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Tailoring Client Relationships: Retainer or Project-Based Model for Optimal Results

Mike Kulakov, February 23, 2024
retainer or project-based model – which one to choose for a company and an agency?

When a company is overwhelmed with projects and lacks enough resources, it’s time to consider working with an agency. But finding an appropriate agency and figuring out whether to work on a retainer model or a project-based model is quite challenging.

That is why we came up with this article to help you find the difference between these two models and in the end, you can easily determine which is right for your company or agency. So, keep reading!

What Is a Retainer Model?

A retainer model refers to an agreement between an agency and a company for a specified amount of time (usually 18 months) where a company pays a fixed rate every month to the agency for a certain amount of work carried out.


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Retainer Model for an Agency

Every project comes up with a specific timeline. They have the start and the end. However, there are some projects that can have the element of continuity or keep evolving. There can be a broad range of services and deliverables which can be fulfilled by your dedicated team members. In such a scenario, it is best to go with a retainer model.  

However, here are some pros and cons of the retainer model for an agency:

👍 Pros of working on a retainer model:

  • Easy workflow: In a retainer model, since your client agrees to work with you on a monthly basis, you can easily communicate with them to discuss the project. This will help you to gain a clear picture of what your client wants and by end of each month, you can deliver the expected outcome. This way, it’s easier to plan and execute the work with satisfaction.
  • Work assurance: Since the retainer model is for long-term projects, you can be assured of being occupied for the agreed duration or more (if you provide better service). You need not require to  pitch multiple companies to sustain your business.
  • Good relationship: By working together each month, you’ll be able to understand what their exact goal is. The more satisfied your client is the more possibility of a long-term relationship. Moreover, they can easily recommend you to other clients as well.  
  • Recurring payments: Recurring payment is another perk of working in a retainer model as you’ll be paid a fixed fee every month.
  • Simplified proposal process: Instead of crafting a custom project-specific proposal, a retainer can be fairly standard and handled with the same, simple contract across all of your clients. This can cut out a massive amount of work.

🤔 Cons of working on a retainer model:

  • There’s no fixed amount of work: You cannot be sure how much work is coming your way. Sometimes it might be sufficient, sometimes less or sometimes more. Anyway, you should plan it better for all your hours to be used up so that your resources are utilized well.
  • The charge is less: The hourly rate in a retainer model is usually less compared to a project-based model. You do not quote thinking on how many specialists you’ll assign for your client. You quote on a flatter cost for the overall amount of work.
  • Project uncertainty: Despite working together each month, if there comes a time when the clients think they are not getting exact value for the money being spent, there’s a possibility they withdraw their projects. That is why you should plan beforehand how you’ll demonstrate your work and how each month’s investment is providing value.

Retainer Model for a Company

When your business has a clear vision for the future with enough potential to operate in long term, the retainer model can prove to be the right choice for you. Besides being being cost-efficient, the retainer model will allow you to have a dedicated agency who will work for you.

Here are some pros and cons of working in a retainer model for a company:

👍 Pros of working on a retainer model:

  • Fixed cost which is usually less expensive: One of the best advantages of working in a retainer model is that you do not need to negotiate each month for the work to be done. The price is fixed and usually less expensive since you agree to work on a long-term basis.
  • Dedicated agency: You can be assured to get your work done as you’ll have a dedicated agency working for you. They will invest their time to get a deep insight into your business for your goal completion and brand recognition. They will always want to continue working with you.

🤔 Cons of working on a retainer model:

  • Transparency can be an issue: It is somehow hard to track where your time and money are being spent. You do not have the overall control over how you manage people to work for you. However, if you are in good hands, you’ll easily be given a detailed report of the work done each month.
  • You might not have enough work: There might be chances where you do not have enough work for the agency. But still, you will need to pay them on monthly basis regardless of how much they’ve worked. That is why it is highly required for a company to have plenty of work planned beforehand.

What Is a Project-Based Model?

In a project-based model, as the name suggests, an agency will charge per project to the client. This is usually handy when you know your exact requirement and just need certain skill sets to help you complete the project. The pricing is quoted for the exact service you want and if you need some additional service, you’ll be charged separately for that.    

🕒 When to choose a project-based model?

A project-based model suits companies that have a one-off need with a small budget and short-term business goals best. For example, if you want to run a Facebook ad campaign but do not know how to set it up, you can find an agency that will help you with needed elements. You will be quoted a price and timeline for the same.

Due to numerous agencies in the market, it is hard to find that one trustworthy agency with whom you can work for the long term. Working on a project-based model can actually be an opportunity to test drive an agency so that you can later turn them into a retainer for added benefits.

Conclusion

Distinguish if you are looking for a one-off need to improvise a specific part of your business or you want to improvise the overall aspects of your company with a more profound approach for the long run? If you are clear on your business goals, then it’s easier for you to analyze which model works best for you. Regardless of the model you choose, it is very essential that you find the right agency to work within that model.

Mike Kulakov

Mike Kulakov

IT entrepreneur, executive and a former engineer. Responsible for company growth as well as the team’s motivation. Big fan of playing tennis, snowboarding, traveling, reading books, and (of course) I live and breathe our product.