Ranetta wrote to ask:
I know you’re a fan of the retainer model. But my coach says what’s smarter is to bill at the end of the month, but require a minimum number of hours. That way you get the best of the retainer idea, without having to deal with overage hours. She also says I should do as much work as a client can give me (even if it’s more than I want to do, because it will make the client happy and the client will stay with me longer that way). What’s your take on that?
Great questions! Today, let me tackle the idea of getting paid in arrears (at month end, after the work has been done), rather than in advance (retainer). I’ll do a follow-up post on the other question.
- My biggest reasons for being a fan of being paid on retainer are:We pay for most things in advance. Why shouldn’t services be pre-paid?
- You can’t get stiffed, or even get in hot water due to a client’s late payment (because I also advocate shutting down work if the invoice isn’t paid on time). If a client doesn’t pay a retainer invoice, no work happens, and you’re not out money for work performed. If a client doesn’t pay an invoice issued at the end of a month of work, you’re out a bundle.
- You know what you’re agreeing to (hours-wise), and can see how a client and her needs would fit into your practice before agreeing to work with her.
- You can normalize your schedule, which allows you to have more life in your life.
- For the people pleasers reading this, it’s far easier to cap availability with a retainer,than to try to say no to a request for more time when you’re billing in arrears.
In my view, the difference is sanity vs. insanity. I’m here to help people have solid businesses that contribute to their having high-quality lives. And for me, that means running a “sane” business, where things are normalized and systematized, where you know what to expect, and where you’re not always having to jump to the beat of someone else’s drum.
Retainer helps you create that sanity. Billing at the end of the month doesn’t because it just can’t—there’s no way for you to know what’s coming, or what you should count on. Retainer also reduces drama, because it tells a client what you can give, and doesn’t leave her thinking she can get more whenever she needs it. Having a “minimum” doesn’t really say the same thing to a client, and, in fact, can let her think she can have as much of your time as she needs when she needs it.
Having a sane practice involves having higher standards. And I’m always going to stand for anything that calls you to have higher standards because higher standards lead to a smarter, more successful business.
