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Jerri G

Retainer Rates

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I need some help in understanding exactly how retainers work, i.e set-up, pricing, if the client does not use all of the hours what happens to the money left over? Does the hours and/or money ge rolled over into the next month? :unsure:

 

 

Thank you for any input

 

Jerri Goranson

Virtual Office Visions

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Hi Jerri,

 

Retainers are a block of time (5, 10, 20 hours, etc) that a client will purchase before the start of a month guaranteeing your availability to complete that many hours worth of work. Typically, VAs will give a discounted hourly rate for retainers as opposed to a per-project/non-retainer rate. All of my clients are required to use their retained time in the same month.

 

Warmly,

 

Donna

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Hi Jerri,

 

You will want to determine your own rate based on what expenses/overhead you have, what you would like your profit margin to be, how many hours/month you want to work, etc. It's not something someone can set for you. It certainly requires some number crunching. And remember to always consider the "value" that folks will receive in working with you as you set your rates. They should pay for the value they receive, not just for your time.

 

I don't work by the hour any more, just in packages. But when I did work by the hour, my retainer rate was a $5/hr discount off my full rate.

 

Warmly,

 

Donna

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Donna,

 

I'm at that horrible "figuring out rates" stage LOL.. and I'm interested in your approach to going for packages only..do you think this works even from the get go or needs to be introduced as you did it, ie. hours initially then packages only?

 

rgds

 

darina

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Hi Darina,

 

Packages can work from the get-go yet I still encourage you to crunch the numbers so you're confident you're charging enough. You'll also want to track the time in the beginning to be certain you're on target with your pricing.

 

 

Warmly,

 

Donna

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The first thing you'll want to do is figure out your hourly rate because without that you have no baseline to start figuring out your retainer prices. There is a excel spreadsheet lurking around the forum that Naomi did for us once that helps you with that...I'll have to search for the link (or maybe someone else knows where it is).

 

Once you figure out your hourly rate, putting together your retainer packages will be a lot simpler.

 

Example of how to set up your packages

 

  1. Prepaid hours (full hourly rate)
  2. 2 hour test run (full hourly rate or you could give a discount to entice them to try you out too! - One hour free??)
  3. 10 hours (10% discount)
  4. 25 hours (15% discount)
  5. 40 hours (20-25% discount)

 

Make sure they pay up front for the retainer (that is why they get the discount so you don't have to chase after them at the end). As for rolling over the hours, I don't recommend it. I've done it once or twice before when there has been an odd event happen to prevent my client from using up the hours ie) death/sickness, etc.

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Hi Tawnya,

 

Thank you for the information. I now know to start with my rates first as you said and then set the retainer price. I think that I have the spreadsheet from Naomi, I will double check.

 

Thank you :D

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Wow, I can't believe it's been so long since I checked the forum! Wow. (Yeah, I know I said that twice.)

 

Anyway, moving on to the real subject...

 

Definitely figure out your "regular" rate first, then decide if you even think you can afford to give a discount and how much of a discount. Here's an excerpt from the information I send potential/new clients on how my rate structure is set up:

 

Standard Hourly Rate - $XX

 

Monthly Retainer Rates
*

5 – 9 hours – $XX / hour (no discount off standard hourly rate)

10–19 Hours per Month $XX.XX / hour (5% discount)

20+ Hours per Month $XX.XX / hour (10% discount)

 

* Unused hours do not roll over to the next month.

 

Retainer packages over 20 hours per month will be calculated at the 10% discounted rate.

 

Hours in excess of the retained hours will be billed at the standard hourly rate.

 

Rush jobs (completion needed sooner than two business days) will incur a 30% premium per job in addition to the time used/billed.

 

Retainers are due and payable by the first day of the month of service. (i.e. July 1st for services to be rendered in July.)

 

I know of others who give bigger discounts and some who don't give a discount at all for retainers. It's just what works for you and your business.

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Guest donnamarie

Thanks for all of these examples. They are a huge help!

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