Setting Up a Retainer Payment System If you have clients who use your services on a regular basis, find out more about the benefits of having them pay by retainer.

By Paul and Sarah Edwards

Opinions expressed by Entrepreneur contributors are their own.

Q: Recently one of my good clients trimmed my consulting work to a minimum but is still expecting me to charge the same rate. I'd like to establish a retainer or non-refundable fee instead. Do you have any suggestions about how to go about doing this?

A: Working on retainer with clients offers homebased business owners something close to duplicating the regularity and security of a paycheck. With a retainer, you agree to be on call for a specified number of hours for an agreed-upon monthly fee. Normally the retainer is paid in full, in advance or periodically on a payment schedule, such as monthly, quarterly or annually, but is generally made in advance of your work. Think of the retainer as operating like a "draw": If the client doesn't use all the time you've allotted, they lose it.

Since your client will have prepaid you for your time up to a certain amount, you need to make provision in your retainer agreement for periods when your client uses more than the time you've sold them in advance. Then you want to negotiate to bill them for the extra time you've spent rather than carrying it over to another period.

Usually the retainer involves a quantity discount that's offset by the security of knowing you'll have a steady income. This is the carrot to the client, but some consultants whose time is in high demand take an opposite position: Committing their time in advance commands a premium above their normal rate. Obviously, this involves your impressing the client with your unique abilities, how well you know your client's special needs, the competitiveness of the market and the prestige you have.

Since your situation involves a client who's been cutting back your time, you need to think of how you can "incentivize" this client. Maybe it's with a price break or perhaps you can add some special service, such as providing content your client will value, such as current information from your field that's relevant to the client or special insights you provide in the form of a client newsletter or bulletin.

Client attrition is something that's particularly important for consultants to think about because clients usually think of consulting services as a temporary expenditure, not an ongoing commitment. So even with retainer business, you need to continue marketing for new business.


Paul and Sarah Edwards are the authors of several homebased business books, including Working From Home. Their latest book is Why Aren't You Your Own Boss?

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

After a 12-Year-Old's Side Hustle Made Over $4,000 in 1 Day, He and His Dad Grew the Business to Nearly $50,000 a Month: 'It Takes Commitment'

Madden Forrest and his father, Steven, turned their passion for football into a lucrative business.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

Here Are the 10 Highest-Paying Jobs For New Graduates With a Bachelor's Degree — and They All Start at Six Figures

According to a new report from Resume Genius, finding a high-paying job as a new grad is possible, even in this market.

Business Solutions

Streamline Your Workflow With This $30 Microsoft Office Professional Plus 2019 License

Outfit your PC with seven helpful apps thanks to this Microsoft Office Professional Plus 2019 for Windows license.

Side Hustle

Use This AI-Powered Platform to Turn Your Side Hustle into a Scalable Business

Turn a side hustle into something sustainable with Sellful's ERP White Label plan.

Business News

10 Surprising and Inspiring Quotes From Brian Wilson, the Genius Behind The Beach Boys' 'Pet Sounds'

The Beach Boys' Brian Wilson died this week at age 82, but his music is still blowing minds.