The hourly vs. retainer pricing choice finally caught up with me

After losing out on a $3,000 project to a bigger agency last month because they offered a flat retainer, I had to decide: stick with hourly or switch to retainers for my small shop in Denver. I went with retainers for my top 5 clients and it seriously evened out my cash flow, but I'm worried I'm leaving money on the table when projects run short. Has anyone else made this switch and figured out how to handle the scope creep that comes with it?

3 comments

3 Comments

the_mary16d ago

Retainers are honestly just a way to make your clients feel like they're getting a deal while you eat the cost of your own time. You're basically betting against yourself by letting them lock in a flat rate when you have no idea if next month's workload will be light or heavy. Scope creep will destroy those profit margins faster than you can blink, and before you know it you're working 60 hour weeks for the same money you'd make billing 30 hours hourly. The bigger agencies can pull it off because they have junior staff to dump the overflow onto, but a small shop like yours gets stuck doing all the extra work yourself. Your cash flow might feel smoother now, but you're almost certainly leaving real money on the table every single month. Hourly pricing keeps the power where it belongs with you, not with the client who thinks they're buying unlimited access for a flat fee.

bennett.evan15d ago

You know, I used to be pretty pro-retainer (thought it was the only way to smooth out cash flow) but this actually flipped my thinking around. The part about betting against yourself really hit home because I've definitely had months where the workload doubled but the pay stayed the same. Scope creep is a killer and you're right, big shops can just shuffle work down to junior people but us small folks eat that time ourselves.

wyatt_mitchell2615d ago

Are you getting crushed by scope creep too? I feel like that's the part nobody warns you about with retainers, it just slowly eats up all your time until you're working nights for free.