When it comes to web development work, there are several challenges faced by both clients and freelancers. The two most important concerns are trust and communication. As someone who works in web development, I well understand clients desire to understand what they’re getting for their money. I have to balance that with my company’s desire to ensure that we get paid.
At a certain point in our life as a company, this conflict became a serious pain point for everyone involved, and we decided to do things differently. Traditionally, we’d charge clients 50% deposit up front and the remaining 50% when the project was completed.
The problem with 50% deposits
This didn’t work for many reasons:
- For starters, clients paid half and were unsure of what they would get for that deposit.
- Secondly, we were often frustrated at the end of the process when we’d already worked more than we’d been paid but our contract stipulated that the final payment was not due until launch.
- We still had to pay our staff no matter how long the client took to get materials to us, for example, or if the budget went over.
We looked at various models and ultimately agreed it was time to switch to a retainer approach. Here’s why we do it, how it helped us be a better web development company and how it helps our clients better understand the web development process. We believe our current payment model addresses the core trust and communication issues in an optimal way.
Using a client retainer in #webdev can help you manage expectations every step of the way. #softwaredevelopment
- Clients understand what they’re getting, every step of the way
To begin with, we settle on a monthly retainer amount based on the overall budget scope. For example if a project budget is 20,000 for a 6 month project, we’d set up a retainer payment of 3,300 (more or less) per month until the project was completed.
We’ve received feedback from clients that this is really helpful, specifically because they see what they get for their money and the completed tasks every few weeks. They know what their monthly burn will be, and can budget for it. We’ve found that software development works best when you bite off smaller chunks. This approach encourages success.
Note: We not only charge a monthly retainer, but we send a monthly invoice showing the previous month’s detailed line items along with each retainer invoice.
2. The opportunity to tweak deliverables and expectations
Although we always start with a clearly outlined scope of work within our contract, the nature of this business is that directions and priorities tend to change along the way. Building software is often like deciding to build a car, and realizing what you really needed all along was an ATV, or a motor home. Or like expecting you’ll just be fixing a hose in your engine, then finding that a fixed hose increased the pressure to the radiator, which then blew a leak. You can’t always know what’s going to happen until you actually get under the hood.
With a retainer, we can review each month’s budget, completed tasks and remaining tasks. We can make changes and adapt as needed. This is especially helpful for tech startup projects going from idea to MVP. Priorities change.
3. The opportunity set smaller goals, to deliver them and be paid each step of the way
(or Working against money vs worrying it might not be there)
For most freelancers, the challenge of making sure you receive payments for your work is part of the job stress. This challenge is exacerbated when there aren’t clear deliverables and expectations. By using a retainer, we make sure that we are receiving payments for the work we are doing in close to real time. This motivates us to keep going without worrying about using up the 50% deposit and then working without assurance of receiving a final deposit payment. It also protects us from going long periods without any payment, and protects clients from having to pay large chunks all at once.
- Payment plan for clients keep costs manageable
Many clients like being able to make monthly installment payments towards their web development project. We recommend that our clients see this as in investment in their business, and the retainers as a payment plan. For clients to be able to pay a bit at a time, it is not as overwhelming overwhelming as an initial 50% deposit.
5. Keeps everyone accountable & in the know as to site progress
From a software development agency perspective, we appreciate and value the level of accountability a client retainer gives us. Since we’re sending out monthly invoices out monthly retainer invoices and completed tasks, we’re able to stay on top of things and think about what the client would like to see crossed off the list. This accountability has been invaluable to helping us grow as a company.
6. Allows for clearer communication
We want our clients to tell us if there’s a problem, and we want them to do it early on in the process before launch. We’ve found that using a monthly retainer, coupled with smaller, well-defined deliverables, allows for more transparency. Everyone can see the project status at any time. By giving this information to our clients as often as possible, it’s opened up many more opportunities for them to tell us what’s working and what’s not working. It gives us the chance to do the same in return, and encourages all of us to get and stay on the same track before anybody gets too far off course.
7. Working against money vs worrying it won’t be there
I’ve mentioned this earlier, but mentioning it again is important. Many freelancers worry about getting paid from clients and this worry is real. It’s about trust. Having smaller, more frequent payments and deliverables allows both sides to see they are getting what they need at regular intervals and thus build trust. Or, if it’s not working out, to cut bait with less lost on both sides.
We’ve changed how we bill clients, and doing so has really upped our game when it comes to billing, communication and staying on course with completing projects. Instituting a client retainer model has many benefits for both the web development agency and the client. From allowing clients to pay off the balance monthly to giving everyone involved a clear idea of the project status, using a monthly retainer is something we use with our clients and we’re really happy with the results.
Want to work with us? Contact us and let’s start something.