Imagine finishing a project for a client and realizing that what was supposed to be a one-time gig turned into a 2-year collaboration. You’ve created value, delivered great ROI, and built a strong relationship with your favorite client. Now, you’re wondering how to take it a step further and create more stability and income with retainer projects.
A recent study from 2021 revealed that 48% of digital marketing agencies have long-term client relationships that span over 36 months. Only 4% of agencies reported client relationships of less than 12 months. This means that freelancers and small agencies are more likely to have recurring clients than one-time projects.
The solution to creating income stability and fostering better client relationships is opting for a project retainer agreement.
Understanding Retainer Fees
A retainer fee is an advance payment from a client for the services you will provide on an ongoing basis. It can be based on a predefined amount of work or a time commitment. Retainer fees are usually paid monthly, quarterly, or yearly to ensure that your services will be available to your client.
Retainer agreements are commonly used in industries such as IT and development, marketing, design, consultancy, and legal services. However, any business niche that allows for hourly or project-based work can easily adopt a retainer work model.
Five Benefits of a Retainer Agreement
1. It Generates Regular Income
A monthly retainer fee provides a level of stability that freelancers often crave. It allows you to have guaranteed income, regardless of whether the retainer fee is refundable or not. With a retainer agreement, you can focus on your work and not worry about next month’s earnings.
2. It Gives a Better Cash Flow Estimate
Retainer fees help you plan your budget and manage your cash flow more effectively. You can expect a steady income, which reduces the stress and uncertainty of relying solely on project-based work or finding new clients. It also allows you to assess project profitability better.
3. It Helps Manage Your Workload
A retainer agreement ensures that you know exactly how many hours you can commit to your work. It allows you to balance your workload and avoid overcommitting to new clients or projects. By having a clear understanding of your work schedule, you can improve your project planning skills and achieve a better work-life balance.
4. It Nurtures a Deeper Client Relationship
Working on a retainer basis establishes trust and consistency with your clients. It allows you to foster better relationships and spend more time understanding their needs and delivering high-quality services. You can anticipate client requirements better and improve your overall service delivery.
5. It Streamlines the Invoicing Process
Invoicing software, like Paymo, can automate the invoicing process for retainer projects. This streamlines your administrative tasks and allows you to create invoices easily. You can set up the project details and billing terms, and the software will automatically generate and send invoices to your client.
Setting Up Your Retainer Project in Paymo
If you’re considering implementing retainer projects in your business, Paymo can help you streamline the process. Here’s how:
Step 1: Create Your Retainer Project
In Paymo, you can create a “Retainer Project” and set up the payment frequency, start and end dates, hourly retainer rate, and budget. This project-level retainer allows you to have multiple billing methods for the same client and provides flexibility in handling different projects.
Step 2: Monitor Your Work Progress
You can easily track your work progress, completed tasks, and outstanding retainer fees in the project overview. This gives you a clear picture of your financial performance and helps you assess the profitability of your retainer agreement.
Step 3: Create an Invoice Based on the Retainer Project
With just a few clicks, you can create an invoice based on the outstanding retainer fees. Paymo’s invoicing features make the process efficient and hassle-free.
Step 4: Assess Long-term Project Profitability
Paymo provides financial projections for the entire retainer agreement, including unbilled AR, internal costs, and profit margin. You can easily assess the financial health of your retainer projects and make informed decisions about your business.
Implementing retainer projects in your business can provide stability, regular income, and improved client relationships. With Paymo, you can manage your retainer projects efficiently and focus on delivering exceptional value to your clients.
So, why wait? Start maximizing your income and building stronger client relationships with retainer projects today!
