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How to Set Up a Retainer Agreement: The Exact Steps to Earn More as a Freelancer

How to Set Up a Retainer Agreement

In a nutshell 🥜, a retainer agreement is a work-for-hire contract that pays on a regular schedule for expected work. Most retainers offer a small discount in exchange for the promise of reliable income. Learning how to set up a retainer agreement is one of the best ways to give yourself income security as a freelancer!

In this guide, we will explore:

By the end of this article, you will understand precisely how to set up a retainer agreement with your best clients.

Disclaimer: I am a freelance writer, not a lawyer. This should not be considered legal advice. If you are concerned about the details of your retainer agreement, please seek out advice from a legal professional.

Benefits of a retainer agreement

There are two main benefits to a retainer agreement:

  • Guaranteed income. A retainer gives you a regular pay schedule, providing a level of stability freelancers often lack. This makes it easier to pay your bills, enjoy your day-to-day life, and plan for the future.
  • More reliable clients. Companies willing to sign a retainer are more likely to pay on time, every time. A retainer agreement will also often scare away low-paying and/or unscrupulous clients.

A retainer can also help you earn more money over the long term. After all, if a client is already paying you, they’re not going to use someone else for the same service.

Who to target with a retainer agreement

who to target

A retainer agreement is a big commitment. You probably won’t convince a small company with a highly variable budget to sign one. Likewise, a company working with you for the first time will probably be hesitant to agree to a retainer.

The people who will agree to a retainer are the ones who already serve as your “bread and butter” clients. They already know you do good work. They’ve proven that they have the budget to pay for your services on a regular basis. They’re probably also the clients who are most pleasant to work with.

As a more specific example, if one client has hired you for $2,500 worth of work every month for three months in a row, you can consider pitching a $2,200/month retainer to them – more on the specifics a bit later.

Marius Vetrici
General Manager at WPRiders

“In the WordPress Monthly Retainer space, we found out there are three types of clients with different needs and, hence, different selling points:

a) Those who just need WordPress updates. They just need somebody who’s able to provide peace of mind when it comes to updating a complex e-commerce website with 30+ plugins.

b) Those who need updates and small tweaks here and there. They are very focused on the relationship with you; they are buying you, not your service, and hence nurturing this relationship is of utmost importance for this type of client.

c) Those who are developing large features or new products. They need more than just a freelancer; they need a team of people able to write Requirements Documents, develop, and design as well as test.”

How to set up a retainer agreement

The next thing to consider is how you’ll structure the agreement. Specifically, how you’ll structure your work offering.

There are three main ways to do this:

  • Hourly. Offer the client a specific number of hours of work per month. You also need to establish what happens to hours that are not used. For example, you might offer ten hours of work per month and be willing to carry up to two unused hours over to the next month.
  • By deliverable. Promise to deliver a set number of “products” or “services” per month. The agreement also spells out if additional work will be accepted and, if so, how that work will be priced.
  • For access. In some instances, a client might pay a monthly fee for access to your services. This serves as a base pay, and hourly fees are also charged. This is common practice for law firms, but most freelancers can’t get away with charging this way.

To increase the chances of your retainer being accepted, base the scope of work on what you’re already doing for the client.

Most retainer agreements are monthly, paid on the first or final day of each month. Some clients may be open to other payment schedules.

Figuring out what to charge

Once you’ve established the structure of the work you’re offering, it’s time to figure out how to price that work. The key here is to offer enough of a discount to make the retainer appealing without shortchanging yourself for your work. Often a discount of 10-15% works well.

At this point, you’re probably wondering how can you make more money by offering a discount?

Here’s the thing: every month, you spend a certain number of hours marketing your services to new clients. Retainer agreements allow you to reduce those hours, giving you more billable time. Or, alternately, more time to spend on your other passions.

Let’s take a quick look at how this might work:

A client hires you for $1,200 worth of work three months in a row. When they approach you about doing a fourth month of work, you offer them a monthly retainer. You agree to do the same amount of work for $1,000 paid on a specified date in advance of the work (such as the first or 15th of the month), with the option to continue on a month-to-month basis.

The $200-off is a notable discount for the client, and the cost to you is covered by the time saved on marketing. This makes the retainer a worthwhile deal for everyone.

You will also need to establish how extra work is paid for. There is a tendency here to offer a discount, but that can mean losing a lot of money if one month’s project goes significantly beyond the agreed-upon scope. Instead, charge your usual rate and offer to increase your retainer if you find yourself regularly going over the agreed-upon amount of work.

Length and cancellation

The next thing to consider when figuring out how to set up a retainer agreement is the length of agreement you want to go for. This will depend partially on the types of projects they tend to pay for. If their projects often take place over the course of two or three months, a three-month retainer makes inherent sense.

However, in most instances, the important thing here is your relationship with the client you’re pitching. The first time you pitch a retainer agreement to them, consider a month-to-month agreement that requires a two-week cancellation notice. This gives your client full control over how long they work with you.

Once you’ve had a client on retainer for a few months, consider pitching a longer agreement. You can wrap this into a bundle with extra work offerings if the client frequently requires work beyond what you originally agreed to. If you do this, make sure you still have an option for cancellation.

Handling vacations

Another thing you may want to consider in your agreements is outlined vacation time. For example, if you take two weeks off every December, you might want to specify that in your agreement. You might also choose to halve the retainer, and the amount of work you do, for that month each year to avoid cramming.

How to pitch your retainer agreement

how to pitch

Once you’ve figured out how to set up a retainer agreement, it’s time to pitch that agreement.

Your pitch email must contain the following information:

  • A reminder of your work together. This should emphasize the quality of your work and/or the client’s previous compliments of your work. You may also want to emphasize how much you’ve enjoyed working with this client.
  • The suggestion of a retainer. Your initial suggestion should focus on how the retainer agreement will benefit both you and the client. The details come in the next section.
  • An outline of your work offering. This is where you will specify what work you will offer and whether it will be structured as hourly work, deliverables, or payment for availability. This should also include some information on unclaimed work.
  • Your rate. Include both the price of your regular work commitment and information on how additional work will be priced.
  • The amount of time this contract is good for; as discussed above, it’s typically best to start with a month-to-month agreement.
  • How the agreement can be canceled. This will explain when and how the agreement can be terminated by either party. It may feel strange to include this information in your pitch, but knowing they have a way out can be the reassurance a client needs to agree.
  • How the client can move forward. Explain what the client should do if they want to sign on right away or if they have questions. Consider offering a meeting on Skype or Zoom to discuss the details of the agreement.

And remember to follow the basic rules of pitching: be polite, focus on how you can help your client, and make it easy for them to take action.

Want to see what this looks like? Here’s an example of how I might pitch a retainer agreement for my freelance writing business:

Hi (Name),

I'm pleased that you enjoyed my work on (project) and (project). I really enjoyed working on these projects and I would love to work with you more.

In fact, I would like to offer you a month-to-month retainer contract. This will ensure that I am available to complete the work you need each month and provide you with a small discount in return for your loyalty.

Based on the work you've requested in recent months, I would like to offer the following:

- (Number) words per month for (number) dollars, paid on the first of each month
- Words can be split between any number of articles
- Additional words will be available for (dollar amount) per word; extra assignments must be individually accepted
- Up to 2,000 words may be carried over by one month

This would be a month-to-month contract, with the ability for either party to give two weeks' cancellation notice at any time.

If you are interested in moving forward with this, I can send you a contract. If you have any questions, feel free to email them to me. We can also schedule a Skype meeting to discuss the retainer in more detail.

Let me know how you wish to proceed.

Thank you for your time,
(Name)
(Professional title)
(Website)
(Email address)

This email works because it is polite, direct, and filled with all the information the client needs to make a decision.

Final thoughts on how to set up a retainer agreement

Retainer agreements are one of the best ways to give yourself stability as a freelancer. You can set one up in a few steps:

  • ✅ Choose a high-paying client to target.
  • ✅ Use their recent work requests to determine how much work you’ll offer them on a monthly basis and what will happen to unclaimed work.
  • ✅ Establish a pricing structure, including the pricing for overflow work.
  • ✅ Specify the length of the contract.
  • ✅ Give both yourself and the client a way to cancel the retainer agreement if it doesn’t work out.
  • ✅ Pitch your client, taking care to explain exactly how the agreement will work, including how the agreement can be canceled.

Most importantly, remember that it isn’t always about knowing how to set up a retainer agreement in itself. Sometimes, clients will refuse for reasons you can’t predict. That shouldn’t dissuade you from pitching the next one.

What do you think about retainer agreements and their value? Are you going to be pitching this to one of your clients?

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