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I am a developer / designer, and I'm interested in establishing a retainer position.

How do you structure a retainer arrangement?

Is a flat monthly rate preferred? A client will likely want to know how many hours they get out of that monthly flat rate. Again, we are back to the hourly rate. How do you deal with this?

Do you put a cap on the hours in that month, or charge an 'overage' fee for going over that limit? Do you use a contract, and is there up-front payment involved?

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A retainer is a fee payable in advance for ensuring your availability to serve a client, and comes with a service level agreement.

For example the agreement should include:

  • Duration (inc termination provisions)
  • What it includes... usually the first X hours
  • What it doesn't include...
  • Response times, both in which you will respond, as well as by which you will respond

Any time (or tasks) spent over and above the agreed X is billable, as are expenses incurred - both usually in arrears.

I would expect that the retainer carries a premium over what it covers - after all, they are in effect paying for you to be "on call"

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    Great answer! But to the OP: Be aware of what it means to be on call! – Canadian Luke REINSTATE MONICA Jul 27 '13 at 23:33
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    Agree, CL - response times should include the hours in which you respond, as well as the time by which you respond - unless you are truely offering a 24/7 service! Answer updated to include this observation. – Andrew Jul 28 '13 at 12:42
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I'd recommend structuring the retainer agreement such that you provide a certain amount of value to your client for a certain price per month (flat rate makes sense in this case). Forget about the hours - just focus on serving them and making them more money than they spend on you.

Here's an outstanding example of a retainer agreement that doesn't even look like one - it looks like a product, and that's what businesses want.

Your clients want to pay you for something and get some sort of predictable output from you. They don't care how many hours it takes you.

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