How can you decide between retainer and subscription fees?

A retainer model is a pricing model where you pay an upfront fee to reserve a certain amount of hours or services from a agency or a freelanceer for a specific period of time. You can use these hours or services as you wish, as long as they are within the scope and terms of the retainer agreement. The agency or the freelanceer will allocate a certain amount of time and resources to work on your projects and deliver them within the agreed timeframe.

A retainer fee is a flat fee billed to client before starting work for a set amount of time. Although it covers a certain scope of work, the scope can be wide. It's a mix of contract work and subscription model. Imagine a pool of money in a bank and the client can withdraw from it to use for the consultant's services anytime as agreed. Clients don't get back any unused credits or fees.

As a (recovering) MBB consultant and now building a firm independently I can attest to the value of subscription, although no seen as such a lot of what is considered "value-based" pricing is really a subscription of sorts with a specified outcome, done with a firm commitment to delivering client it can build trust and be quite lucrative (which may go without saying).

Subscription fees for services work like how SaaS or software products are priced. A set of predefined offers or specific items are packaged, promised to be delivered to the client. The client makes payment either monthly or annually similar to how one subscribes to SaaS. Within the period of time, the client can choose to cancel or renew their subscriptions at any time.

A subscription model is a pricing model where you pay a fixed monthly fee to access unlimited services from a agency or a freelance. You can request as many projects as you want, as long as they fit within the scope and terms of the subscription plan. The design agency or the freelance designer will assign a dedicated designer or a team of designers to work on your projects and deliver them within a specified turnaround time.

Some of the drawbacks of a retainer model are: You might end up paying more than you need, as you might not use all the hours or services that you have paid for each month. You might have to commit to a long-term contract, which can limit your options and flexibility if your business needs change. You might have to deal with more administrative work, such as tracking hours, invoices, and reports.

In my experience, we've seen massive success in transitioning from retainer to subscription when we started to look at scaling our business. When you're engaged in a retainer, the client is the leader and controls your time. When you move to subscription, you're no longer selling time for money and can begin to scale. Yes, churn rate is a thing but it sure beats having a major retainer client drop you. You can predictably combat churn. For a lot of service providers, I think they'd actually be shocked at how much IP they use on a daily basis that they could roll into a subscription model and start to drive revenue from things already existing within the business.

Some of the drawbacks of a design subscription model are: You might not get to choose your designer or design team, as the design agency or the freelance designer will assign them based on availability and expertise. You might have to wait longer for complex or custom design projects, as they might require more revisions or feedback. You might have to follow strict guidelines and limitations on the number, type, and size of your design projects, depending on the subscription plan you choose.

TLDR: The primary difference between the retainer and subscription models lies in the handling of unused time. The subscription model permits the rollover of unused time, making it a more advanced version (2.0) of the retainer model. Also, the subscription model has no contract and can be cancelled at any time. Both concepts are similar, and the distinction between them remains ambiguous in some industries. My perspective is specifically tailored to the creative industry.

To make an informed decision, here are some scenarios: If you have a limited budget and need frequent but simple design projects, such as social media graphics, flyers, logos, etc., then a design subscription model might be more cost-effective and convenient for you. If you have a flexible budget and need occasional but complex or custom design projects, such as websites, apps, animations, etc., then a retainer model might be more beneficial and satisfying for you. If you value speed and consistency over quality and customisation, then a design subscription model might be more suitable for you. If you value quality and customisation over speed and consistency, then a retainer model might be more appropriate for you.

There is no definitive answer to which pricing model is better for your business, as it depends on various factors, such as: Your budget: How much can you afford to spend on design services each month? Your needs: How many and what kind of design projects do you need each month? Your preferences: How much control do you want over your designer or design team? Your goals: What are you trying to achieve with your product design?