[thelist] Retainer Arrangements

chris h chris123 at magma.ca
Wed Jun 16 12:16:19 CDT 2004


On June 16, 2004 10:01 am, patrick wrote:
> Norman Bunn wrote:
> > I have a client who is interested in purchasing a set number of hours
> > a week for a year in exchange for a reduced hourly rate.  This idea is
> > intriguing and I wondered if any of you have such arrangements in
> > place.  This seems similar to having a lawyer on retainer or, heaven
> > forbid!, like a cell phone agreement.  I am not sure how to structure
> > this and would appreciate any insight you might provide.
> >
> > Thanks,
> >
> > Norman
>
> Make sure that you set out your rate if the client exceeds the
> agreed-upon hours. I have a similar agreement with a client and it works
> well. Watch, however, that you do not refer to yourself as the 'IT
> guy'....because you WILL be asked to do/fix everything to do with
> PCs......scope out what you will be doing, just like a regular project.

Simple enough exercise. As a consultant on a retainer you really have two 
concerns, well actually three. 

1. The scope of the work
2. The cost quoted on a per diem rate ie: per day
3. Costs for work that is out of scope or outside of the given rate structure.

Typically these are what are called gravy contacts if set up properly as they 
can provide assured revenue flow over a set period. This is a good thing..:)

Basically its as simple as defining the scope of work and setting a daily 
rate. A day rate is used as the client will require a quick turned around not 
on the work but on your personal accessibility. In exchange a half days costs 
a full day to the client as you have been deprived of income from other work 
or have had to drop work/production to meet his/her/its demand to be on site. 

Wrt to the scope of work, you are being retained to provide a unique service 
based on your proven skill. That work and skill set when applied needs to 
defined and costed in advance as it has its limits. Hence you need to define 
two rates, one for what is in scope and one that it out of scope. The only 
thing extra that can be defined is telephone support. X number of calls per 
month for X dollars. And they will call, sometimes endlessly..:)  Best to 
make this a package rather then priced individually and if its a good client 
or you need the cash, then have the number of calls rolled over to the next 
month. ie: they are bankable...:)

The real art of consulting is no so much a description of your abilities but 
rather knowing how to write a good contract that is fare and equitable to 
both parties. Where you lack the skill, no one is perfect, use a subcontract 
structure with the clients approval. In this regards never leave out a 
reliable change order mechanism, otherwise it will bite both parties in the 
butt with either cost or time overruns. This is less important on a per diem 
contract then on a fixed price contract however every contact should include 
an elemental change order mechanism that is clearly defined. 

When it comes to getting paid and or invoicing, the only thing that counts is 
whats defined in the contract. Verbal contracts or verbal agreements of any 
kind are simply "verbal diarrhea". 

Best of luck, hope it helps.

regards

/ch


More information about the thelist mailing list