[Hidden-tech] Retainers

[Jeff Rutherford]

I would argue as well that carrying over hours from month to month is  
counter to a monthly retainer billing structure.

Sure, you need to have a rough idea of how many hours you're working  
for a monthly retainer - a) so you can figure out an amount for the  
monthly retainer, b) so you can manage your own time so that you're  
not working for an hourly rate much lower than you normally would,  
and c) so you can give your client an idea of how many hours they're  
getting for a monthly retainer.

For the clients that I have on monthly retainer, I've explained in  
the initial negotiations, "You're paying me a monthly retainer of X,  
and for that you're getting roughly X number of hours per month. But,  
the reality is that with a monthly retainer, some months I might be  
super busy on your behalf, and other months I may not be that busy.  
But, over time, it equals out."

If you have a retainer client that you think will constantly question  
your hours, then maybe you're better off working on a billable hours  
basis rather than have stressful conversations all the time re: hours  
worked or not worked.

Jeff


Jeff Rutherford
jeff at jeffrutherford.com
413 369-4128 - phone
866 677-4108 - fax




On Jan 22, 2008, at 11:51 AM, Paul Stallman wrote:

>    ** The author of this post was a Good Dobee.
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>
> David,
>
>
>
> We’ve done it many ways in the past and as a small business I can  
> tell you it’s always a struggle.  While other small businesses,  
> love the idea of having you on call, they also don’t like the idea  
> of paying for extra hours they don’t use.  So it’s a constant  
> struggle.  We are looking at doing it more again with clients to  
> get that constant stream of cash flow.
>
>
>
> Another option that we’ve had some success with is buying blocks of  
> time or budget billing.  You sell a client 200 hours per year at  
> rate of say $90.  If they buy 300 then maybe $80 etc.  You then let  
> them use hours how they need to, but they pay you at a constant  
> rate of $1500/month.  I wouldn’t reduce your hourly from $100 to  
> $80 for a promise of less than 200 hours per year, personally.     
> You can cap the number of hours  in any given month to say 20-25,  
> if you don’t want to do 100 hours in the first month.  What we’ve  
> found doing this is most clients can justify the budget billing  
> idea, because they are getting what they pay for with no one having  
> a better advantage.  Show them that it’s justifiable in terms of  
> payroll, how much would it cost them to bring in a person and pay  
> their salary and benefits on a monthly basis.  Your expertise and  
> much lower cost will be very easy to swallow.  Plus you’ll find  
> your clients will use up their 200 hr contract in 6-8 months many  
> times and you’ll continue to draw the monthly check from them.   
> This also give you justification to sell them a bigger contract to  
> go forward.
>
>
>
> The end result is constant and repeatable cash flow.  Just make  
> sure you don’t let clients miss those monthly payments.  Because  
> with method, you’ll end up front loading the work a lot of times.   
> Trust me though it’s better than doing a retainer and carrying over  
> hours for the client, because when you do that, you could end up  
> owing them hours or dollars in the end when you’ve already spent  
> the cash they paid you.
>
>
>
> If you can find a company that will do a real retainer and pay you  
> a set amount if you complete the number of hours or not that’s  
> great, but those companies are fewer and fewer today.
>
>
>
> Paul Stallman
>
> Managing Director
>
> paul at alias-solutions.com
>
> 413.364.6147
>
>
>
> alias|solutions
> How will the world know you?
>
>
>
> From: hidden-discuss-bounces at lists.hidden-tech.net [mailto:hidden- 
> discuss-bounces at lists.hidden-tech.net] On Behalf Of David Spound
> Sent: Monday, January 21, 2008 4:09 PM
> To: Hidden-Tech Tech
> Subject: [SPAM] [Hidden-tech] Retainers
>
>
>
> Hi all,
>
> I am trying to create a new consulting relationship with an  
> organization, and I am wondering about the concept of a retainer.  
> When one agrees to be on retainer, does one receive a set amount of  
> money per month? And, if so, does one agree to provide a certain  
> number of hours of work? How would that hourly rate compare to a  
> situation if there was no retainer?
>
> Hypothetically speaking: say I have a client for whom I currently  
> provide services on an as-needed basis for $100 per hour. I might  
> do anywhere from 0 to 25 hours of work in a given month. I am  
> looking for a way to get more work on a regular basis. In exchange  
> for some sort of guaranteed monthly payment, I would be willing to  
> lower my rate. My thought would be to propose a retainer of $1,200  
> per month in exchange for which I would do up to 15 hours of work  
> ($80 per hour).
>
> Is that how a retainer works? If the client does not utilize their  
> 15 hours in a month, do they “rollover” to the next month (that  
> would reduce the benefit of the retainer agreement to me)? And if  
> the client needs me for additional work, would I bill them at the  
> new, lower rate based on the retainer amount (i.e. $80 instead of  
> $100)?
>
> Any advice will be greatly appreciated!
>
> Regards,
>
> David
>
> ++++++++++
>
> David Spound, M.Ed.
> Valley Mindfulness
>
> (413) 219-0654
> david at valleymindfulness.com
> http://www.valleymindfulness.com
>
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>
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