Why I switched from hourly rates to a monthly retainer

TL;DR: For years, I punished myself for being a fast worker by charging an hourly rate. Then I wised up. You can, too!

As I look back at the past decade, I can’t help but smile, cringe, and ask myself, “What the hell were you thinking?!” I have made many mistakes throughout my life, especially in my writing career. Errors that have potentially cost me tens of thousands of dollars. But after nearly a decade, I finally learned a simple but powerful lesson: I am a good writer, and I am worth every penny I charge.

Humble and naïve beginnings

When I founded wanderluster co. in 2016, I had no idea what I was doing. I knew I wanted to write for tech and SaaS clients and that I wanted to get paid to write. But I didn’t know what to charge or how much I could charge. Like many new “professional” writers, I lacked confidence and never dreamed of asking any client for more than $40 or $50 an hour—and even then, that’d be when I was really good. I was naïve to the world of freelance writing.

But when I hit that $40 per hour milestone and beyond, I started asking other writers what they charge. I read blogs, googled every question I had about how to charge clients, and reevaluated whether my rates were fair. That’s when I had my “What the hell?” or aha! moment. I was sorely undercharging clients. And it was costing me… big time.

Price gouging didn’t feel right

When I heard about writers charging $500 an hour to write a blog, it made me cringe. I wanted to be compensated fairly, but that felt like price gouging, and I couldn’t bring myself to do that to existing and new clients. I knew I had the talent to charge that if I wanted to, but I took a different approach instead.

I talked with my clients and explained why I wanted to raise my rates. I told them I would work with them but was firm in telling them I needed compensation that aligned with my skill set and the value I provide. Every client obliged. Now, keep in mind that while I was doubling my rates, I was still only charging $80 per hour—which is significantly less than many writers out there just looking for a quick buck.

I was asking for fair compensation instead of a steep increase for no reason. My clients understood that, and it made sense.

Value-based pricing?

For a few years, $80 an hour felt right. But as I grew my skills and continued researching pricing, I came across a webinar discussing the idea of value-based pricing. I was unsure what that meant but quickly discovered that value-based pricing is a strategy writers use to set prices based on perceived value, not how long it takes to do the work.

A lightbulb went off, and I went down the rabbit hole to understand my value, how this strategy worked, and if this new approach was something I should consider. For my copywriting services, it one thousand percent made sense. Copywriting is part art, part science, and has a direct and easily measurable connection to sales.

And while I offer copywriting services, my passion has always been content writing. Content writing is valuable for brand awareness and moving leads through the funnel, but it’s hard to attribute ROI. I was stuck. Do I use value-based pricing or go back to hourly?

I came up with another solution: a monthly retainer.

Why I switched to monthly retainers

A monthly retainer is a flat-rate fee my clients pay me every month. I can work six hours or 50—I will get paid the same amount. Note that this is only for clients I work with repeatedly. It wouldn’t work for one-off projects or random ad hoc work throughout the year. But for the clients I work with regularly, the retainer benefits us both in a few ways.

• I prioritize clients who pay a monthly retainer, so they feel confident that I will get work done on time and done well
  
  
• I can work at my crazy fast speed confidently, knowing clients will pay me fairly, regardless of how fast I work
  
  
• The monthly retainer creates a predictable income, so when I freelance full-time, I have an income I can count on

I work quickly. Not just speedier than your average writer, but faster than anyone most of my clients have met. Everyone who works with me points this out as a compliment, but I slowly realized my speed was punishing me every time I got a check. I could have charged $500 per hour to write a blog and still wouldn’t make as much as I do on retainer. Why? Because I work so fast that writing a longer blog at an hourly rate pays only a fraction of the retainer.

I was tired of my speed being a hindrance to my income, which was one of the driving reasons behind moving my clients to retainer agreements. But I also switched because there are no surprises for my clients. They know the exact dollar amount they owe me every month, which helps them plan their finances for the year.

That awkward conversation

Retainers are almost always more expensive for the client. After all, who would charge a retainer that pays less than your hourly rate? Certainly not me! So, you want to make more money, but that means your clients will have to pay more. This could lead to an awkward conversation. Or it could lead to an understanding.

When I talked with my clients about going on retainer, it was the latter. Sure, I was nervous about having that awkward conversation about asking for more money, but with the right approach, you can get your clients happily on board. Not sure where to start? I’ve got you!

• Schedule a time to talk with your client and let them know you want to discuss your rates. You don’t want to create dread or make them anxious by putting them on the spot
  
  
• Calmy, tell them you’re raising your rates (or going on retainer) and explain why. “I want more money” is not an explanation. When I talked with my clients, I explained the value I provide and how I want to foster a lasting, mutually beneficial relationship. I highlighted some of my previous work and asked for their feedback
  
  
• Ask them if they need time to think about your request or get approval for more budget. You don’t want to create a high-pressure situation
  
  
• Be willing to walk away. This is a hard one, but if you know the value you bring and your client is unwilling to compensate you fairly, it’s okay to politely walk away

The end result

I won’t pretend that I have been rejected when asking to go on retainer or raise my hourly rates. I have been very fortunate to have compassionate and intelligent clients who know that motivated freelancers do better work. But if you do get turned down by one client, you still have other existing or new clients who will understand why you’re changing your compensation structure.

Don’t give up when one client says no!

I have earned more in 2022 than every year wanderluster co. has been in business combined, and it’s because I asked my clients to pay me fairly.

Advocate for yourself

For years, I let my lack of confidence and fear of having tough conversations hold me back from earning the compensation I deserved. Yes, it cost me a boatload of money over the years. But it also taught me to advocate for myself and to be more intentional with my communication. And when every client agreed to my retainer rates, it was more than worth it.

So, meet with your clients, have the discussion, and let me know when you get your first retainer client!