What’s the difference between a retainer and a package?
Do you know the difference between a retainer and a package?
One of the things that drives me crazy about the VA Industry is there are no standard definitions and terms. And… coming from both the IT and Project Management worlds I love standards.
I see the use of retainers and packages being mixed and I believe it starts to cause some confusion, especially for those new to the industry.
So… Since I get asked frequently, “What’s the difference between a retainer and a package”, I decided to do a quick blog post on the topic. These are my definitions of the differences (also, how I used them in my business).
- Are a bucket of hours.
- Are billed prior to the work being done.
- Can be used for any tasks.
- Must track your time.
- Has an expiration date.
- The client pays for your time.
A Retainer is a pre-paid bucket of hours that can be used for any tasks your clients need. The client dictates what the hours are used for and are paying for your time vs. your expertise.
Retainers are normally billed at the beginning of the month and have an expiration date of anywhere from 30 to 90 days from invoice date. Time is tracked on all the tasks completed against the retainer and the client is given a report showing how the hours were used.
Retainers are great except when you do several different types of tasks. You’re getting paid one flat rate for doing multiple types of work that could include several different types of expertise.
I know I don’t want to be paid the same rate I would charge for data entry if I’m setting up campaigns in Infusionsoft. They require vastly different skills.
Instead of being paid for your time – be paid for your expertise using Packages!
- Delivers a specific set of items.
- Has a fixed price.
- Has a specific deadline.
- No time tracking required.
- Invoiced for 50% up front and 50% on delivery.
- The client pays for your expertise.
A Package is a set of deliverables based on an expertise such as creating a WordPress website, implementing 1ShoppingCart, or sending out a monthly e-zine. Clients are paying you for a specific expertise.
They are normally billed either all up front or 50% up front and 50% on delivery. They are for a fixed price and have a specific deadline.
For some reason the perception is people who charge by the hour get paid less than those that work with packages. I believe it’s because time seems less valuable than a specific expertise (even though we all know time is extremely valuable). Again… it’s a perception.
The beauty of packages is you can define them by your expertise AND control exactly what is included. If you have several different types of expertise, you can offer several different packages showcasing each and every one.
You can package anything as long as you quantify all the pieces!
I used both retainers and packages in my business. Remember, your business – your choice. Do what works best for you and your clients.
Which do you use in your business? I would love to know, please take a moment to leave me a comment below and share your thoughts and questions. Or, feel free to share what you learned from this blog.
Thank you for reading!