Is a retainer agreement part of your pricing strategy? Back in episode 11 of Resourceful Designer I talked about pricing strategies for your graphic design business. In it I talked about how value based pricing is the Holy Grail of all the pricing methods. In that episode I didn't cover the retainer agreement because I don't really view it as a pricing strategy. It's more of a payment method. But if I was to include it in all the ways you can be paid I think it comes in a close second. What is a retainer agreement? Simply put, a retainer agreement is a way to be paid in advance for work you'll do in the future. It's an agreement between you and your client stating that for a fixed amount of money paid up front on a regular basis, you agree to provide a predetermined amount of work for that client. Why should you use a retainer agreement? There are several reasons why a retainer agreement will benefit your home based graphic design business. First and foremost it creates a steady stream of income. Anyone running a graphic design business knows that it's not a profession of absolutes. There are no steady paycheques to be collected every other week. Instead we live off the whim of our clients and their schedule for paying their bills. Having a client on retainer creates a small piece of dependability where you know for a fact that money is coming in. It's like receiving a paycheque on a regular basis. Another benefit of using a retainer agreement is it allows you to plan your work in advance. Knowing that you have to work on a certain job every week, or that you have to devote a certain amount of time to a client each week allows you to set a schedule and be more productive with the remainder of your time. Don't forget, when you have a client sign a retainer agreement with you, it's a guarantee that they will come to you for their work and not look elsewhere for a graphic designer. What are the Pros and Cons of a retainer agreement? Pros Steady Pay: As long as your client pays according to the agreement, you know when and how much income you can expect. Better Clients: Entering into a retainer agreement is a big commitment. It takes a client with whom you have a good relationship with to agree to it. Since the relationship is already there, entering into a retainer agreement with them solidifies their loyalty to you. Retainer Agreements Benefit the Client: There are many benefits to the client to sign with you. The client solidifies their relationship with a graphic designer and wont have to shop around each time they have a project to do. And the client knows in advance how much they are spending, allowing them to create more focused budgets. Cons Scheduling Conflicts: Although it's nice to know how much work you will be doing for the client each week. It may be hard to schedule other clients around this, especially if they have tight deadlines for their projects as well. Dependence Issues: Relying solely on clients with retainer agreements may seem great as far as your income goes, but it can be dangerous if you don't diversify your work with non retainer clients. If a client with a retainer agreement decides to end the contract and leave you, there goes a good chunk of your income. Potentially Less Pay: One of the things clients like about retainer agreements is the chance to acquire your services at a discounted rate. This, along with the scheduling conflicts I just mentioned could mean putting aside higher paid work in order to complete the work for the client under contract. You could potentially loose out on better paying jobs because your time is tied up due to the retainer agreement. What type of work do you do under a retainer agreement? The best type of work for a retainer agreement is anything that is done on a regular basis. Reoccurring work is perfectly suited for this scenario. Work such as website maintenance, newsletters, advertising, consulting, strategic planning. Don't forget emergency issues. Some clients may