How should I make my retainer contract fair for me and the client? How do retainer agreements usually work?

Question

Theyre kind of a big corporation with multiple brands. They had a full time offer for me but I said I can't do it since their office is too far so I opted for their part-time option. Now they have never done this so they are confused so I offered that I would be the one to do the contract and terms (which I think should be the right way since I wont be an employee for them).

For a full-time job, I ask for a monthly salary of $600-$700. I'm at peace with that range. But this is a "part-time" gig so I woudnt have their benefits, they wont pay for my tax, I wont have an office, etc. So how would I price this? For the full time, you expect they would give you unlimited work. For part-time, should i price it per output? Or just say "you can give me all the work you need but pay me $700 per month fixed" just like what a full-time job is set up.

But is that beneficial to me? Its not as great as a fulltime job where i have benefits and job security. So in this sense, should I be charging MORE? But also, a partime job means i wont need to clock-in 9-5oclock and go to the office every day. So in this argument, should i charge LESS? Really need your help guys. Have no idea how business works obviously and this is new to me.

Answer 1

Formulated an answer from comments....

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A Retainer is an agreement for a set amount of income for set amount of work.
X hrs a month for $X in return.
Anything more than Xhrs is invoiced above and beyond any retainer.

Retainers are not based on projects.... they are typically flat hourly structures. Full time employment generally means around 160 hrs per month (40hrs/week x 4 weeks). First thing is to determine how many hours you'll provide.. THEN put a price on those hours. Without a known list of projects to be completed, I can't see how you could format a retainer agreement based upon anything other than hours of work. There's a reason hours are the determining factor.

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The point of the retainer for the service provider, is that they are paid regardless of any percieved value-based work or amount of total work to be done.

It's a balance -- some months there will be work completed worth MORE than the the retainer amount. Some months there will be work completed worth LESS than the retainer amount. – Some months the client will receive MUCH more valuable work for the retainer fee, other months they'll pay more for less valuable work.

Example...

July you create 3 logos for them in 20 hrs... estimated worth, $500 each... $1500 total.

August, you post 15 social media items for them.. in 4 hrs... estimated worth $30 each, total $450.

Retainer amount $800 for 20 hours.

So in July, the client benefits more by getting an additional $700 of work...
In August you benefit more by get an additional $350 of income.

Meaning the client has still received $350 worth of work above and beyond what they've paid in the retainer for two months. In another slow month, you may balance the amounts, or be ahead.

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Retainers are about both parties understanding that in some months they will be PROVIDING more value than the other party. But in other months they will be RECEIVING more value than the other party. So, neither party should "freak out" because in any given month they feel they are providing more than the other party.

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Anecdotal example.....

I create monthly newsletters for a client. There are a total of 3 newsletters.They all use the exact same content and merely have different branding. Newsletter 1, 2 and 3.

I have a retainer of $600 a month for all 3 newsletters. Essentially $200 each. Now, the client is fully aware that for Newsletters 2 and 3 all I'm doing is copy/pasting Newsletter 1 content into a "shell" for 2 and 3 branding. This takes maybe 15 minutes.

However, the client is also aware that for Newsletter 1 I may spend several hours formatting the content initially. This is where I do photo searches, illustrations, image editing etc. Newsletter 1 is the bulk of the work.

So while at face value, Newsletters 2 and 3 are certainly not worth $200 based on the amount of effort they take -- Newsletter 1 is generally worth much more than $200 based upon the effort required.

So both parties - myself and the client - understand that I'm earning more for Newsletter 2 and 3 to compensate for my additional effort on Newsletter 1.

Answer 2

Unless you are Jeff Bezos, don't fool yourself in thinking about producing too much added value on your service. You are literally selling your time on this planet for money and the best way to quantify that is hourly, even if you would then communicate a flat rate per specific periods.

In a long-term involvement, an hourly rate can work for pretty much anything as long as the hourly rate covers both easy and hard work. So you would set an hourly rate not based on the quick jobs, but as a median between quick jobs and labour intensive jobs.

Then, with an hourly rate in mind, you evaluate your pricing per day, per week, per month and so on. Per month (X dollars) would be equivalent to a full-time job, while half of that would be equivalent to a part-time job (X/2 dollars).

Then take the X/2 part-time fee and factor in what you already mentioned, do the math applying the cost for organizing this in your country, then you should have a ballpark number to start from:

I woudn't have their benefits, they won't pay for my tax, I won't have an office.