The dirty truth: I have an astronomical amount of debt. I have debt from student loans taken out during my undergraduate and graduate years. I have credit card debt and, although minor, a couple of IOUs to close friends. The fact of the matter is, I am only 30. I want to end the year debt-free. In order to do this with my freelance career, I have been working to gain more regular clients.
It’s been great and I am slowly chipping away at my debt. But a friend of mine recently educated me on her freelance career and the notion of charging people retainers. Don’t get me wrong, I’ve heard of retainers before. But I wasn’t aware that it was a thing in journalism.
If you write a story for someone, how can you charge a retainer? If you do social media work for a brand, what would the retainer fee be? If you only work contract base, is that when it’s best to charge someone a retainer fee? These are the questions that entered my head. In case you are interested in getting involved in retainer work, I have done the research for you.
Below, discover the 411 on retainers: What they are, what to charge, and what factors go into it.
What is a retainer fee?
Think of it as an advance. You’d essentially discuss with a client their down payment for your services. This fee, typically paid at the beginning of the contract, covers the initial expenses of the services. Really, it’s the upfront costs before the service is actually performed. It is basically a way for a freelancer to ensure they will receive payment for their services.
There is a chance you can charge more, based on how long the scope of work takes you. However, it’s important to have the general terms penned in the beginning, then include a clause stating it’s “subject to change.”
How does charging retainer fees work for freelancers?
Present your retainer agreement to the client. A helpful tip when coming up with your rate: Most retainers are a monthly fee. To calculate it, determine your hourly rate and how many hours you’ll allocate to the project a month. Once you have this number, it’s a good rule of thumb to add in 20% or so for taxes.
After you share your fee with the client, wait for approval. The written agreement should include:
- Retainer fee amount
- Additional costs that could accrue
- How often you’ll get paid
An example would be a $4,000 retainer fee, with potential for an extra $1-2K depending on hours spent, to be paid every 7th of the month.
What are the benefits of a retainer fee for a freelancer?
It’s great for freelancers because it’ll let you know if the client means business. If they agree to pay you upfront, they will most likely keep their word for payment. Retainer fees, since it tends to be a lot of money upfront, helps build trust between both parties. And on the client side, it helps them budget their money.
There are a couple different types of retainers: General, retaining, and special.
A general retainer is requested for a specific time, rather than a service or project. Whereas, a retaining fee is highly based on the amount of money paid to you by the client. Lastly, a special retainer is a flat fee charged for a specific service.
Now that you know the basics, tune in next week to learn how to actually build a retainer.