On retainer: the economics of retainers for editors and other professionals

I usually charge people by the project. But for some ongoing relationships, I charge a monthly retainer. While this arrangement is good for freelancers, clients need to think carefully about whether it’s appropriate for them.

How a retainer arrangement works

Here’s the mechanics of a retainer arrangement, or at the least the kind that I’ve done.

Let’s say you want to have me available for an ongoing series of projects. For example, you and your staff are writing blog posts every month, and you want me available to edit them. Or you’re running a PR campaign promoting your book and you’d like me available to participate in strategy meetings and to ghostwrite contributed articles for you. (I’ve done both of these.)

We agree on a fixed price per month, billed in advance, that will cover a fixed number of hours. At the end of the month, if you’ve used more hours than that, you pay for those. If you’ve used fewer, there’s no bill; you’ve just paid a little extra to have me available when you need me.

For example, suppose my hourly rate is $250 and you agree to a $1,000 retainer to cover four hours.

On September 1, I bill you for $1,000.

If you use 2 hours of my time in September, there’s no additional bill, but you paid $1,000 for only two hours of work.

If you use 6 hours, I send you an additional bill for $500 to cover the additional 2 hours.

Retainers are great . . . if a client regularly depends on a freelancer

Why would you undertake a retainer arrangement? Because it makes me, your freelance contractor, available to you when you need me.

As a freelancer, I find the regular payments that come from retainers to be very helpful. Freelance is a feast-or-famine type of business, and with a retainer, I know a certain amount of money — and a certain amount of work — is likely to come in from a given client.

As a result, I treat those clients well. I am instantly available when they need me. I turn work around quickly; their job goes to the front of the queue. And I develop an excellent understanding of what the client needs over time, which makes both of us more efficient.

For the client, retainer arrangements have pros and cons.

On the plus side, you get dependable access to a preferred resource on a preferred schedule. And your costs are more predictable.

Of course, the arrangement can be wasteful if you don’t use the resource. (If you consider the retainer to be like insurance, it may feel like less of a waste, but you are still paying for a resource that you don’t use in a give month.)

I find some clients put me on retainer as a promise to themselves. They know they ought to be using me more, to improve their writing or their staff’s. So my bills become a tangible reminder that they ought to be taking advantage of what I can do for them.

Retainers in book projects can help with slow clients

The biggest problem I have in book projects — editing and writing — is clients whose work slows to a crawl. I may have ample time available to work on editing or writing a chapter, but without the material available from the client, I can make no progress.

Such clients may go dark for three months, then expect me to move forward frantically as they approach a deadline. That’s tough on me, as I don’t have any insight into when the work is going to come in and how to fill in the fallow time with other projects. There’s also a financial hit, since I typically get paid on those projects when we pass a milestone (such as finishing a draft), and I can’t make progress toward that payoff without the client’s help.

One solution to this is a retainer arrangement, but this retainer is different. For example, let’s say I charge a $1,000 a month retainer on a book project. I send that bill at the start of every month, no matter whether the project is moving forward or not. Then, once we pass a milestone that would generate a bill, like the completion of a draft, I subtract the already paid retainer amounts from the invoice for that milestone.

This arrangement doesn’t cost the client anything extra — the total cost is the same as it would be without the retainer payments. But for me, the freelance talent, it’s helpful to know I’ll get paid while you’re occupied with other projects or dithering with writer’s block.

A retainer arrangement in a book project can effectively motivate clients to move forward, rather than pay me to sit around and wait.

If I ask you for a retainer on a book project, that’s my way of saying I’m not sure you’ll actually be able to make timely deliveries of what I need to work on to help you. If you don’t want to pay for me to sit idle, all you have to do is accept the retainer agreement, then deliver the work to me quickly and regularly. Go ahead, prove me wrong. I’d rather get paid for working.