As an agency owner, it’s important to know how to put together an effective retainer agreement.
5 Steps to a Million Dollar Marketing Agency
Why do some agency owners rake in cash while others work 80 hours a week to barely break even?
This free workshop will give you the EXACT game plan to go from $0 to $1,000,000 without getting burned out.
GET ACCESS FOR FREE!
Retainer contracts are a great way to make consistent income with clearly defined parameters. Whether you are freelancing, consulting, or running a remote agency, recurring revenue brings stability and predictability to your business.
But once you sell clients on the idea of retainer pricing, you need a thorough understanding of what goes into a retainer agreement.
Retainer agreements set expectations and responsibilities for both the service provider and client. They also set boundaries between your team and a client, so that all involved parties know how the relationship will work.
To learn more about how to make retainer agreements a key part of your client onboarding process, read on.
What is a Retainer Agreement?
A retainer agreement is a document that explains the terms of engagement between an independent agency owner and a client.
Retainer agreements are also called “work for hire” contracts. Through a retainer agreement, the client will pay a retainer fee in exchange for a defined set of hours or tasks. The agency will reserve the prescribed time and resources for the client.
A retainer agreement allows for a client to have reliable access to your services. Introducing retainer agreements into your client partnerships is an excellent strategy for building a long-term client base.
What Should a Retainer Contract Include?
The first, and most important consideration for a retainer contract is that it needs to be formal and legally binding.
An official retainer agreement must be formally drafted with precise language and signed by all parties.
A retainer agreement should include a few things:
Scope of Engagement
The contract should specify exactly how engaged the agency will be and what they will be doing. It should be as specific as possible.
For example, a video production agency will produce two YouTube videos a month for the client.
The scope of engagement could also be limited by hours.
Using the same example, the agency will provide up to 40 hours a month of video production and editing for the client.
Scope of engagement is one of the most important sections in the contract as it determines exactly what the client is getting.
A retainer agreement should list out who may be providing services.
The client should know if they will be working with you personally, assigned to an individual on your team, or getting access to a group of professionals.
This is also an opportunity to highlight your team’s credentials and skills, reinforcing the value of signing.
A retainer contract should specify the retainer fee and any additional expenses. This should be broken down and categorized, especially for any work requested outside the scope of the agreement.
KEEP IN MIND:
When negotiating rates, it’s best to focus on value, rather than getting overly granular with costs and prices. However, you can quickly lose money if you don’t make it clear what’s included in your fee and what’s not.
Make sure your contract lists out what your fee includes, and get as detailed as you need on pricing out extras and upgrades.
Goal of Partnership
While a retainer agreement is a legal contract, it’s also part of your sales process. You may have already written an amazing business proposal, but until a contract is signed, you haven’t really closed the deal.
Use the agreement to reinforce the value of working with you, showing the client you have a plan for your work with measurable outcomes.
This section of the contract should highlight what the agency intends to achieve for the client and how success will be measured.
Identify the goals of the partnership and how outcomes will be reported. Focus on benefits, laying out a specific plan for how your agency will improve or grow a client’s business.
Methods and Hours of Communication
It is important that the preferred methods of communication are listed in the retainer agreement.
Delineated methods of communication could include email, work phone numbers, or a messaging platform. Be sure to include specifics about what times of the day your team can be reached and through which methods. These terms are important to setting boundaries between the client and the agency.
DRAW A LINE!
No one likes receiving phone calls in the middle of the night or unsolicited text messages. While some clients may feel like a retainer agreement gives them unlimited access to your team, that’s definitely not true.
A retainer agreement should include any other information that is deemed important. For example, contract termination or client and agency rights could be included in a retainer contract.
How to Write a Retainer Agreement
It is imperative to remember that a retainer agreement is about more than just money and services. A retainer contract is also a dispute remediator and boundary setter. It defines the relationship between yourself and the client.
Before you write the retainer agreement, have an open conversation with the client to ensure that you are both on the same page.
It is easier to come up with oral agreements and transfer them to a document than it is to send an un-discussed document back and forth until both parties agree.
Take a look at the steps of writing a retainer agreement:
- Have an open discussion with the client about goals, negotiate rates, set expectations and outline services. Write down what is discussed and send it to the client as a business proposal after your meeting for approval. This will save you time when you write the full retainer agreement.
- Outline and write the contract based on our template provided below.
- Review the contract and have an attorney or someone familiar with retainer agreements review it.
- Send it to the client for revisions. In some cases, you may need to have more than one discussion about the retainer agreement. A client may change their mind about pricing or you may want to revisit how many hours you can offer.
- Both parties should sign the agreement. You should also put it somewhere easily accessible to, such as a shared folder.
Writing a retainer contract should not be too difficult. You are not writing for publication so there is no need to attempt any flowery language.
Remember: the goal is to be clear, concise, and specific.
Retainer Contract Template
If you are struggling to write, use this retainer contract template to get you started:
- Exclusivity Agreement
- Independent Contractor
- Ownership of Product
- Service Expectations
- Goal of Partnership
- Description of Services
- Payment and Fees
- Payment Method
- Hourly Rates
- Flat Rates
- Non Disclosure Agreement
- Methods of Communication
- Hours of Communication
- Intellectual Property
Freelancing is often difficult to navigate, especially when you are on your own. That’s where Agency Clarity comes in. Our team is here to help you build your independent agency.
From consulting to multi-day workshops, Agency Clarity has the entrepreneurial tools that you need.
Bookmark this site for continuously updated info, insight, and tips on how to grow your agency.