Episode 65
How to price a client-friendly retainer
If you’re a coach, consultant or agency one way to be able to guarantee some steady income is to work on a retainer basis.
But what does that mean from the client’s perspective? How do you generate the commitment from clients to engage in a longer relationship, particularly if the work you do can be responsive and emergent? How do you set the boundaries and expectations for the work? And how do you come to am acceptable price for the monthly retainer?
This blog post by Tom Nixon is a helpful way to think about selling client-friendly retainers.
He talks about about how sales is consulting, how to sell value and find the right number, and how to cultivate commitment and make it easier for clients to say yes.
On this episode, Ben and Carlos offer their thoughts to help you sell client-friendly retainers that meet your need for focus, stability and to do good work.
Links
Transcript
Oh, so those of you listening live, I'm sure that was highly educational, useful and, uh, definitive for you in terms of like, Hey, no, I can get on with my rest of my day.
Carlos:'cause I know exactly how to price price, a client friendly retainer.
Carlos:So I think we should probably deal with that and we'll try and stay focused for you
Ben:Focused on working out what the podcast is for?
Carlos:I think trying to.
Ben:That's like a meta podcast.
Carlos:Welcome to the Happy Pricing Podcast.
Carlos:It's our gift to you of thoughts and ideas that will help you get a bit more clarity about how you're pricing, and how you also, I hope, how you're selling, how you're running your business, why you're running your business, who you're running your business for.
Carlos:So today we are talking about how to price a client friendly retainer.
Carlos:This was inspired by a blog post written by Tom Nixon six years ago ' cause we are current.
Carlos:But it, a lot of the stuff that he writes in his po this blog post, he's still practicing today.
Carlos:And hopefully if you receive the Happy Pricing email, you'll get a link to the blog post.
Carlos:If you aren't subscribed to the Happy Pricing email, then you need to be, go to the happy pricing.co and then sign up.
Carlos:Some key elements that I was, I pulled out from that particular post, for me were around his kind of approach to, well, the value from a supplier's point of view of having a run through retainer.
Carlos:So I thought we could talk a little bit about that.
Carlos:Then his approach to selling and pricing, and maybe have a quick discussion about that.
Carlos:And finally, and this is Tom Nixon's, you know, he's got money stories Tourettes to a certain level.
Carlos:Sorry, Tom.
Carlos:But he loves to talk about money stories.
Carlos:He loves to talk about our relationship and money and how that influences all of this.
Carlos:So that's what we're gonna cover, in our chat.
Carlos:So the first thing I wanted to talk about was this idea of a monthly retainer and why that's so attractive to people.
Ben:So I think, yeah, all of the kind of the obvious and you know, self evident thing, the consistency of money coming in removes sources of anxiety, sources of worry about where tomorrow's money is coming from.
Ben:And where we remove those sources of worry and sources of anxiety we can more likely turn up in our kind of fullest creative selves.
Ben:So then with that, are able to kind of be most useful, most valuable to the clients who we are kind of working with.
Ben:So, I would guess the kind of, the biggest attraction it, the kind of default idea of why the why they're attractive is that the consistency of money removes a source of kind of worry and potentially also beds in a longer term relationship with the client and the longer term relationship you have with the client, the more you understand them, the better you know them.
Ben:And the more you, the better you know them, more you understand them, essentially the more valuable you can be.
Ben:So, long term is good, I would say, and consistent money in is good too.
Carlos:So I think you touched on one of like a more, one felt to me like a kind of existential aspect to it.
Carlos:It's like, oh, you can now have predictable income and now you can feel safe 'cause in the next six months you can pay the mortgage.
Carlos:And then the other thing was a bit more strategic.
Carlos:You can really start building a relationship with a client, which means that you could potentially sell other things to them.
Carlos:You can actually provide value in different ways.
Carlos:And also, create a sense of safety for your client to know that you know them inside out and the prospect of going anywhere else is just a bit more scary.
Carlos:So there's a sense of like, okay, I'm very well seen and understood in this relationship with my supplier.
Ben:Mm-Hmm.
Carlos:And so what I wanted to also talk to is like, and in a similar vein that people talk about, oh, I want passive income, or I want a product and I want, you know, to be able to then have it sell while I sleep, is that way working has its own challenges, and it's you know, it is how do you fit into that way of working.
Carlos:And I'm thinking like, you know, in my days, people would, the kinds of people would tell me the retainer work with the SEO people and the Facebook marketing people and the Google Ads people, it'd be like, you know, this is something you have to keep on doing.
Carlos:You know, you just have to pull money into it, 'cause otherwise it's not gonna work.
Carlos:You know, you need to have someone doing it on a regular basis, ' cause if you just stop and start, it's not gonna work.
Carlos:So there's that one aspect and that, that was purely I was what you would be buying, there is more customers.
Carlos:As a design agency uh, we sold hosting.
Ben:Welcome to my party?
Ben:That kind of hosting?
Carlos:You just confused this crap without, back in the day when Squarespace and Wix and Carrd and all these services existed, people actually had, needed to have a place to put their files on a server so people could see their websites.
Carlos:And people would pay for that.
Carlos:And that work would also take require effort to make sure that the machines didn't melt and the code didn't break.
Carlos:So, to have the peace of mind that someone was always there.
Carlos:We asked for a retainer.
Carlos:So that we could allocate our time each week, some, a certain number of hours a month to help out that person.
Carlos:And then there's the other one, which is more about coaching or consultancy.
Carlos:Particularly if you are helping maybe someone launch a new aspect of their business, maybe even launch a new business, maybe restructure whatever it is, there's some kind of complex process that's going on.
Carlos:May be harder to define exactly where you're gonna get to for some of them.
Carlos:Maybe it's easier for others, but it's less process driven and more, I would say results or, or more emergent as a, requires more interaction.
Carlos:And I just wanted to illustrate those as ways of thinking about, all right, well, you know, how does it work as a, being a supplier on the supplier end of a retainer.
Ben:Mm-Hmm.
Carlos:And what is it that, you know, customers might be buying in that particular situation?
Carlos:But I think the thing I wanted to point out is like, if you go into it purely from the perspective, oh, it's a great way to make regular income without thinking about what are you doing?
Carlos:Why are you doing it?
Carlos:Who are you doing it for?
Carlos:And what does it mean for you?
Carlos:Because some, you know, I know many entrepreneurs and people in our community who get bored by process, who get bored by repetition.
Carlos:And so some aspects of that work might not be the best fit for you as an entrepreneur.
Carlos:But like you said, fundamentally, it's like to be able to plan, to know for the next six months that you don't have to go and pitch again, and you can focus on the work, and you can focus on the client and you can do the stuff rather than
Carlos:stuff, there's a comfort in there.
Carlos:There's a, I think, yeah, there's a peace of mind.
Carlos:Maybe that's a false piece of mind, but there's a, there is a peace of mind that people can get from that.
Ben:Yes.
Ben:And I think it is interesting.
Ben:So I was thinking about when I was running an agency, I remember, so we did a lot of projects and there was a point at which we flipped to having some retainers.
Ben:And so a few different things kinda happened the same, my kind of mem my reflection of it is the point at which we flipped to having some retainers in addition to some of the projects, was also a time when there were kind of more projects happening.
Ben:So there's kind of generally sort of more kind of confidence around anyway.
Ben:So the two first retainers that we had were sort of, were pretty lucrative actually, and so I do remember the feeling that actually just every month these two clients were paying quite a lot of money into your bank account.
Ben:And so for me, like to Tom's point around the kind of money stories, so for me, money is a security thing.
Ben:And so when the bank balance is going up, I would feel more secure.
Ben:And so in that sense it definitely appealed to me because when a client is consistently putting money into the account, especially if it's quite a lot, uh, which it was for by my company, your bank balance goes up pretty fucking quickly actually.
Ben:And so when there's a money story around sort of, kind of money as safety, money as security, that's ticking a hugely big box basically, because it's sort of, it's making you feel.
Ben:But, but equally as you are sort of, it's also a slight distraction because the thing which can then very easily become the kind of reference point in one's kind of sort of heart mind as the kind of managing director is all that's good, the bank balance is going up, security, security, and you might lose sight of, hold on a second.
Ben:What actually is the client buying here?
Ben:What are we doing?
Ben:What is it that they're changing?
Ben:Because, you know, sort of marinating in the security of an increasing bank balance makes the kind of warm fuzziness of all of that other kind of focus kind of go away or, or can.
Ben:And so like, I think to your point is a kind of good one.
Ben:It can feel like sort of safety, it can feel like security and the predictability is good.
Ben:Is it keeping you focused on the most important thing?
Ben:And or even knowing what the most important thing is?
Ben:And I think we found ourselves in those situations of kind of clients buying retainers equally though, which is kind of part of the kind of mix here because it was easy for the client to buy that.
Ben:So both of our clients were marketing people in big businesses, big organizations.
Ben:And so those marketing ments are essentially set up around buying ongoing agency support.
Ben:So they had a model in their mind that I just buy agency support.
Ben:And actually in the negotiation of it, what was a lot for us as a monthly sort of amount was very small compared to the global advertising agency that they were also paying kind of monthly amounts.
Ben:So it was as much, it was, there was some ease and convenience and safety and predictability for the client because they were used to buying things in that in that same way.
Ben:There's a whole separate question over whether that's good value for everybody.
Ben:You know, like, because part of what happened inadvertently in the company paying us, the agency in that way is I just felt better about my own money stories, you know, whether that's kind of good business for them, you know, right?
Ben:But in a way, the thing that was important for them was our client, the marketing director has his meeting whatever, once, twice a year with the global CEO.
Ben:He just needs to be able to show some predictability of spend, really, that he is managing his budget in an appropriate way.
Ben:And so, in a sense, you know, it just kind of points to a conversation we were sort of having at the very beginning of this, what actually are clients buying?
Ben:Uh, and you know, kind of re needing to kind of know all of those things, points to whether a retainer is a good idea, whether a retainer is a good, is a bad idea, irrespective of any of the kind of warm and fuzziness that might go with it.
Carlos:and I'm hearing there when you're talking about, you know, this is how these companies are used to spending money on retainers and compared to some of the other retainers, this is quite a small retainer.
Carlos:What, and if for you, it's like, okay, money coming in the bank, so that's good.
Carlos:There's a kind of an unconscious, behavior happening.
Carlos:It is like, it's like, okay, I, that's what we do.
Carlos:We do retainers.
Carlos:We pay for retainers and that's what we do.
Carlos:We get retainers in because it means, it's the balance.
Carlos:And then what does that mean for people who wanna be more conscious about their work, wanna be more intentional about what's going on?
Carlos:So we've got this idea of retainers.
Carlos:It, on a very unconscious level, it can meet a need for safety and security.
Carlos:For someone who may be a coach or a consultant, and let's say Tom Nixon for instance, he loves helping, you know, founders build these purposeful businesses and really just help these leaders lead well, I'm not sure how he sells that in terms of what he promises and what he says where you're gonna get to, but he did have this example
Carlos:of like, what's the value of uncovering an unconscious childhood bias, bias that is affecting your current leadership style and the way you interact with people?
Carlos:How do you put a number on that?
Carlos:So maybe talking to this idea of money and price.
Carlos:But then even how you engage with people who, how you sell to someone who wants to be coached in that way or wants a consultant to help them.
Carlos:And he touched on his post about kind of selling by consulting, by offering value as soon as possible.
Carlos:And I think that Connects to, you know, what we talk about when you talk about the course around conversations.
Carlos:On one hand there's understanding your customer, but then we talk about how we coach them into some clarity.
Carlos:I dunno if there's anything there that you could just elaborate a little bit on in terms of selling, not to convince someone, but selling to help them understand the value of working with you.
Ben:So one of my clients, they were in a situation, I dunno if this is gonna sort of loosely sort of talk to this, what we're just talking about here.
Ben:They're in a situation where they are, they've done a discovery piece of work, which sort of talks to that a little bit, which, you know, so together we'll uncover what the kind of key issues are and broadly the work that needs to be done.
Ben:So a good way of putting a kind of containers, not so much on the retainer thing, although that may be something that kind of flows.
Ben:But they were having trouble getting the client to actually commit to the next piece of work.
Ben:For reasons which on some level you think are sort of legitimate.
Ben:But of course, on another level, the reason the client's having trouble committing is there's some ambiguity, there's some uncertainty.
Ben:There is something that they are kind of unsure about.
Ben:And so our job in providing services to understand what all those things are so that we can help the client kind of buy.
Ben:And I think, I was having a conversation with one of the directors and we, he was asking me what I thought that they should do.
Ben:And I was saying I think that you should, you know, you should basically kind of do what sort of Thomas told.
Ben:You should give them something.
Ben:Value essentially.
Ben:And you know, which actually, kind of, which helps solve the problem for him, the immediate problem that he's dealing with and moves them forward.
Ben:And so, you know, that might be called whatever it is, giving them advice or whatever it might be.
Ben:And if you kind of do that, you are essentially, you are kind of helping them take the next step because that is always the kind of goal you are helping them take the next step.
Ben:And you are doing it by being useful.
Ben:You are doing it by being value valuable, which in, you know, in many ways is reassuring the client.
Ben:It's kind of reaffirming your expertise, all of the things that need to happen for a client to, to buy.
Ben:But one of the things they said in the correspondence was, we could start now, and that would help you for these reasons.
Ben:But of course that just sounds like you are just trying to get the client to start now for your own benefit.
Ben:And of course that's never gonna persuade a client to do anything.
Ben:The thing that will persuade a client to do something is them getting clarity around the problem that they're trying to solve or them feeling kind of safe enough that this is the kind of route to moving them forward.
Ben:And so the pseudo, you can be doing that for somebody, the better.
Ben:And that was gonna link to another conversation, uh, was listening to with another client talking, in fact, this morning.
Ben:He was talking about there's a guy called David Baker who writes a lot of stuff for about agencies and pricing and positioning.
Ben:And in a recent newsletter, David Baker had written a post saying that he only, he starts caring about you, ie his prospective client, when you start paying him.
Ben:And my client was saying, but actually he feels the reverse.
Ben:He feels, he starts caring about the client at the first conversation.
Ben:And I would say, you know, that's a really good kind of point of difference.
Ben:You don't need to only care that maybe that's good for David Baker to only care at the point when you, there is a kind of financial exchange happening.
Ben:For my client, it's like, no.
Ben:If you care from the first conversation, then that's good.
Ben:That's an important part of your kind of positioning and how you work.
Ben:It then raises the question, how and when do you kind of introduce the money conversation?
Ben:How and when do you in, you know, introduce the money exchange part of it?
Carlos:that's interesting.
Carlos:So getting to the number, and that is through your conversation.
Carlos:There's you're saying providing value, but then also understanding both parties, trying to understand what is the outcome you're trying to create and how are they considering that a value by being with you?
Carlos:The thing that, a conversation I was having with Tom Nixon this morning is like people spend money and sometimes aren't committed.
Carlos:And some people are committed even though they haven't spent money yet.
Ben:Mm-Hmm.
Carlos:So one aspect is like where you spend you putting some focus, but it isn't a given that they're committed to doing all the work.
Carlos:It isn't a given that you are gonna get the outcome that you wanna do just because they just spent some money with you.
Carlos:And so it's much more important, through the conversations and the initial sharing of value, to unearth and uncover that commitment and how strong that commitment is.
Carlos:Because then if they're committed, then it's more likely they'll understand the value and then the value will be created and you can start.
Carlos:Talking, well start proposing prices that, that you can work with.
Ben:And I guess the flip Of that is understanding what they are committed to.
Carlos:Yes.
Ben:Because if they're not quite committed to the thing that you are talking about, but maybe they're engaged in some sort of money, they started to give you some money, but it's a bit unclear.
Ben:There will be something else which genuinely lights them up and or is where their kind of commitment and motivation goes.
Ben:And the more we can navigate to that, the richer the relationship we'll ultimately have.
Carlos:Yeah, exactly.
Carlos:And then part of that is like, through that journey you'll find out what they're committed to, what they think it's valuable, how much it's valuable to, how valuable it is to them.
Carlos:And there'll be a number that you'll get to.
Carlos:And there, isn't that you have to accept that number.
Carlos:Because at some point also, you have to be clear, to put it bluntly, how much are you willing to get outta bed for?
Carlos:You need to be able to not just, get paid whatever the client thinks gets paid.
Carlos:If you have for the sustainability of yourself and your business some clear ideas of what's important to you in terms of how much you need to get paid.
Ben:Indeed.
Carlos:And and yeah, and that's the whole process of what is all this money about for you?
Carlos:And we can maybe talk about that some other time.
Carlos:I think we, we will cover this again and I think we'll cover this again with Tom Nixon.
Carlos:'cause then I think we'll be able to dive deeper into his particular.
Carlos:Work and how he's tackled it, and he can share some stories about his experience.
Carlos:And maybe we can just have a bit more time to explore that.
Ben:I admire your commitment to ending on time.
Carlos:Well, I admire your commitment to admiring my commitment.
