Tuesday, December 1, 2009

Retained Fee Structure


As a graphic design student having limited experience in the billing process, I found this article to be very informative. After a design job has been completed it has been my understanding that the client is then billed for hours spent on the project and that is that. However there is something called a retained fee structure that bills clients in a completely different manner.

Ryan Kovach, author of this article and part owner of Dillinger & Kovach, states that web design is not something that can ever be finished. In the print world, after many revisions, the final piece is printed out and the job is done. The great thing about working in web design is that the medium is constantly changing. When new technologies arise websites need to be updated.

As a web design firm, Dillinger & Kovach understands this and has transitioned from a billable hour/project to a retainer structure. When this firm takes on a new client, the client must commit to a one year agreement (after the date of "completion"). In this year after "completion," the client pays a monthly fee that includes any edits, additions to new technology, and any further consulting.

The greatest benefit to using this type of billing is that the firm has saved an immense amount of money on marketing costs. Because most clients sign contracts that extend beyond the one year agreement (many have signed 2 or even 3 year agreements), the firm is not so focused on outreach to gain new clients. Some other benefits include: needing fewer clients to make the same amount of money, more accurate forecast of internal costs and budgets, longer-term relationships and possibility for referrals, and easier adjustment during economic downturns.

1 comment:

  1. Nice assessment. Way to be thinking about your future business. Good luck!