Becoming independent is easy; remaining independent is difficult.
Some of my low years have been so deep that I arguably really should not have continued my solo practice. While the high years generally made up for it, that wasn’t helpful when in the middle of those low points …when I really needed to pay myself a living wage (not to mention my overhead).
There are numerous ways to maintain a baseline of revenue. One way I’ve found sustainable income is retainer arrangements, which work well for the types of clients which benefit from being able to periodically access me for advice and small requests, and which desire priority access to me when something important and urgent arises.
I happen to like recurring revenue because it reduces my ongoing sales and marketing needs (to an extent) and makes my short-term cash flow more predictable. This frees me up to serve my clients, to pursue newer (more risky or less predictable) business opportunities if I so choose, and helps stabilize my income in a way that I haven’t been able to meet through any other technique.
I also personally prefer it because I like to work with the same clients over long periods of time, and retainers focus my energy on those types of clients.
Retainer arrangements are like Membership offerings — Only Better
I view retainer arrangements essentially like a paid membership offering — only better. Membership has its privileges (that is, after all, why someone joins) and in and of itself — with some creative thinking — you can create something valuable to your types of clients.
But even more interesting — each individual arrangement can be customized — one can tune the specific benefits and specify other perks that are appropriate and valued by each individual client in question. Costco can’t do this. You can.
This increases value to the client. This, in turn, increases conversions of proposals into sales, better retention (renewals, which decrease time devoted to sales and marketing and increase your operating profitability), and boosts what you can charge. Win-win!
My retainer arrangements are typically one of monthly, quarterly, or annual. I automatically invoice at an appropriate point near the end of the current period for renewal. I also require a heads up a reasonable period prior to renewal if the client won’t be renewing.
One difference between retainers and other types of work, is that full payment is always required prior to each period — not during or after. This is important, as it’s helps justify the discount you’re effectively offering in exchange for your receiving prepaid guaranteed income; this goes away if you bill after the period is over.
How to start offering retainers
I got my feet wet with retainers by offering them as an optional add-on to existing client projects at proposal time. I spent time thinking about each project and determining where there was value-add to ongoing follow-up of some sort. Not everyone went for it, and some projects were better fits than others, but enough did… until it donned on me I could make this a central part of my practice not just a small revenue bumper tool.
I suggest this route because it allows one expand their comfort zone in a low risk manner, without scaring off clients or cannibalizing existing business. And, over time, it’ll give you a better idea of which opportunities make the most sense to explore and which clients really see the value in this sort of arrangement (many clients won’t and that’s fine).
What to include in retainers
This is really something that you will know best as you know your specific types of clients best and your market. Here are some suggested places to look for ideas that worked for me:
- Look at past project proposals and ponder what types of add-on or ongoing value-add offerings might have been appropriate
- Look at existing projects in progress and do the same
- Chat with clients about their ongoing non-project needs.
- Brainstorm ideas, even ones that sound far-fetched and commit to selecting one or more of them to tack on your next few proposals as optional add-on offerings. Ask for feedback after proposal acceptance, from those who did not opt for it.
Should project work ever be included in retainer arrangements?
Should project work ever be completed as part of a retainer arrangement? That depends on your goals. Some of my retainer arrangements have been about establishing predictable income and basically are designed to be cash cows for me, albeit heavily discounted versus if I’d performed the same duties on a project by project basis. I was willing to accept this because my priorities were different at the time. There’s nothing wrong with this, but know why you’re doing it if you do it.
Most of my retainers include a discounted rate for project work, applied either to my hourly rate or to my quoted fee for any future projects we do together during the term of the retainer arrangement. The client will still be paying separately for the project work, but gets a discount in recognition of their membership status.
I think retainer arrangements are a good component of a well rounded solo practice. They bring additional value to clients, encourage long-term client relations (leading to more project work), often can make project work more successful (by incorporating ongoing maintenance and adjustments), can reduce firefighting (by encouraging reaching out for advice and assistance with small tasks), and can bring stability to our cash flow and income.