PeakStrategy

A retainer agreement is something you may want to consider in your practice.

a.         The main purpose of the retainer fee is to cause the consultant to be available to perform services whenever needed by the client.

b.        An additional fee is normally charged if the services provided by the consultant exceed a stipulated level.

c.         It is sometimes agreed that the retainer fee is an advance payment which is set off against the charges that would have been made using any of the other methods of compensation. A good retainer is one which is predictable. If you have no idea at the start of the month whether you will be spending five hours or five days with the client, you have a bad retainer.

A Time Retainer is one where you receive a set dollar amount each period (e.g., each month) for a predictable level of effort of service. Analysis of client financial statements might serve as a good example.

A Base Retainer is the one which you use if you are unable to determine in advance just how much service the client will require. An example: The client has claim to three days of your talent each and every month. You receive $4,500 in exchange. The client pays for the three days whether or not they are used. If more of your time is needed you get compensated at an agreed-to daily rate--say, $1500 per day.

An Availability Retainer is one which provides you with some measure of compensation for reducing your flexibility to make yourself available to the client in the event of a need. That is, the client is guaranteed that you will be available, if needed, for say, two days a month. In exchange, you receive a sum usually equal to 25-30 percent of the value of your time. If your daily rate is $2500, you might receive $10,000 per month just to be available. If you are used, you would either receive $2,500 plus $750, or just the $2,500, depending upon how your contract was written.

An Advanced Retainer is different than the above. It refers to the fact that you receive compensation prior to the delivery of your services. It is also called, by some, a start-up payment.