One of the best ways to escape the “trading time for money” game is to transition to a retainer model.
(Note: It’s not the only way, but it’s what we’ll be diving deep into today.)
And if you’re anything like me, part of the reason you escaped the rat race in the first place was to break free from “punching a clock” or sitting in a cube from 9-5. So why would you want to go from that to punching a proverbial clock for more than one boss? To tracking your time on a daily basis and handing in timesheets at the end of every week or month?
And I haven’t really since the beginning.
I did work on a per hour basis for a very short time when I took on my first virtual assistant client. But that didn’t last long and thankfully we moved our pay agreement from per hour to per week – or a retainer model after the first few weeks.
Why per Hour in the First Place?
Why do people charge or expect an hourly rate in the first place?
I think it’s how most people are able to assess value. But I don’t think it’s the best way to charge or want to pay someone that you contract with for work.
Because everyone works at a different pace. And why should someone that’s more efficient (read: faster, without losing the quality) get paid less because the task takes them less time?
I don’t think they should.
A task should be worth the same whether it takes one person two hours or another 30 minutes. The task being completed based on certain criteria and in the agreed about timeframe is what counts. Not how long it took the person doing it.
But again, I’m not sure that’s the most widely adopted idea YET. But we’re getting there. Especially as the world of work transitions away from being almost all employees and back to more peeps being self-employed (that’s how it was until the Industrial Revolution you know!).
Luckily, when it came to freelance writing, I never bid or accepted a job based on an hourly wage. I subscribed to the advice that per word or per article was better and I still initially bid work that way.
For VAs, it can be hard not to start with an hourly wage as a starting point. But once you and the client get a feel for the workload and flow, there’s no reason you need to stay there.
And for both categories knowing how long tasks take you and what you need to average per hour is a great starting point for YOUR calculations. But your client doesn’t need to know the math behind it. They just need to know the net result or cost to them.
There’s Nothing Wrong with per Word or per Post
If you’re a writer or freelancer bidding per project (vs. a retainer model), there’s nothing wrong with it.
It’s just nice to move away from it eventually.
I.e. I started writing for one of my VA clients last year. I quoted him $100 per student profile I was writing. But towards the end of the year I knew that I’d need to renegotiate with him as my rates had changed pretty significantly.
Luckily, so had the volume of applications and need for how many we posted per month.
So I pitched him the same rate, but half the articles. Which means I effectively doubled my rate or was able to keep the same wage, but for only having to do half of the work. And we’ve since built it into our retainer model. I.e. my deliverable is two articles per month, but my pay is the same each week.
Another example is that I have a couple of writing clients that have ad hoc assignments. I.e. there’s no one post per week or two posts per month that I’m guaranteed to be assigned.
I like this and I don’t like it.
I like it because I can say yes or no when offered the work depending on what else I have on my plate at the time. I.e. right now I’m writing a new course and revamping another, so I’d probably say no more times than yes. I get to choose just as much as they do.
I don’t like it, because there’s no consistent workflow or pay associated with writing for either of them. And while one was pitched as a need for a weekly blog post, it hasn’t turned out that way.
Oh well, I just don’t depend on that writing income in my monthly business budget. And because I don’t have recurring work guaranteed, they’re not first on my priority list when it comes to client work.
How You Can Transition to a Retainer Model
The easiest way that I’ve found to do this, is to nail down the expectations of the client.
I.e. how many articles do they need per week or per month? Or what tasks am I responsible for as a VA that are repeating?
As with ANY client relationship (writing, VA or otherwise), I think it’s best to start with a trial arrangement. I.e. one article to start. Or two weeks for a new virtual assistant client relationship.
I might not like you and you might not like me. Or maybe we’re just not jiving when it comes to the expectations of the assignment. That’s cool, not every new relationship will pan out.
Starting with a trial period is a great way to figure this out. (It’s also a great way to know that clients pay promptly!)
So once you’ve determined their ongoing needs and that you’re a good fit from your trial period, you can pitch them a retainer package for your services.
For writing it might look like this: $500 per month for a weekly blog post. This is really just $125 per post, but you’re framing it as a monthly investment on their end, rather than taking it post by post.
For VA work it might look like this: $400 per month for social media services. This would include posting on all applicable channels and breaks down to $100 per week or $20 per day.
Again, you need to figure out YOUR rates based on what YOUR needs are. And whenever I give advice about setting rates, I always tell people to overbid and add 25% for taxes/lack of benefits, etc.
Because your employee wage and your new self-employment wage can’t be compared apples-to-apples. They’re not the same thing. As a contractor or self-employed individual, you have to pay your own self-employment taxes, for your own benefits like health insurance and saving for your retirement, etc. Sadly, there’s also not usually vacation or sick time provided.
But… freelancing does typically come with a whole lotta flexibility. And unlimited income potential. So in my book, it’s more than worth it!
Don’t lock yourself into an hourly rate. In essence, all you’re doing is trading one time clock for another.
It’s okay to start on an hourly basis as a VA or social media strategist, but I wouldn’t stay there long. And absolutely DO NOT price your writing services this way. It DOES NOT benefit you (unless you’re a very slow writer, but they’ll probably pick up on that eventually and cut your rate).
In both cases, it’s ideal to figure out the expectations of your client, determine you’re a good fit for each other and then package your work on a retainer basis. It’s more predictable for you and for them. And always leave it up for evaluation!
Do you have any clients on a retainer model? Why or why not?