Ever had a client that didn’t pay you for weeks? Or months? Or… longer?
If you’ve had a services business for a while, you know the frustration of unpaid client invoices.
You've done the work. You just don't know when you'll get paid.
It doesn't have to be this way.
For client-based businesses, monthly retainer agreements are the easiest, fastest way to establish a regular flow of cash into your business.
How Good Retainer Agreements Work
Most retainer agreements establish what you will do for a client. They also define how much you’ll get paid and when payment will happen.
Good retainer agreements also protect you (the service provider) against major increases in work without appropriate payment in return.
This is usually done with a cap or maximum amount of deliverables you agree to provide within a month’s time.
If you own a marketing agency—for example—your retainer agreement might be for a flat price up to a certain number of hours—then a per-hour fee beyond the limit.
If you have a landscaping company, the client might get up to five “mows” a month—with a surcharge for additional work.
Benefits to the Client
You may not have considered this, but retainer agreements can be very attractive for a client.
When clients work with you on a project by project basis:
- They never really know if you’ll be available.
- Paying a la carte makes budgeting difficult. They never know how much they need to set aside each month.
- Negotiating a price for every project is a pain. It can cause hurt feelings and strain professional relationships.
- Receiving invoices for each project means they pay you multiple times every month—and keep track of what has been paid and what hasn’t been paid.
Signing a retainer agreement solves all of those problems:
- They know you’ll be there when they need your help.
- They know how much they have to budget for your services.
- They no longer have to lose time and energy negotiating every single project.
- They can pay once each month, instead of whenever they receive an invoice.
With that in mind, what remains is how to get your clients to sign a retainer deal with you.
Here are a few ways to get started:
1. Pick High-Profit, Low Maintenance Clients
Use the 80/20 rule to help identify your best clients.
Which clients send you the most work? Which clients do you make the most money from? Which clients are wonderful, low-maintenance accounts?
These are all good candidates for retainer deals.
2. Be Willing to Ask
The biggest reason companies don't have more retainer clients?
They fail to ask.
Don’t make it more complicated than it needs to be. Send a note that pitches the idea. Pick up your phone and call. Send an email and schedule 10 minutes in their office.
Most clients will be glad to talk with you about a mutually beneficial deal.
3. Make It About Them
When you get that 10 minutes with your client, focus on what a retainer deal means for them—not for you.
They’ll know right away what’s in it for you (regular work, predictable income, etc.). They may not realize how beneficial a retainer agreement could be for them.
In addition to the benefits we covered earlier, your retainer deal might also include:
- A price break
- Guaranteed delivery
- Quicker turnaround times
- Special "on-call" access
4. Offer Extra Services
Approaching a client to offer a retainer deal is the perfect time to speak with them about extra services.
- A marketing agency might offer to load social media content into the client's social media accounts—instead of simply writing the content and delivering it.
- A bookkeeper might offer to provide custom-built monthly reports that show the client’s key performance indicators.
- A house cleaner might offer a monthly check and refill of the salt in the water softener.
Offering these upsells is easy. As you’re discussing the terms of the retainer deal, say, “Would you like me to check and refill the salt in your water softener every month too?”
These are billable items, not freebies. But since they’re presented in the context of a retainer deal, they’ll seem very reasonable to the client.
And since the client already knows and trusts you, they're much more likely to say yes.
5. Bundle Your Pricing
McDonald's figured out a long time ago that people like bundled pricing.
The Happy Meal and the Extra Value Meal are perfect examples of how a company can make money by selling more, but positioning those extra purchases as a deal.
You can do the same thing with services.
Offer your current services, throw in a few extra services (as in No. 4 above).
Add up the total price for those things, then discount it a bit so the client feels like your offer is an amazing value.
6. Use a Compelling Written Proposal
Always use a written proposal when pitching a retainer deal.
You want to give them something they can refer to as they think about your offer. That’s especially true if you’re offering a bundle of services.
They might feel a little overwhelmed by the options at first. A written proposal gives them something to look over as they consider your offer.
It also makes you seem more professional—further increasing the chances they’ll say “yes.”
Use a document that clearly states what they’ll receive from you, what limits there are for the amount of work you’ll provide, the value of all services being offered, the value of any discount you’re offering, and the payment terms.
7. Make Payment Easy
Finally, make it super-simple for your retainer clients to pay you on-time, every time.
The best method for this is to set up a recurring charge against a credit card or bank account. This is easy to do with recurring billing software.
The best thing about recurring payments?
Once you have them set up, you can finally forget about chasing down payment for outstanding invoices, at least for your retainer clients.
Locking in regular, recurring revenue is often just a matter of deciding to offer your clients the option.
There's no risk to asking. The worst that could happen is the client says no.
If that happens, what have you lost?
You still have them as a regular client. And maybe one day in the future they'll change their mind.
At best, you'll gain those awesome, predictable payment checks, once a month, for as long as you have the client.