Increase Retainer Profitability Using Assets
One way of selling retainers to clients is what I call the “cell phone plan retainer”: A client pays you $X,XXX dollars a month, and you work for up to XX hours that month. In effect, you are pre-selling a bank of hours. This approach comes with tradeoffs: You get recurring revenue, and your client gets a fixed expense.
However, clients have a habit of making sure they use every single minute less they feel screwed, and you haven’t truly escaped the trappings of hourly billing.
One way you can transition out of this is to start offering “hours plus” retainers. For a price, you deliver XX hours, plus something else of value.
Example: Stock Photos
Let’s say your clients occasionally need stock photography. Good photography isn’t cheap. These wolves cost $249. Your client might look at you like that if you put that on a retainer invoice. And that’s a big cost that you shouldn’t just eat yourself.
Adobe offers a more reasonable option: subscriptions starting at $29.99. This expense raises another problem:
How Do You Spread The Expense Across Multiple Clients?
Let’s say that your clients need around five images a month, and the 40 images/month plan will always meet your needs. It’d be unethical to bill one client the expense, and let the rest gain from it. It’d also be unethical to charge the subscription as an expense to multiple clients:
Solution: Make it Part of Your Offering, Increasing Your Value and Profitability
Here’s your new retainer pitch:
“For $X,XXX dollars a month you get up to XX hours of my time plus unlimited stock photos.”
Your price should be higher for the type of engagement. Offering something unlimited may scare you, but in our example, you can upgrade to the $199 plan for 750, which is 150x your normal volume, and it’s only $0.99/image after that you have a good fail safe.
The unlimited offering means you aren’t just selling stock photos anymore, you’re selling freedom from ever worrying about how many photos to use or how much they cost.
That’s worth at least $100 to any discerning buyer. And it’s more than the subscription. And it gives you an opportunity to make a small step away from hourly billing and increase your profitability.