Retainer fees for freelance software engineers - is this common practice, can I use this?


4

I have a relatively new business - I've recently been freelancing as a software engineer for 6 months, working from my own office for a couple of companies having contracted on site before for about the same time before that.

Much of the major work for my (very good) main client is complete now, and there seems to be the expectation that I will be available for telephone / email advice no matter how few hours of paid work are put my way on a week to week basis. I've been pretty busy tying up loose ends for a couple of weeks, so answering the odd question here and there hasn't been too much of a problem to attend to. If the work is thinning out to almost nothing though, I need to get myself working on other projects (the client is uncertain of when the next bulk of work will be required, as it depends on the money that the business is generating).

I'm thinking that this is what retainer fees are probably used for, even if it's more to give an inventive to the client to make a firm decision on if they need you or don't.

Are retainer fees common practice? I don't want to irritate my client but I need to take a position here so this situation doesn't damage my earnings.

How would you approach this - where might I find a template contract?!

Just looking for general advice really.

Contract Independent Contractor

asked Apr 26 '11 at 22:01
Blank
Bomb Defused
227 points

4 Answers


4

This is very common. There's several ways I have structured this in the past, including:

1) Pay as you go - send them an invoice every X weeks for the time spent.

2) Buy a set of support hours up front, and then use those until the expire. You could even give them a discount for pre-payment of these hours.

3) A monthly or yearly agreement where the hours expire after a certain amount of time. This may allow you to give them a lower rate if you know they won't always use all the hours each month.

4) A flat support amount per month covering as much as they want to use you. Use this with care, but it works in some situations.

Also, make you keep them up to date as you use hours, so there's no surprises. Sending somehting like a weekly status of hours used help this a lot.

Good luck!

answered Apr 26 '11 at 23:28
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Matthew Dorian
292 points
  • the point 2 is what I generally try to sell to clients. It gives cashflow, that you can invest (either in new projects or financially). – Sylvain Peyronnet 8 years ago

2

Yes, retainers to guarantee availability for support etc. are quite common.

After my old consulting company finished a major project, the client expected to do another one in a year or two, but wanted to be sure we'd be there for bug fixes and escalation tech support in the meantime.

A monthly retainer solved the problem quite nicely; we just had to avoid taking other projects that would conflict. Their monthly payment got them up to a certain number of hours a month, and past that they paid our normal hourly consulting rate.

answered Apr 27 '11 at 09:22
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Bob Murphy
2,614 points

2

Yes, I've successfully used a support contract -- mine stated that I'd do a certain maximum amount of hours work per month for a fixed fee. The fee roughly corresponded to my hourly rate for the maximum number of hours.

Some months my client didn't take me up on the whole number of hours per month, so as a gesture of goodwill I'd roll that over into a following month if demand required.

Once you have four or five customers working this way then this model can be quite lucrative. I've not got there myself, however!

answered Apr 26 '11 at 22:22
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Jeremy Mc Gee
371 points

1

You could call it a retainer or a support contract, either way it's basically the same. For simplicity, I would call it a support contract. That's more common than a retainer and perfectly acceptable.

In terms of a contract, you can probably use the same one you did for the original contract. Instead of a project, you put in support hours (or calls) at whatever rate you feel appropriate.

answered Apr 26 '11 at 22:10
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Jarie Bolander
11,421 points

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