A case for retainer fees

When clients look to cut marketing costs, they often ask their agency to move from a monthly retainer to hourly or per-project billing, but this method is not one-size-fits-all.

When clients look to cut marketing costs, they often ask their agency to move from a monthly retainer to hourly or per-project billing, but this method is not one-size-fits-all.

While hourly or project fees work well in some situations, in many cases, they will actually end up costing the client more money.

Project fees work best when a campaign has a definitive end that is within a few weeks or months. Events typically fall into this category. Pre-planning, execution, and post-event follow-up can all be marked on a calendar with a clear start and end date.

While project or hourly fees are occasionally appropriate, we typically encourage our clients to work with us on a monthly retainer because it benefits both sides of the arrangement. Here's why:

  • A retainer encourages long-term, strategic thinking by both the agency and the client. Neither party is willing to embark on a long-term campaign if the relationship isn't guaranteed for more than a few months.
  • A retainer gives the client piece of mind that they will not unexpectedly see an astronomical bill for services, particularly at the beginning of a client/agency relationship, when the time requirements are greater.
  • A retainer guarantees a consistent effort by a dedicated agency team and ensures that appropriate manpower will be given to the account each month.
  • A retainer protects the client by eliminating potential agency conflicts of interest. With a retainer, the client has the right to expect that the agency will not accept work from a direct competitor.
  • From an agency perspective, a retainer guarantees a baseline of income each month.

There are several ways a retainer can be executed, including a hybrid version, in which an agreed upon number of hours per month is reached before the agency begins to bill hourly. We find that the hybrid version works for clients who are not completely comfortable with a straight monthly retainer. It also works well when the amount of work each month fluctuates greatly.

Per-project clients should still be considered, as they have the potential to turn into retainer clients down the line. However, I always recommend encouraging potential clients to consider a monthly retainer because this relationship tends to produce strategic, long-term results that support the objectives of the company, rather than a series of "one and done" tactics.

At the end of the day, a retainer allows the client and agency to develop and execute a solid campaign without worrying about counting the hours.

Jessica Sharp is co-founder and principal of Maven Communications.

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