How to Build a More Profitable Retainer Model for Your Agency

The Agency Profit Podcast

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3M ago 40:34

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Points of Interest

1:08 – 1:44 – Defining Retainers: Marcel and Carson introduce the topic of retainers, noting how different agencies define them in varied ways.
2:05 – 2:37 – Core Benefit of Retainers: Carson explains that retainers create recurring revenue and provide clients with consistent access to agency resources.
2:50 – 3:33 – Historical Context: Marcel traces retainers back to traditional professional services, where upfront payments secured future capacity.
3:44 – 5:19 – Modern Variations: The conversation highlights how retainers have evolved into many models, including time-and-materials, flat fees, and performance-based pricing.
5:32 – 7:04 – Pitfalls of Prepaid Hours: Carson critiques “bucket of hours” retainers, emphasizing their lack of control and operational strain.
7:10 – 9:29 – Accrual Accounting Risks: Marcel outlines how prepaid hours create deferred revenue liabilities that are often untracked, leading to serious cash flow problems.
11:05 – 11:41 – Operational Consequences: Carson notes that unexpected claims on rollover hours can overwhelm teams, forcing agencies into overwork or costly freelancer hires.
12:04 – 14:33 – Pricing Model Quadrant: Marcel introduces the value–risk quadrant, showing how agencies should align retainer structures with engagement value and project risk.
15:07 – 16:31 – Abstracted T&M Models: For high-value, high-risk work, Marcel explains why abstracting hours into larger time blocks or cross-functional teams improves leverage and profitability.
17:00 – 18:21 – Low-Risk Models: The hosts outline flat retainers tied to deliverables and performance-based pricing tied to client outcomes, noting challenges with attribution.
19:00 – 20:27 – Pricing Dynamics: Carson and Marcel discuss how flexibility and overages influence rates, with retainers often discounted for predictability but charged higher when clients exceed agreed capacity.
37:06 – 38:14 – Account Management Posture: Marcel contrasts T&M models, where account managers say “yes and” to client requests, with fixed-scope retainers, where the posture shifts to “yes but” requiring tradeoffs or renegotiation.

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