CONSULTING RETAINERS: HOW TO USE THEM EFFECTIVELY

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A consulting retainer is one of the sure-fire ways to ensure cashflow for your freelance consulting business. Unlike the usual pay-per-project or pay-per-hour works, a retainer allows you to earn regular monthly income in advance of the project. So, what is a retainer? How does it Work? Why you should adopt the strategy to sustain and grow your consulting business? You can find out the answers to these questions if you read on.

What is a Retainer?

A retainer is a form of contractual agreement between you and your clients, which allows you to receive payments from them on a monthly basis in lieu of them gaining access to your expertise whenever the needs arise. Securing a retainer agreement allows you to have upfront regular monthly income, making it easier for you to sustain and grow your consulting business. Likewise, your clients are sure of enjoying your dedication when they need your services.
Having consulting retainers can really help both parties to achieve their objectives. The consultant achieves consistent cashflow through recurring monthly payments while the clients have a guaranteed expertise to turn to when they need help.

How Do Consulting Retainers Work?

Basically, there are two consulting retainers. These are: “Pay for Work” and “Pay for Access.” Any of these two retainer systems or both can work for you depending on the circumstance. For best result, however, it is important to know when and how introduce retainers into your services.
It is often easier to introduce retainers to clients who have enjoyed your services in the past and understand the kind of values you offer. If you offer valuable consulting services, most clients won’t hesitate to keep you on their retainer list, so that you can be there for them when it matters most. Let’s consider the two retainer options you have and which one is appropriate as against the other.

Pay for Work

When talking about consulting retainers, “Pay for Work” retainer is what most people often talked about. Pay for work retainer is a model where you get paid monthly for the ongoing work you are providing to your clients. This model, actually, is not fundamentally different from the pay per contract, pay per project or pay per hour models, except that it is an ongoing work that attracts monthly payments. Basically, what you do is what you are getting paid for at the end of every month.
At a particular month, you could earn $4000. On other occasions, it could be a $1000 or $8,000. It is never a fixed monthly allowance for you. The succor, however, is that you are on a retainer, which guarantees you continuous works with the clients every month. Thus, in order to avoid any ambiguity, your retainer agreement must contain everything pertaining to the values you will be creating for them month by month and the corresponding payment for each job.

Pay for Access

The other retainer model is referred to as “Pay for Access”. This model is the preferable one for most advanced and seasoned consultants. The reason being that it actually operates base on a system where you may not really provide any service on a particular month or for some months, yet you get your pay. So, unlike the “pay for work” model, if you are operating based on Pay for Access model, you won’t be trading hours for dollars nor get paid based on work done.
It doesn’t matter the number of hours you spend monthly for the clients, you will get paid your fixed monthly allowance. Basically, the clients are not paying you for a specific job. Rather, they’re paying you so that they can access your expertise when needed. So, instead of having to wait in line or not having access to you at all when you are busy with other clients, the Pay for Access model allows clients to access you instantly if they need your service. Pay for Access model is really good if you know how to take advantage of it.
However, this model is easier to initiate with client whom you’ve already had an existing relationship. So, if you have already worked on one or two projects with a client, that relationship is sufficient enough for you to earn their trust. Although Pay for Access model is really hard to sell to a client, it is the best model if both of you enjoy working together after you must shown your level of expertise through previous works. Most clients who know your worth will not hesitate to pay you monthly if that will give them instant accessibility to your knowledge, your expertise, or maybe even your network when they need to resolve immediate challenges.

How to Price Your Retainers

Pricing your retainer is easier when you operate on the Pay for Work model. For the Pay for Work retainer, what you do is what you get paid for each month. So, all you have to do is to make sure your retainer agreement specify how much you’re going to get paid on each of the projects involved.
On the other hand, however, the Pay for Access retainer requires a little bit of technicalities. Here, you will need to price your retainer based on the value you’re providing. For instance, if you’re receiving $6000 retainer fees per month, you must be prepared to provide values that surpass $72,000 to your clients in a year in order to give them a sizeable Return on Investment (ROI).

Conclusion

Consulting retainers are huge assets to your freelance consulting business if you really want to establish yourself in the industry. A retainer helps consultants remove the pressure that comes from the fear of not having enough works to pay their bills. It also gives the clients the rest of mind to focus on other important aspects of their jobs knowing that they have a capable hand on a retainer contract to handle their projects ongoing basis. Thus, you must make deliberate efforts to brainstorm on how you can use retainer to benefit your clients’ business as well as grow your own consulting business.
Once you’re able to come up with a win-win strategy, it is time to implement suitable consulting retainers in your business. So, start now by selecting clients you enjoy working with, whose business has been fairly steady, and decide on the appropriate consulting retainers suitable for each client from among the two retainer models discussed. The decision to adopt the use of consulting retainers in your business, no doubt, will give you the confidence to grow your consulting business.
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