A monthly retainer fee is an amount that a client pays in advance in order that they are sure your agency services will be readily available to them, when they need them. It’s very usual that retainers are a big lump sum, or a monthly fee. While the first option can be specially useful for big agencies and even bigger clients, the best way to ensure your client enters into a retainer agreement with you is billing them for a monthly recurring payment.
Why to sell on a monthly retainer?
One simple answer: cash flow. In order to provide the A+ service your clients expect, you need to have a steady income of cash flow to work. Also, in case of big projects, they can usually go dormant waiting for customer feedback that never comes. This is really problematic, specially for small agencies that need this money to pay for fixed monthly expenses. Also, monthly retainers can help your business to kindly remind your clients that your service is valuable.
For these reasons, selling a monthly retainer can be a positive thing you can do for your agency.
How much is a good retainer?
This is a more complicated question that varies form business to business. Take a step behind and see the bigger picture: how much value am I giving my client? If you are giving enough value, you can be sure your services can be charged on a monthly retainer basis.
A great way to start the conversation, is to first see how much you’re currently charging your customers in average. And for new customers, you can even sell them an upfront discovery session, as a way to start working on their project. This way, you can easily introduce the retainers after this discovery session is complete and they’re ready to become full time clients.
Always remind them that it’s better to pay a small monthly retainer on an ongoing project, than paying for example a full project build that may cost between $5,000-$100,000.
How to keep clients paying their retainers?
While the obvious first choice is to say giving value to them, the truth is it’s difficult to collect these retainers every month from every customer. A great way to automate this task is our solution, PayForm, that collects automatically from your clients’ credit cards every month, on autopilot. It’s cost-effective and easy to get started.
Also, a great way is to remind them how much is the money they’re spending being used. You can create a simple report on a monthly basis that explains all the services you’ve done, how much money you’ve saved them and the upcoming plans for the particular client. Keeping this communication open is key to remind them how valuable are your services for their businesses.