One of the most important keys to success for a creative agency is building long-term, stable client relationships. But how do you move from one-off projects and unpredictable work schedules to a steady, reliable partnership? That’s where the agency retainer comes in. Marketing agency retainers let you, the marketing agency, better predict your flow of work and, even better, your revenue.
“But retainers are confusing!” No, no. They’re going to make your life so much easier. Grab your notebook, because we’re going to walk you through everything you need to know in order to structure your creative agency retainers for long-term success.
We’re going to discuss retainer fee structures, setting clear scopes of work, and even crafting those annoying—but important—agreements! Pen ready and poised? Let’s get started.
Understanding Agency Retainers
What even is an Agency Retainer?
An agency retainer is a little different than project-based work or even hourly work. (It’s still crucial to track time!). A retainer-based structure is one in which the client pays a fixed amount—generally monthly or quarterly—for ongoing work. But unlike project-based or hourly-based work, marketing agency retainers are far more predictable for both the agency and the client. Where the agency has a steady income stream, the client has steady deliverables.
You know how you pay monthly for Netflix? Think of it like this—your client’s paying a monthly amount for a set amount (we’ll dive into this more later) of work. You can either be on standby for the client for any ad hoc tasks, or you can establish an agreed-upon workflow for the month (or quarter!). And the best part? You’re not waiting for project sales to come through. You’re actively working a consistent amount for a consistent client.
Benefits of Agency Retainers for Long-Term Relationships
Agencies often live like it’s feast or famine when they’re relying on project-based work to come in. Marketing agency retainers can instead provide predictability and stability—specifically when it involves cash flow and resource planning. Plus, agency retainers encourage stronger relationships with the client. There’s more trust there through consistent collaboration and communication.
And on the client side? Marketing agency retainers give them constant access to your agency’s expertise. They’re likely to get faster turnaround times, which is likely more cost-effective for them. They don’t have to negotiate contract additions or surprise add-on costs when the scope adjusts.
Marketing Agency Retainers vs. Hourly Rates and Project-Based Work
As we’ve mentioned, agency retainers are different from your traditional hourly or project-based contracts. With the hourly structure, you bill clients for every hour your agency works for them, which can mean inconsistent monthly costs.
With project-based contracts, you’re giving the client a specified deliverable with established start and end dates for a set amount. This is a great structure for one-off campaigns or launches, but really isn’t that great for work that’s ongoing, like content management, ad management, or digital marketing.
Retainers? They offer an awesome middle ground. Predictable payments for predictable work. Your agency is always available for established services. This makes life easier for all of you. Your clients can budget better, and you can focus on the work instead of trying to bill every waking moment.
Determining the Right Retainer Fee Structure
Types of Agency Retainer Fee Structures
It’s really important to choose the right fee structure when it comes to setting up your marketing agency’s retainers. You want to create a sustainable and mutually beneficial agreement. Here are the most common fee structures used:
Fixed-Fee Agency Retainer: Your client pays a set amount each month or quarter, no matter how many hours are worked or what tasks were completed. This works really well for clients that have consistent needs. But still, track your time to gauge profitability.
Hourly Agency Retainer: Here, your client pays for a certain amount of hours each month, which you then dedicate to their projects. “But what about unused hours?” you ask. They don’t roll over, meaning your agency has availability while at the same time encouraging your clients to use all of their dedicated time. This is a great option for clients with more ad hoc requests and unpredictable needs.
Hybrid Agency Retainer: This is a nice mix of fixed fees and hourly work. Your client pays a certain amount for their regular menu of services and then is charged additional fees if they ask for extra work or you exceed what was established in the scope and agreement. This structure gives both you and your client flexibility, accommodating regular and consistent tasks while also accounting for one-off projects and campaigns.
How to Choose the Right Agency Retainer Fee Structure
“That’s great, but which one do I choose?” Don’t worry. Let’s chat about that. This all depends on the work you’re delivering, your client’s needs, and your marketing agency’s resources. Here are a few things to consider:
The Consistency of Your Client’s Workload: Ask yourself, “Does my client have a consistent and predictable volume of work?” If the answer is yes, with regular work coming in and going out, then a fixed-fee agency retainer structure might be the way to go. But if the answer is no, with fluctuating needs, then going the hourly or hybrid route might be better…
Agency Expertise and Value: Does your agency provide a lot of strategy and marketing planning? Do you currently offer value-based pricing? If so, then going the fixed-fee or hybrid route means you can be accurately compensated for your work without having to show them your work every second. But still track that time! Marketing agencies structured on a value-based pricing model often do well on fixed retainers.
Budget Transparency and Predictability: Do your clients love having a clear expectation of budget? Do they hate surprises? Then an hourly or fixed-fee model might work best for you both. You know what your monthly income will be, and they know what their monthly expenses will be. Transparency equals happy relationships!
Setting a Competitive and Profitable Retainer Rate
Now that you know what your marketing agency retainer’s fee structure will be, you’ve got to set your rates.
Evaluate the Scope of Work: First, you’ll need to list and break down all of the tasks and/or services your marketing agency will deliver to the client on a monthly or quarterly basis. Make sure each of your services and tasks are well-defined in the scope of work—whether it’s social media management, PPC campaigns, or email marketing.
Estimate the Hours Needed: If you decide to go with an hourly or hybrid structure, estimate the number of hours it’ll take to complete the monthly or quarterly tasks. Don’t forget to include time for meetings, discovery, and revisions.
Consider Overhead and Profit Margins: Your retainer shouldn’t just cover billable time. It should also include overhead expenses like software, tools, and team salaries. You’re going to need a healthy profit margin so that this structure is financially beneficial for your agency.
Review Industry Standards: Take the time to research the typical rates for agencies of your size and your niche. For instance, marketing agency retainer fees for ad buying and management will likely be different from videography and design services.
Crafting an Effective Agency Retainer Agreement
Make sure you write a clear and detailed agency retainer agreement. This facilitates a healthy and happy working relationship between you and your client and that you both are on the same page.
- Clearly Define the Scope of Work
One of the most important things you need when setting up a marketing retainer agreement is a well-defined scope of work. This sets expectations for both your agency and the client, making sure you’re all on the same page when it comes to deliverables, timelines, and workload. If the scope isn’t clearly established, you can run into issues with scope creep, miscommunication, frustrations, and burnout.
Having a clear and established scope of work ahead of time means your staff isn’t over-committing. But it also means that your clients understand exactly what they’re getting for their monthly or quarterly fees.
1. List Core Services: The first thing you should do is outline your core services included in the retainer. Obviously, these should align with your client’s needs. For example:
– Monthly SEO audits and updates
– Weekly social media management
– Content creation
– Paid ad management and optimization
NOTE: Be specific—vague descriptions can lead to misunderstandings down the road.
2. Set Deliverables and Deadlines: Next, break down those services into deliverables. For example:
– 4 blog posts per month (500-1,000 words each)
– 10 social media posts per week
– Monthly performance reports
Just like SMART goals, setting deadlines, how much, and when on these deliverables can help you stay on track and monitor the success of the retainer.
3. Include Regular Check-Ins and Reports: Communicate! This is another very important aspect of running on a retainer model. Schedule regular status updates (weekly, bi-weekly, or monthly) to review progress, address concerns, and adjust strategies.
4. Limit Revisions: Set a strict number of revisions for each deliverable. This helps you control the scope. For example, you may provide “two rounds of revisions per deliverable.” Anything outside of that could be considered out of scope, and you should bill separately.
5. Account for Ad Hoc Requests: Let’s face it. The word “retainer” makes the client think they can make ad hoc requests. This is why having a clear scope is crucial. But in your agreement, outline how ad hoc requests will be handled.
– Will they be billed separately at an hourly rate?
– Will they require a separate project agreement?
Set clear boundaries!
Marketing Retainer Scope of Work Template
To make your life easier, make a marketing retainer scope of work template. Here’s a sample format:
– Services Provided: [List of specific services included]
– Deliverables: [e.g., 4 blog posts per month, weekly email newsletter, etc.]
– Deadlines: [e.g., Blogs delivered on the 1st and 15th of each month]
– Revisions: [e.g., Two rounds of revisions per deliverable]
– Meetings/Reports: [e.g., Monthly performance report and weekly check-ins]
– Ad Hoc Work: [Policy for additional requests outside of the agreed scope]
2. Include Flexibility for Growth
While your agency retainer agreement needs to be clear and specific, feel free to allow for some flexibility! As your client’s business evolves, their needs may change, and your agency retainer agreement should be able to adapt.
Here are a few ways to build flexibility into the contract:
– Options for Additional Work: Determine how you’ll handle out-of-scope work. Maybe you’ll bill at an hourly rate or make a whole separate project agreement.
– Adjustment Clauses: Also, make sure you include sections that allow for regular reviews of the agreement in case either you or the client needs to adjust the scope or fee.
3. Protect Both Parties with Legal Language
And the fun part: the legal stuff. Make sure your agreement includes key provisions that protect both you and your client, such as:
– Termination Clause: Either one of you needs to terminate the agreement for whatever reason? Establish the ground rules. Don’t forget to include how much notice is required (e.g., 30 days).
– Confidentiality: Include a non-disclosure agreement to protect you and your client. Especially if client data is involved.
– Ownership of Work: Define who owns the deliverables. Normally, ownership transfers to the client after full payment is made.
– Dispute Resolution: Include a section on how disputes will be resolved, such as through mediation or arbitration, to avoid legal battles if disagreements pop up.
4. Customize the Agreement
We’re not saying not to use a template. In fact, please do! They’re necessary! But each of your clients is unique. Feel free to customize each agreement for each particular client to fit their goals, expectations, and needs. This way, your client feels like the retainer is tailored specifically for them, rather than putting on a one-size-fits-all retainer.
Marketing Agency Retainer Agreement Template Outline
Need some help on what to include and how to include everything in your marketing agency retainer agreement? Here’s a sample outline template that shows you how best to format your agreement.
1. Introduction
– Parties Involved (Agency and Client)
– Purpose of the Agreement
– Effective Date and Duration
2. Scope of Work
– Services Provided (e.g., content creation, strategy, advertising)
– Deliverables (specific tasks and outcomes)
– Excluded Services
3. Retainer Fee Structure
– Monthly Fee and Payment Terms
– Additional Fees for Out-of-Scope Work (hourly rate or project-based)
– Late Payment Penalties
4. Timelines & Deadlines
– Regular Deliverables (e.g., weekly or monthly tasks)
– Reporting Schedule
– Communication and Check-In Frequency
5. Termination Clause
– Conditions for Termination (with or without cause)
– Notice Period (e.g., 30 or 60 days)
– Refund or Payment Policies Upon Termination
6. Confidentiality & Ownership
– Non-Disclosure of Sensitive Information
– Ownership of Work/Intellectual Property Rights
7. Dispute Resolution
– Mediation or Arbitration Guidelines
– Governing Law
8. Flexibility/Amendment Clause
– Terms for Adjusting the Agreement
– Periodic Reviews of the Retainer
9. Signatures
– Agency and Client Signatures
– Date Signed
Conclusion
And there you have it! A well-structured marketing agency retainer agreement allows you to create strong client relationships—by making your staff, your agency, and your client happy. It’s a win-win-win! Next step: Find a good project management software that will monitor and track your marketing agency retainers. Function Fox has got you covered! Reach out to us to learn more about how we can help you manage your retainers.