How to set up a retainer agreement

Using a retainer services agreement is the perfect solution for freelancers, consultants, and agencies looking for a steady stream of work. They provide a win-win situation where both parties have a clear understanding of expectations, timelines, and deliverables.

However, setting up a retainer agreement can seem daunting for first-timers, which is why we’re going to walk you through how to set up a retainer services agreement and show you how to get it signed for free electronically.

But first—what is a retainer and how does a retainer agreement work?

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What is a retainer agreement?

A retainer agreement is a contract between a client and a service provider, such as a freelancer, consultant, or agency, in which the business pays the client a predetermined fee in exchange for ongoing work or services.

The purpose of a retainer agreement is to secure a steady flow of work for the service provider and ensure that the client has access to their services when they need them. In a retainer services agreement, the scope of work, timelines, and deliverables are usually outlined in detail, and payment is usually made on a regular basis, such as monthly, quarterly, or annually.

Why use a retainer agreement?

A retainer agreement gives you a set amount of work and income for the period it covers. So, instead of doing a single project for a client every now and then and being paid sporadically, locking in a retainer means you have a clearer idea of how much work and pay to expect within a set time.

A retainer also benefits your client because it shows them that you're making a commitment to them. You're legally promising to be available and provide them with a predictable amount of work for a predictable amount of pay. This can be a huge relief, as it makes it easier for the client to stay organized and plan effectively when they know they have someone to rely on, making them more likely to give you more business in the future.

Plus, putting the retainer agreement in writing and using a legally binding eSignature is a good way to build trust because it signals to clients that your services are professional and legitimate.

How to set up a retainer agreement

Before you start to draft up the retainer contract, you and your client should be clear on what you will each provide and receive. Whether it’s via a meeting or email, be sure to discuss the following terms and conditions and consult with an attorney if you need more guidance.

Services and deliverables

Determine if you’ll provide a service for a certain number of hours or a set amount of deliverables within each pay period. For example, if you’re a freelance graphic designer, you can offer your client up to 10 hours of work a month. Or if you’ve been contracted as a writer, you can provide six blog posts every quarter. Additionally, define how deliverables will be delivered—this could be by mail, email, in-person, etc.

Timelines and availability

Determine when your deliverables will be due or when you will be available to provide your service. These can be during set times, dates, hours, or you can include in the retainer agreement that timelines will be discussed between both parties on an ongoing basis if the timelines are flexible.

Payment and fees

One way to decide how much to charge is to multiply your hourly rate by the number of hours you’ll dedicate to the agreement. But you can also sweeten the deal for your client by offering a discount for committing to the retainer contract. 10-15% off is a decent amount, but make sure your discount is reasonable for the amount of work and time you’re putting in. From there, establish how often the fee will be paid, whether that’s monthly, quarterly, or annually, and exactly when, such as the first day of the month.

You should also determine what happens if payment is late. For example, you may charge a certain amount or percentage for each day past the due date.

Lastly, define what happens if the client doesn’t use all of the hours they’ve paid for. Let’s say you give your client 12 hours every month, but they only use up eight. You could do one of three things: have the remaining four hours roll over to the next month, only roll over a predetermined amount of hours, or not allow any hours to be rolled over.

Ownership

Decide on who has legal ownership over deliverables and to what capacity. For instance, if you’re a freelance writer, you can decide that any blog posts you deliver to your client fully belong to them for any use but it’s agreed that you’ll receive attribution as an author on each post.

Alternatively, your client may decide they want to name their own staff as authors and not allow you to claim any part of the work. You should also define who owns the intellectual property when the agreement ends.

Termination

If you’re planning on setting up an ongoing retainer services agreement without a definite end date, provide terms for how both parties can exit the agreement. For example, the condition could allow either party to end the agreement for any reason provided there’s a 30-day notice.

Looking for a retainer agreement to use?

Formswift from Dropbox has created a free retainer contract template that you can customize fit whatever agreement you want to make.

Sign your retainer agreement with Dropbox Sign

Once you’re finished drafting your retainer agreement, it’s time for both you and your client to sign.

With Dropbox Sign, you can easily upload a retainer agreement, sign it, and send it off to your client for signature in just a few minutes. Then, once your client has signed, the completed agreement will be stored in your Dropbox Sign account for you to access or electronically send to your client at any time.