What Discount to Give for A Retainer Contract

Question

I'm a web developer from Dublin and a web development agency whom I used to work with as a normal employee has asked me to quote a day rate to them.

However, they've asked for a discount as they want to hire me on retainer for two fixed days per week were I cannot work for anyone else & be 100% available to them. But they're guaranteeing to pay me for those two days even if they have no work for me. And they said they could increase the amount of days when I have them available.

I'm eager to work with them again as I like there work processes and they often have new & interesting projects. It will also be convenient for me as I'm moving abroad and can work for them from home.

At the moment I charge €450 per day. How much would be normal to discount a retainer contract like this? Also I know they pay €200 a day to an eastern european developers on a similar arrangement. They know that with my move abroad that my cost of living will be less so they may expect a similar rate.

I have one client who regularly pays me €450 rate but is unhappy I'm moving abroad as he regularly requests me to come into his office and work.

I'm considering offering them €350 per day but this is such a huge drop, it seems like I may be selling myself short. But then it would be nice to get such regular work with a company I like.

Answer 1

It sounds to me like the company wants a part time employee, without paying the extra costs. Don't fall for their trap - you are worth your time, and it does not matter where you live. If you decide to move somewhere expensive, that's on you - if you decide to move somewhere cheaper, that's on you. The company should not care if they do not need you physically located at their site.

You can offer a small discount, simply because you know you will be getting paid for two full days, but I would only do it if they are a good client for you, and constantly bring you work. So, I would say 450 Euro (Canadian, don't have the Euro symbol on my keyboard) per day, with the promise you'll be available for them, as requested.

Ensure that when you make up the contract, you include a lunch break or coffee break, whether paid or unpaid, where you can be undisturbed for non-emergency work. There's nothing like having to work straight 8 hours days for a couple weeks with no break until you're off. Include the hours that you will be available, and ensure they understand that completely (i.e. have them initial that paragraph on your contract or SoW).

If you drop your price for them, you are selling yourself short. They should be paying you your rate because YOU are the expert in your field. Your rate should increase as time goes on and you get more experience, depending on the market, but that's a story for another time. Having said this, ensure you ARE the expert, and be fair.

Answer 2

Offer a discount only if they will PREPAY. You'll be in a crappy mess to offer discount, tie up two days a week, and then have to fight to get payment when it's time to invoice. You can't get the time back. Turn the request for a discount into an advantage for yourself, and not just an advantage for them.

Keep the same standard rate. Maybe discount 10%, 5% if prepaid. Don't worry about the guys overseas.

Answer 3

I've been contracting/consulting/freelancing since 1994 (and like you, also Irish). I apply discounts when the relationship is long term, and I can get more expensive when it is short term. It's no different if you go to cash and carry to buy beer, discounts are applied to bulk.

Are they offering you any contract?

You might have heard of the zero hours contracts in the UK? Basically you sit by the phone for your bar/restaurant to call you to come in to work. You are not permitted to work for others either. Legally, its considered that you are employed even though you might get less than 16hours a months work, or they might ask you to come in two hours a week. Your client appears to be offering you a zero hours contract whereby you must be available to them at a moments notice, and they don't have to pay for this facility.

I suggest they create a purchase order for 26 days, on provision that they will require you two days per week for the next 13 weeks (6 months). Define the work day clearly (8hour day for example, monday to friday). They pay in advance, and the credits they pay for expire if not used when the six months period completes. If you appreciate this type of working relationship, then consider a discount (10%, certainly not more - your 25% is too generous).

They are in business - they have expenses. So have you. Both of you are in this for profit, not charity. If you do not value your time, don't expect them to. What they are asking is entirely to their benefit, and it costs you (you sit by the phone and they may or may not call you, which could cost you work with others).

Find a compromise - you are obviously good at what you do otherwise they would willingly near shore the work to someone else. You might value your relationship with them, but do not under estimate your value to them!

Best of luck!