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Retainer Fees and/or Support Agreements

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I am interested in establishing a retainer fee program for my services. Is this something that is wide spread or is it far fetched? If it is something that is used, would someone be willing to share their experiences and written agreements? I want to do this right to protect myself from getting clobbered but I’d also like to protect the client’s investment by showing them what I will do for this fee.

Your help is greatly appreciated.

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Retainer Fees and/or Support Agreements

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Retainer Fees and/or Support Agreements

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My thought on retainers, is what benefit will this arrangement provide for your customers?

And, how will this be different than if they just called you, or any other service provider, on an “as needed” basis?

Chas

Retainer Fees and/or Support Agreements

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Retainer Fees and/or Support Agreements

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Depending on the services required by the client I have set up contracts with monthly retainer fees, but it will depend on what they want/need as compared to what you can provide.
For example, I put an inventory management database together for a manufacturing company that recieved its shipments between 2:30 and 6:30 AM. I told them that they only way I could be ‘on call’ during those hours was with a monthly service contract.

Retainer Fees and/or Support Agreements

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Retainer Fees and/or Support Agreements

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I have also been putting together a retainer porject for some of my clients
so that I can balance the needs of my client with my need to pay the bills this is what I have done:

-reviewed my billing over the past 4 months
-taken an average of $ billed to a particular client
this is now a baseline for me
-take the number of computers, peripherals and network hardware and divide that into baseline

this number ends up being how much I get paid per incident if one piece of equipment goes down

then I decide if i cna live with that and if so i bump the avg cost up 10% and take it to the client.

then i let the client talk me down or i offer him 10% off because he is such a good client and he goes away happy.

now this only works for me because most of my clients have very simple networks and pretty standard pc’s nothing fancy or challenging. i have only had to eat my own time twice undewr a retainer but the steady flow of money from it justified it in the long run. I have also popped in toward the end of the month and done som simple maintenance if i havent been in all monht just os they feel like they are getting their moneys worth. hope it helps!

Retainer Fees and/or Support Agreements

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Retainer Fees and/or Support Agreements

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The Retainer fee (& success) depends on the following factors: the clients requirements, skills you have, the competition and of course the quality of your proposal and presentation. I would suggest you to see past archives at techrepublic for standard templates, agreements and formats and some very good articles and templates. They have done an excellent job at compliation and still if you have unanswered questions, please email me at oics@aoberai.com or anil@aoberai.com Best Regards OICS Consultancy

Retainer Fees and/or Support Agreements

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Poster rated this answer

Retainer Fees and/or Support Agreements

In reply to Retainer Fees and/or Support Agreements

The Retainer fee (& success) depends on the following factors: the clients requirements, skills you have, the competition and of course the quality of your proposal and presentation. I would suggest you to see past archives at techrepublic for standard templates, agreements and formats and some very good articles and templates. They have done an excellent job at compliation and still if you have unanswered questions, please email me at anil@aoberai.com Best Regards OICS Consultancy

Retainer Fees and/or Support Agreements

In reply to Retainer Fees and/or Support Agreements

Poster rated this answer

Retainer Fees and/or Support Agreements

In reply to Retainer Fees and/or Support Agreements

Remember that a retainer is a liability on your financials. This shouldn’t deter you from developing a retainer policy. If you borrow from the law practice, a retainer is a fee that guarantees that you will be available for the client though X duration of time.
If used, you should prorate the cost of service throughout the life of your retained guarantee. Then when you deliver, use a portion of the retainer to offset the delivery cost. I would keep a balance of the retainer throughout the time duration as an inducement for future work. But, again remember that the retainer balance on your balance sheet is a liability (yes it is also an asset in your bank account), and not operating income until it is recognized by delivery.
Another good point mentioned previously is learn what your competition is doing in this area. You dont want to be the only one with a retainer structure.
And like the rest of the answers, future work depends on your relationship with your client and the quality of your delivery.
If you feel assured you will get called back, and that you can claim an upfront fee from the client, then this alternative puts money in your bank (asset), but is is offset by the corresponding liability (debt).
As far as templates, search this website. A retainer fee contingency clause we place on the contractual agreement.

Retainer Fees and/or Support Agreements

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Retainer Fees and/or Support Agreements

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Obviously the services you provide to your clients are the same regardless of whether they are under a retainer or not, so the benefit to them is a guaranteed level of service at a known cost. The benefit to you is also obvious – dependable regular income.
In my past arrangements, I used a scale of support coverages based on the included quantity of support hours, and the expected/guaranteed response times for emergency support. Then I would offer discounts to my normal rate based on thenumber of hours of coverage the client desired; the more hours of coverage included, the better the discount.
Limit the choices to keep it simple – for you and the client. For example, I would generally propose two plans: Plan 1 for 20 hrs of support and promised response times of 24 hrs (normal) and 8 hrs (emergencies); Plan 2 for 40 hrs of support and response times of 8 hrs (n) and 4 hrs (e). Plan 1 offers the client a rate discount of 10 percent, Plan 2 a discount of 20 percent.
The retainer fee would be based on the support hour quantity chosen and my regular rate, less the discount. So, at a regular rate of $100/hr, the retainers for plans 1 and 2 would be $1800 and $3200, respectively. Any support in excess of the set quantity of hours would be at my regular rate.
These numbers are all for example purposes only, but you get the general idea. Also, even though the response times are not figured into the math, they are still part of the equation. A guaranteed response time can help sweeten the deal with the client. When multiple clients are involved, however, be careful to offer response times on which you can deliver.
Sell your retainer plan(s) to your client(s) by stressing the benefits to them – the same (presumably) great service at a discount, with promised response times when necessary. Hope this helps.

Retainer Fees and/or Support Agreements

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Retainer Fees and/or Support Agreements

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I believe that Support Agreements are a good way to build strong relationships with your clients. You will see them on a regular basis, as opposed to only when things are down. You also have the opportunity to plan for future equipment and services upgrades. The more you see the client the more influence you will have on them. Make sure that you can perform what you say you are going to do.

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