Maintaining strong relationships with your customers to ensure they consistently return to your business is extremely important for any business, even more so for those with high overhead costs. While many other factors can contribute to customer retention, good execution and a consistent pricing strategy can have a major impact on whether you keep customers onboard. 

For businesses that have established a significant level of trust with their customer base, utilising a retainer pricing model can be effective in maintaining consistent cash flow - which, in turn - informs future planning. However, properly implementing a retainer pricing model can be a challenge — concerning a completely different set of issues that can affect results for both businesses and clients. 

However, properly implementing a retainer pricing model can be a challenge — concerning a completely different set of issues that can affect results for both businesses and clients.  

If you’re planning to implement retainer pricing as a core part of your business offering or are looking for ways to optimise your retainer pricing strategy: we’ve got six tips outlining the best practices for a retainer pricing model. 

What is a retainer pricing model?

With a retainer pricing model, businesses can charge clients upfront for ongoing services to be delivered throughout the retainer period. This is unique from regular pricing models where charges are applied according to the services rendered.

Retainer pricing models are gaining popularity within the service industry as businesses seek to secure more stable income, compared to constantly relying on intermittent assignments from clients. This pricing strategy also holds the potential for businesses to develop a closer, more dependent relationship with their clients.

How do retainer pricing models benefit your business?

Retainer pricing models have significant benefits for businesses:

Reliable revenue sources – Having clients pay in advance for a period of ongoing service means that businesses can effectively ‘lock in’ their revenue sources: since the upfront retainer amount can cover the expected revenue earned during the same timeframe.

Planning and forecasting – With cash flow kept stable and continuous, businesses can better plan for how to use their finances, whether for expansion or investment. This consistent cash flow allows businesses to be more proactive in their overall strategy rather than relying on month-to-month payments.

Save resources on client acquisition – Acquiring a new client is always more taxing and costly when compared to retaining them. A retainer pricing model confirms work and cash flow for a set period, allowing businesses to steer resources toward delivering quality work and results. 

Client relationship development – A retainer pricing model allows businesses to develop positive relationships with clients on retainer by constantly meeting their needs. As essential elements like trust and reliability develop and grow between businesses and clients, the likelihood of future work (and revenue) will increase.

How do retainer pricing models benefit your customers?

Retainer pricing models also come with a host of advantages for clients — chief among them being the ease of access to required services. 

By engaging a business on a retainer basis, clients can enjoy priority access to a service provider whenever they have a need, saving them time and effort for having to scour the market for one.

For a business, sticking with a service provider that understands their unique needs is an obvious benefit for clients.

What types of businesses can implement a retainer pricing model?

As beneficial as it sounds, a retainer pricing model doesn’t fit every type of business. Generally speaking, businesses that offer ongoing services such as consultancy or marketing will tend to see more success when implementing a retainer pricing model. 

However, actual suitability will come down to the nature of the service, relationships with clients, and the capacity of the business to handle the scope and flexibility of work.

6 essential tips for implementing a retainer pricing model

With the essentials out of the way, here are 6 essential tips for how businesses can effectively implement a retainer pricing model:

1. Assess and understand your resources

The ability of your business to adopt a retainer pricing model will ultimately be dependent on your organisation's output and services rendered. Have a look at your internal team and resources — ideally, you should have a comfortable amount of resources at your disposal to adapt to projects as they come in. 

Take a “worst-case scenario” approach by planning your offering around situations where your business is running at full capacity. If your business has sufficient capacity to pull it off reliably, a retainer pricing model could work well for your business.

2. Calculate your costs to offer your product/service

The great thing about a retainer pricing model is that it allows your business to plan around its prevailing costs. Get a good estimate of the cost of running your business for a certain period, and ensure that your pricing accounts for these costs, with sufficient margins to ensure ongoing operational continuity.

3. Provide clear pricing to your customers from the get-go

It’s so critical to keep your pricing clear to customers. If your clients are paying upfront for a whole period of services, it’s best to ensure that they understand the breakdown of how the costs add up. Be as transparent as you can with your pricing to ensure that your customers know exactly what they are paying for.

4. Outline key deliverables that your clients can expect to receive

Clearly outlining what exactly your business will deliver is a big part of ensuring that clients are not only on board with your business’s offering but also managing expectations throughout the service period.

5. Implement an effective payment collection system

Make the payment process as seamless and easy as possible for clients — not only will this reduce the possibility of issues such as late or failed payments, but it can also create convenience for clients. Using a reliable subscription payment solution is the best way to automate and effectively collect payments.

6. Manage scope creep before it becomes a problem

Scope creep happens when clients start to ask for more than they’ve agreed that your business will deliver. If left unaddressed, scope creep can become a major drain on your internal resources and potentially even affect work for your other clients.

Unleash the benefits of a retainer pricing model today

Finally, let’s unpack and summarise some of the benefits your business might see when switching to a retainer pricing model.

First, setting your customers up on a retainer pricing payment plan can be a fantastic way to maintain a steady cash flow and consistent work schedule for your business. Instead of chasing new prospective clients for work, your business can lock your customers in for a pre-determined amount of time, allowing you to forecast and scale your business with the confidence that only regular work can bring.

Additionally, the nature of retainer pricing allows you and your business to develop stronger, more grounded relationships with your customers – as they return to your business over and over. Your customers will recognise the value that your business brings to theirs as well as the unique relationship you’ve developed with them over time.

If you’re thinking about setting up a retainer pricing model for your clients and prospects, consider partnering with a trusted and reliable payment facilitator like Ezypay. We make it simple and easy for businesses to collect payments from their customers and develop strong and meaningful business relationships with them along the way.