Retainers can be great for the studio or agency but they are prone to disputes. Longer terms lead to forgotten discussions, evolving needs, and unmet expectations. So next time you are drafting a retainer provision, ask yourself these questions and be sure the answers are addressed in your contract.
- Does the retainer cover all types of services or particular services? Any you want to specifically exclude? Consider defining concepts such as Included Services and Excluded Services.
- Are there any specific rules on requesting Excluded Services? How are they billed? Do they need a separate SOW (typically, yes).
- If the retainer is essentially a retained hours arrangement, what happens when client requests exceed retained hours? Are additional hours available? At what rate?
- If the client underutilizes an hours retainer, what happens to the leftover? Can the client get cash back? Credit for future work? Credit to Excluded Services? Use it or lose it?
- If the client can carry over certain unused hours, is there a cap on carryover?
- If carry over is allowed, is there a cap on single month accumulation / use?
- Is carry over handed differently on a month to month basis vs unused hours at the end of the retainer term?
- What assumptions are there about utilization. How will end of month dumping be handled (client making a month’s worth of work requests in the last few days of the month)?
- Does the retainer automatically renew for the same term? Is there an opportunity to adjust rates or scope?
- How are the kill fees calculated if the client bails on a retainer early? Have you structured your billing such that you will have some dollars available to cover early termination?
- Does the retainer bill in advance (like rent) or in arrears (like a utility bill)? For longer retainers, consider advance billing with “first and last” being paid the first month.
Every retainer is different. Answering these questions will help you make sure your contract manages client expectations and puts you in the best position to deal with any questions that come up during the relationship.
Learn about more common provisions in our (ongoing) series, Anatomy of a Services Agreement.