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Re: Hourly Vs. Retainer? Isn't it the same?

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  • Jimmy Vo
    I know this is an old thread, started back in December 2004, but I m confused. When I use monthly retainers, I bill my hourly rate against the retainer. What I
    Message 1 of 21 , Jul 28, 2005
      I know this is an old thread, started back in December 2004, but I'm
      confused.

      When I use monthly retainers, I bill my hourly rate against the
      retainer. What I don't use of the retainer gets carried over. I never
      bill and keep fees for unperformed work, but if addtional work that
      surpass the retainer is needed, the client has the option of paying
      more the additional fees, or wait until next month.

      QUESTIONS:
      1) You mean some of you keep the retainer regardless, even for work
      that's not performed? IS THIS NORMAL FOR THE INDUSTRY?

      2) If you DO keep the extra money from the retainer -- How do you
      manage to not do enough work? There's always work. Research research
      research, coming up with new ideas, refining, give value to the
      client and go beyond what's expected, draft edit draft more editing,
      etc.

      I also provide my clients with monthly statements detailing services
      that were performed. You mean this isn't normal procedure?

      -Jimmy Vo-





      Kezia wrote
      > If there's anyone on this listserv who meets that description -
      > charging a client for work that is not performed - we should chase
      > them like illiterate villagers going after a livestock-stealing
      > monster and stone them to death. Unsophisticated clients may think
      > that's true, but they're very, very wrong.

      Whoa, hold on dar just one dang blam minute. I guess I'm like one of
      those
      livestock-stealing monsters you describe, but you've got it wrong, in
      that
      there is nothing unethical about this practise, which if I am reading
      you
      right, is what you are trying to suggest. When a client hires us on
      retainer, he's buying our availability. Whether he decides to use it
      is up
      to him, but he pays either way, and fully understands this going in.
      Keep in
      mind this is time we would otherwise have booked to do other billable
      work,
      so why shouldn't we.

      This doesn't happen often, but it happens. I'll give you one example
      from a
      couple of months ago. An organization was concerned that an expected
      government decision may go against their interests, and if it did,
      they
      wanted to be able to counter this and try to get it reversed. There
      was only
      a minimal amount of work that could be done in advance, but if it
      occurred
      they were going to need a considerable amount of our time. They knew
      they if
      they waited until they knew for sure that they needed us, we might
      not be
      available, so they booked us. Knowing we would be available if needed
      was
      important to them, and to their mind, a worthwhile expense. As it
      turned
      out, we weren't needed, and they gladly paid the bill. So for this,
      you
      would have us chased out of the village?
      >
      > If a company wants to kick the tires before committing to a retainer
      > agreement, find out what they're going to expect beforehand - you
      > may not want their business.

      Maybe not, but I have to disagree with you on this too. The majority
      of
      retainer clients we have ever had didn't start out as retainer
      clients. They
      first hired us for projects, then switched over to retainer. This is
      because
      they became comfortable with us. I think for many clients, expecting
      them to
      make a commitment to a retainer arrangement when they don't know you
      or your
      work very well may be asking too much.

      Duncan
    • Geri Wilson
      hi jimmy - i don t know what s normal in the industry, but i can tell you what i do. as a boutique marketing communications firm, which means i m a
      Message 2 of 21 , Jul 29, 2005
        hi jimmy -
        i don't know what's "normal" in the industry, but i can tell you what i do. as a "boutique marketing communications firm," which means i'm a one-person shop (sometimes hiring extra help as needed), i provide personal service that the bigger shops don't provide.

        in all honesty, my clients would die if they ever saw an hourly bill of what i do for them, and, to be honest, i hate keeping track of my time like that. so they pay me an hourly rate and i become their "in-house" marketing communication professional. every year we write a marketing communications plan, which is modified as we go as the market and their needs require, and i am basically available to fulfill their needs.

        i'm sure i'd make more money hourly, but this way they feel secure with me, there are never surprises for me or them about the bill, and they don't resent their bill when it goes high, even though they require it. it also keeps the paperwork down, which is, after all, one of the reasons i went into this form of the business -- i hate the business end.

        just one old pro's way. . .
        best -
        geri wilson
        the jonathan group
        - strategic marketing communications -

        Jimmy Vo <jimmy@...> wrote:
        I know this is an old thread, started back in December 2004, but I'm
        confused.

        When I use monthly retainers, I bill my hourly rate against the
        retainer. What I don't use of the retainer gets carried over. I never
        bill and keep fees for unperformed work, but if addtional work that
        surpass the retainer is needed, the client has the option of paying
        more the additional fees, or wait until next month.

        QUESTIONS:
        1) You mean some of you keep the retainer regardless, even for work
        that's not performed? IS THIS NORMAL FOR THE INDUSTRY?

        2) If you DO keep the extra money from the retainer -- How do you
        manage to not do enough work? There's always work. Research research
        research, coming up with new ideas, refining, give value to the
        client and go beyond what's expected, draft edit draft more editing,
        etc.

        I also provide my clients with monthly statements detailing services
        that were performed. You mean this isn't normal procedure?

        -Jimmy Vo-





        Kezia wrote
        > If there's anyone on this listserv who meets that description -
        > charging a client for work that is not performed - we should chase
        > them like illiterate villagers going after a livestock-stealing
        > monster and stone them to death. Unsophisticated clients may think
        > that's true, but they're very, very wrong.

        Whoa, hold on dar just one dang blam minute. I guess I'm like one of
        those
        livestock-stealing monsters you describe, but you've got it wrong, in
        that
        there is nothing unethical about this practise, which if I am reading
        you
        right, is what you are trying to suggest. When a client hires us on
        retainer, he's buying our availability. Whether he decides to use it
        is up
        to him, but he pays either way, and fully understands this going in.
        Keep in
        mind this is time we would otherwise have booked to do other billable
        work,
        so why shouldn't we.

        This doesn't happen often, but it happens. I'll give you one example
        from a
        couple of months ago. An organization was concerned that an expected
        government decision may go against their interests, and if it did,
        they
        wanted to be able to counter this and try to get it reversed. There
        was only
        a minimal amount of work that could be done in advance, but if it
        occurred
        they were going to need a considerable amount of our time. They knew
        they if
        they waited until they knew for sure that they needed us, we might
        not be
        available, so they booked us. Knowing we would be available if needed
        was
        important to them, and to their mind, a worthwhile expense. As it
        turned
        out, we weren't needed, and they gladly paid the bill. So for this,
        you
        would have us chased out of the village?
        >
        > If a company wants to kick the tires before committing to a retainer
        > agreement, find out what they're going to expect beforehand - you
        > may not want their business.

        Maybe not, but I have to disagree with you on this too. The majority
        of
        retainer clients we have ever had didn't start out as retainer
        clients. They
        first hired us for projects, then switched over to retainer. This is
        because
        they became comfortable with us. I think for many clients, expecting
        them to
        make a commitment to a retainer arrangement when they don't know you
        or your
        work very well may be asking too much.

        Duncan





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        - strategic marketing communications -
        626.403.6741
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      • Bob Reed
        Jimmy, From my perspective, you re use of retainers is correct. It s the average of what the client will pay over the course of a yearly program, with peaks
        Message 3 of 21 , Jul 29, 2005
          Jimmy,

          From my perspective, you're use of retainers is correct. It's the average
          of what the client will pay over the course of a yearly program, with peaks
          and valleys in activity.

          On the other hand, some agencies view the retainer as a placeholder, which
          give the client the right to instant availability and use of the agency's
          time and talent.

          What's normal is what the client will accept and tolerate in relation to
          perceived value.

          Bob Reed

          -----Original Message-----
          From: prbytes@yahoogroups.com [mailto:prbytes@yahoogroups.com] On Behalf Of
          Jimmy Vo
          Sent: Thursday, July 28, 2005 4:32 PM
          To: prbytes@yahoogroups.com
          Subject: [prbytes] Re: Hourly Vs. Retainer? Isn't it the same?

          I know this is an old thread, started back in December 2004, but I'm
          confused.

          When I use monthly retainers, I bill my hourly rate against the
          retainer. What I don't use of the retainer gets carried over. I never
          bill and keep fees for unperformed work, but if addtional work that
          surpass the retainer is needed, the client has the option of paying
          more the additional fees, or wait until next month.

          QUESTIONS:
          1) You mean some of you keep the retainer regardless, even for work
          that's not performed? IS THIS NORMAL FOR THE INDUSTRY?

          2) If you DO keep the extra money from the retainer -- How do you
          manage to not do enough work? There's always work. Research research
          research, coming up with new ideas, refining, give value to the
          client and go beyond what's expected, draft edit draft more editing,
          etc.

          I also provide my clients with monthly statements detailing services
          that were performed. You mean this isn't normal procedure?

          -Jimmy Vo-





          Kezia wrote
          > If there's anyone on this listserv who meets that description -
          > charging a client for work that is not performed - we should chase
          > them like illiterate villagers going after a livestock-stealing
          > monster and stone them to death. Unsophisticated clients may think
          > that's true, but they're very, very wrong.

          Whoa, hold on dar just one dang blam minute. I guess I'm like one of
          those
          livestock-stealing monsters you describe, but you've got it wrong, in
          that
          there is nothing unethical about this practise, which if I am reading
          you
          right, is what you are trying to suggest. When a client hires us on
          retainer, he's buying our availability. Whether he decides to use it
          is up
          to him, but he pays either way, and fully understands this going in.
          Keep in
          mind this is time we would otherwise have booked to do other billable
          work,
          so why shouldn't we.

          This doesn't happen often, but it happens. I'll give you one example
          from a
          couple of months ago. An organization was concerned that an expected
          government decision may go against their interests, and if it did,
          they
          wanted to be able to counter this and try to get it reversed. There
          was only
          a minimal amount of work that could be done in advance, but if it
          occurred
          they were going to need a considerable amount of our time. They knew
          they if
          they waited until they knew for sure that they needed us, we might
          not be
          available, so they booked us. Knowing we would be available if needed
          was
          important to them, and to their mind, a worthwhile expense. As it
          turned
          out, we weren't needed, and they gladly paid the bill. So for this,
          you
          would have us chased out of the village?
          >
          > If a company wants to kick the tires before committing to a retainer
          > agreement, find out what they're going to expect beforehand - you
          > may not want their business.

          Maybe not, but I have to disagree with you on this too. The majority
          of
          retainer clients we have ever had didn't start out as retainer
          clients. They
          first hired us for projects, then switched over to retainer. This is
          because
          they became comfortable with us. I think for many clients, expecting
          them to
          make a commitment to a retainer arrangement when they don't know you
          or your
          work very well may be asking too much.

          Duncan







          Yahoo! Groups Links
        • kezia_jauron
          The point I was making was in response to David s statement here: The reality is that the retainer is loaded in favour of the consultant/agency because it
          Message 4 of 21 , Aug 1, 2005
            The point I was making was in response to David's statement here:

            "The reality is that the retainer is loaded in favour of the
            consultant/agency because it gives them the comfort of a positive
            cash flow even if they do not undertake any client work during the
            month. The retainer is also a bad deal for clients because it
            removes the need for the consultant/agency to be creative and
            proactive on their behalf."

            Which I disagreed with, but apparently only the "chase them like
            illiterate villagers" portion of my comments had any legs. I can't
            imagine there would be practitioners in our business who would do NO
            work for a MONTH for a retainer client. Those are the bad guys,
            folks - not anyone in present company.

            I admire anyone who has the time and stamina to maintain hourly
            against retainer billing records. My agency does not do this for
            retainer clients. (My boss would probably be a lot richer if we
            did.)

            Again, I can only speak personally, but in a month where a client
            may think "no work is being performed," I agree with you, Jimmy. How
            is this possible?

            For example, our retainer agreement allows for the writing and
            distribution of two news releases a month. Some companies just don't
            have two newsworthy developments in a month, so they might think
            they'll get a break on the bill. Wrong. It takes much more effort
            and time to get press for a company that isn't doing anything
            noteworthy, doesn't it?

            And aren't you also:

            - Updating your editorial database
            - Maintaining the relationships you trade on
            - Monitoring editorial coverage, competitive coverage, and industry
            happenings
            - Checking editorial calendars for future opps and creating new ones
            - Laying groundwork for future projects (i.e. racking your brain for
            ways to keep an inactive or sporadically active client in the news)

            As Duncan mentioned at one point, your client's failure to take
            advantage of all the PR services/resources available to them isn't
            your fault, and you shouldn't be financially penalized for it. But
            it sounds like you know how to make the distinction between hours
            YOU didn't devote to their account and opportunities THEY failed to
            leverage, and I'll bet your clients value your fairness and accuracy
            when they're writing your checks. Normal or not, whatever you're
            doing, keep doing it.

            For the reasons I disagreed that a retainer agreement is always more
            financially advantageous to the agency than the client, read the
            rest of the original message here:
            http://finance.groups.yahoo.com/group/prbytes/message/2895

            In fact, I'm going through an 'abuse period' now with a retainer
            client that moved around some staff, and I have a new day-to-day
            contact who needs incredibly intense handholding as well as
            massively detailed reports. They're getting their money's worth and
            then some.




            --- In prbytes@yahoogroups.com, "Jimmy Vo" <jimmy@n...> wrote:
            > I know this is an old thread, started back in December 2004, but
            I'm
            > confused.
            >
            > When I use monthly retainers, I bill my hourly rate against the
            > retainer. What I don't use of the retainer gets carried over. I
            never
            > bill and keep fees for unperformed work, but if addtional work
            that
            > surpass the retainer is needed, the client has the option of
            paying
            > more the additional fees, or wait until next month.
            >
            > QUESTIONS:
            > 1) You mean some of you keep the retainer regardless, even for
            work
            > that's not performed? IS THIS NORMAL FOR THE INDUSTRY?
            >
            > 2) If you DO keep the extra money from the retainer -- How do you
            > manage to not do enough work? There's always work. Research
            research
            > research, coming up with new ideas, refining, give value to the
            > client and go beyond what's expected, draft edit draft more
            editing,
            > etc.
            >
            > I also provide my clients with monthly statements detailing
            services
            > that were performed. You mean this isn't normal procedure?
          • kezia_jauron
            Say you ve set up an opportunity for a client - got them included in a newspaper review of the city s best dog groomers or something. Because you re so
            Message 5 of 21 , Aug 1, 2005
              Say you've set up an opportunity for a client - got them included in
              a newspaper review of 'the city's best dog groomers' or something.

              Because you're so chummy with the editor and so familiar with the
              dog grooming biz - in other words, because you are so good at what
              you do - it only took a 4-minute phone call to set up that
              opportunity.

              How would you bill this? And doesn't this kind of thing happen to
              you all the time?

              If you weren't as good at this stuff, and didn't have the contacts
              you have, that task may have taken you hours. And I assume you don't
              bill them for the months or years it took to cultivate the
              relationships and build the knowledge of the industry that led you
              to be able to pull it off in 4 minutes.

              (When clients ask for "their" "mail list," I'm always tempted to
              tell them they can have it at our cost: $260,000. This is a rough
              estimate of what we've spent building it over the last 13 years
              based on a low-level, full-time staff person's annual salary, times
              13 years.)
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