One of the biggest challenges consultants face is the uncertainty of income.
Constantly hopping from one client to another, signing new contracts, and adapting to each client’s unique needs can be stressful and unpredictable. This uncertainty often brings the fear of dry spells, where you might lose clients and income simultaneously.
A consulting retainer dispels this uncertainty. It happens when your clients believe in the quality of your work and pay you advance consulting fees (as a retainer) every month for your services. The client can count on your consistent availability, and you can enjoy a long-term, stable income.
It’s a win-win situation for you and your client.
However, convincing clients to pay you a retainer fee can be difficult, especially if you’re a new consultant or don’t have a solid track record of working with many clients.
This article will tell you everything you need to know about consulting retainers. You’ll learn about the different retainer types, how to choose the right one for your business, implement it successfully, and address any possible challenges.
Let’s begin.
How Do Retainers Work for Consultants
Summarize this article for me pleaseWhat Is a Consulting Retainer?
A consulting retainer is a fixed sum of money or upfront fee your client pays you in return for your work. It is a pricing model that lets clients secure your services for a predetermined period.
Most consultants charge on an hourly, daily, monthly, or project basis for a fixed scope of work. However, these modes of payment don’t guarantee stability or a consistent stream of income.
The consulting retainer pricing model fills that gap. It provides a consistent safety net by paying you upfront in case any of your projects based on conventional pricing models fail.
Summarize this article for me pleaseTypes of Consulting Retainers
Consulting retainer agreements come in various shapes and sizes. Let’s take a look at some of the most common ones:
Pay for work retainer
In this pricing model, your client pays you a fixed amount for a pre-decided scope of work or project you promise to deliver.
For instance, you may receive $500 for revamping a website, and your payment depends on the specific number of pages you revamp in a fixed period, say, a month.
Pay for access retainer
This monthly retainer model sometimes involves upfront payments for six months or one year. In this model, clients pay for access to your knowledge, experience, and expertise instead of specific deliverables or services.
It is commonly used when your client’s business needs ongoing support. This includes marketing and campaign management, public relations management, data security management, client management, and more.
It’s best suited for experienced consultants and subject matter experts with a good reputation.
Value-based pricing retainer
In this pricing model, you and your client agree on specific valuable goals you’ll achieve at the end of certain periods rather than setting a limit on the time you spend working.
For example, your client might set a goal to boost the conversion rate of a signup page or click-through rate on social media ads.
The price you get then depends on how well you can help your client achieve these goals. A crucial factor to consider is to set clear expectations on what you can do, as failure to meet goals can risk your retainer contract.
Hourly rate retainer (or time-based retainer)
In this pricing model, you bill clients for specific hours to use your services. The scope of the project is usually entirely open-ended in this case.
Hourly rate retainers give your clients more flexibility regarding the projects they might need you to work on. But remember to keep your rates higher since you are giving them more versatility.
This pricing model is best for clients requiring consultancy services for multiple projects simultaneously. For instance, if a client is launching a new product, they might need consulting on their product design, website design, marketing campaigns, and more.
Flat rate retainer
In this pricing model, you provide a fixed or ‘flat’ fee that covers all services and costs outlined in your retainer agreement rather than charging by the hour. This fee is paid, either partially or in full when the agreement is signed.
Summarize this article for me pleaseSuccessfully Implementing Retainers in a Consulting Practice
If you’re interested in implementing a consulting retainer model, here’s what you need to do:
Step 1: Choose the right model for you
The first step in implementing a retainer model is determining the type(s) to use. Depending on your client’s needs, you can choose one or more models.
Remember, each has its benefits and challenges. For instance, if you’re a new consultant with little experience, consider using a pay-for-work model. Committing to a specific set of deliverables can help you attract clients who might not be familiar with your work.
On the other hand, if you’re an experienced consulting professional with a strong reputation, you might want to use a pay-for-access system. Potential clients may be willing to pay for access to your services if they have seen you successfully help other businesses in their field.
Also, consider the industry in which you work. Some industries, like marketing, require constant support, while others, like software implementation (CMS or chatbots), may require one-time work with regular maintenance.
While a pay-for-access system is more suitable for the former, a pay-for-work retainer model can be more appropriate.
Step 2: Secure your credentials
Assessing your expertise is crucial when setting up a retainer model for your services. It helps you decide how to market your business, which model to use, and how much to charge.
Start by considering your years of experience and the work you can showcase to demonstrate your consulting skills.
Consider whether you have previous clients who can vouch for your successes with a testimonial or recommendations for social proof. These steps will help you gauge how well you can sell your services and set your pricing structure.
For instance, you might need to start with lower rates if you have extensive expertise but a limited portfolio and few clients. However, you can justify charging higher rates with solid work records and glowing testimonials.
You can easily document all your credentials and store them in a safe, easy-to-access, and shared platform like ClickUp Docs. Your team can also leave comments on it for additional suggestions.
Moreover, you can easily share these documents with potential clients with a button.
You can also use the pre-made ClickUp Consulting Report template to generate a consulting report that helps you.
- Gather and unify data from various sources
- Visualize insights in an easy-to-read format
- Present key stats to clients in an attractive visual format
And don’t forget to add your consulting certifications to your portfolio if you have any.
Step 3: Build an apt business model
Decide what services you’ll provide and set a timescale for completing the work and receiving payment. You can charge weekly, monthly, or even for longer periods.
You must also draft a consultant retainer agreement. This document showcases your terms and conditions and acts like a contract between you and your client. Remember to add the following elements to the agreement:
- Clearly defined project goals agreed upon by you and your client
- A job overview
- A description of the agreement type, either pay-for-work or pay-for-access
- An explanation of how you’ll fulfill the client’s requirements or service description
- The responsibilities of each party in the agreement
- Terms outlining the specific scope of the agreement
- The rate the client will pay for your services
- Signatures from both you and your client
Streamline the whole process using ClickUp’s Consulting Agreement template. It helps you:
- Swiftly create clear and comprehensive agreements that allow you to set expectations regarding services provided
- Outline payment guidelines
- Establish a legally binding contract between parties
Step 4: Calculate your retainer fees
Now comes the hard part: setting up a retainer fee for your services.
When deciding this, you need to consider your experience and reputation. That’ll determine how much your clients are willing to pay upfront.
If you’ve charged an hourly rate before, you can use it to set your new prices. Estimate how many hours you’ll spend on a client’s project during the contract term and multiply that by your hourly rate.
For example, if you charge $80 an hour and sign a month-long contract for 30 hours a week, you would calculate your total fee like this:
80 x 30 x 4 = $9,600
That was the comprehensive hourly estimate method, but other ways exist to determine your retainer fees. They are as follows:
- Average Method: Calculates the retainer fee based on the average cost of similar cases you handled
Formula: Retainer Fee = (Average Hours for Similar Cases x Hourly Rate) - Step Method: The retainer fee is calculated to cover the project’s initial stages, including costs for initial consultations, research, and other documentation
Formula: Retainer Fee = Est. Hours for Initial Stages x Hourly Rate
Once you have calculated the fee using your preferred method, you can negotiate a portion or the total amount as your retainer fee.
Step 5: Display your portfolio
When using a retainer model, you must show clients why your products or services are worth it.
As a consultancy, the best tool for this comes in the form of a strong portfolio. You can list your past clients, the projects you worked on, the benefits, revenues, conversions, and other positive outcomes you’ve generated.
Apart from a portfolio, you can create a coherent marketing strategy that interests companies more in your services. If you want to organize a top-tier marketing campaign, use ClickUp’s Marketing Campaign Management Template to
- Easily schedule, monitor, and manage all your campaigns
- Stay organized and track tasks in real-time
- Collaborate with your team and clients on a unified platform
Use ClickUp Brain, our AI-powered tool, to automate your email or SMS outreach process and other project management workflows. For instance, setting up triggers within ClickUp tasks or statuses allows you to automate sending emails or SMS messages when certain conditions are met. You can also use ClickUp Brain to seek status updates on your tasks quickly,
How do you transition existing clients to a retainer?
As a consultancy, you may already have some clients working with you. So, how do you transition your one-off clients into a retainer model?
That might seem intimidating initially, but with our help, it doesn’t have to be. Follow these steps to transition your current clients to retainer:
- Understand each client’s perspective: Assess what each client needs and evaluate which ones need ongoing support and are more likely to purchase your services again. Also, target businesses that have purchased your services multiple times. Don’t approach every existing client with your new retainer model
- Choose an apt time to showcase the pricing model: If you already have a good relationship with a client, you can comfortably bring up the new pricing model. Choose an appropriate time for this, such as a regularly scheduled conversation or during their budget or strategy planning phases. Don’t spring the retainer model on them out of nowhere
- Be open to client feedback: Be open and transparent about the change and keep an open mind regarding any suggestions they might have. They may have certain specific requirements or might want to negotiate a rate. Address their concerns and be as flexible as possible without compromising your revenue
- Explain the transition process in detail: Will the scope of work change? Will the client receive a short-term credit? Clearly explain the timeline and terms of these changes to avoid any confusion about billing or concerns that they might not be receiving the value they’ve already paid for
Negotiation tactics for new clients
While retaining and transitioning old clients is necessary, you should also focus on acquiring new clients who will start with you on a retainer pricing model.
Here are some tactics that will help you with these negotiations:
- Conduct in-depth discovery calls: Before you propose a retainer fee, conduct an in-depth discovery meeting to understand what your prospective client needs, their goals, and the scope of your work
- Offer a trial period: To ease any uncertainty regarding the quality of your work, offer a trial period. This way, both parties can exit the relationship early with minimal risk. A trial period allows the client to evaluate your work and decide if it’s worth their investment
- Focus on value and benefits: While pitching your business model, be sure to focus on the benefits that come from working with you on a retainer basis For instance, if you’re an online ad agency, you could say something like, “By hiring me on a retainer basis, you’ll have access to my expertise whenever you need it. You won’t need to micromanage your ad spend because our agency will handle performance monitoring and adjustments. Plus, you won’t have to find someone new when this campaign ends.”
- Be flexible: Be prepared to negotiate and compromise. Try offering a lower fee in exchange for a longer contract term or propose a trial period
- Know your worth: While being flexible, don’t let the clients trod all over you. Know when a compromise is becoming too much and learn to decline offers that might harm your overall business
Summarize this article for me pleaseThe Art of Selling Consulting Retainers
The biggest problems that agencies encounter when trying to sell clients on their retainer models are:
- Low confidence regarding their pricing
- Fear of asking clients for a long-term commitment and
- Failure to properly convey the value they bring to the client
You can overcome these challenges using these tips:
- Quantify your outcomes: What tangible outcomes can you produce through your work? Too often, you will find consultancies saying, “We help our customers grow by helping with their marketing.” However, no one will scale a business with that offer. You have to be more specific and meaningful.
For instance, let’s say you improve organic traffic by 200%. Find out how that impacted the number of leads, how many new customers were brought in, and how much value you would produce if you consistently did this for 2,3 or 5 years - Get your foot through the door: Don’t try to market your retainer model to a new client immediately. First, try to form a relationship with them. You wouldn’t buy clothes at a shop without trying them on first, right? So, why would your clients make such a huge commitment just because you asked them to?
Offering a free trial can be a great way to showcase what you can do for your clients. You can also sell upfront discovery calls to initiate transactions between you and your client. After all, selling an upfront engagement for $500-$3,000 is much easier than selling a $5,000-$100,000 project - Offer retainer discounts: Many clients will be skeptical to pre-pay before seeing your services. Your clients might think that if they can pay you $100 an hour every time you spend an hour with them, why should they pay you $10,000 for 100 hours upfront?
To appease them, you can put certain minimal discounts ranging between 5% to 15% on your retainer fees - Provide progress reports: Customers want to be updated on what they get for their money. So, a regular progress report will help you sell and retain clients through a retainer model. The report showcases exactly what you’ve done and demonstrates the benefits they’re gaining from the retainer relationship
Summarize this article for me pleaseThe Perks and Challenges of Consulting Retainers
Here are a few pros and cons to help you decide when a retainer will work best for you – and when it won’t.
Pros
- Steady income: The most crucial perk from consulting retainers is a constant, consistent, and guaranteed income for your agency. This mitigates the risks that you might incur from delayed payments
- Long-term relationship: Consulting retainers foster long-term client relationships and provide steady cash flow, helping you maintain financial stability, cover operational costs, and plan for growth
- Flexibility of scope of work: A time-based retainer lets you help your clients with various tasks within your expertise, not just pre-designated projects. This showcases your versatility and enables you to build a diverse portfolio
- Accessibility: Clients want on-demand access to an expert. Retainer agreements can give clients priority access to your consulting services, which, in turn, strengthens client relationships and boosts your client retention rates
Cons
- Complacency: Over-reliance on retainers can often lead to complacency and a lack of innovation. This stems from having a steady source of income for a long time without facing competition and could reduce your retention rate.
The best way to deal with this is to implement a solution like ClickUp. With the help of ClickUp Goals, you can easily keep track of your progress, for instance, on learning new skills or reaching out to newer clients with a more comprehensive scope of work with measurable goals. With ClickUp Goals, you can break larger targets into smaller tasks and measure the progress of each of your goals.
- Limited client flexibility: The retainer model might seem a bit stifling to your clients since they will be shoe-boxed into working with you without having opportunities to find other alternatives
The solution is to have a well-designed portfolio or offer free trials that help ease your client’s mind.
As you may have noticed, we haven’t mentioned a lot of cons. That’s because the consultant retainer model has very few disadvantages.
Summarize this article for me pleaseManage Your Consultant Retainer Fees With ClickUp
Consulting retainers can become the lifeblood of your agency if used judiciously. They help you maintain a steady source of income so you don’t have to depend on invoices getting approved for your month-to-month payments. This drastically reduces the risk of disrupted cash flow due to delayed payments.
It has other benefits, too, like helping you maintain a healthy long-term relationship, extending the scope of your work, and more. However, retaining old clients or getting new ones through a retainer agreement isn’t always smooth, and you must prepare to do some hard work.
This is where ClickUp’s consultancy software comes in. It is a premium project management solution that helps you draft agreements, process your data, compile information, generate reports, visualize growth, and showcase detailed insights—helping you prepare to earn that retainer by providing the best services to your client.
ClickUp also offers several consulting templates to help you save time when preparing agreements, documents, or reports.
Using these, you can easily appeal to your client’s interests and portray the exact value you bring them—no more guesswork, scattered files, and, most importantly, dissatisfied clients. Use ClickUp’s Consulting Services for free now.
Everything you need to stay organized and get work done.
