Thursday, May 10, 2012

Courting Corporate Clients: Monthly Retainers v Hourly Rates

One question I have to put towards you other PIs (although, I guess, it could be asked of any other professional) out there is that concerning retainers. And by that, I'm not talking about the lump-sum paid in advance to cover immediate expenses and the like, but an ongoing arrangement between client and investigator.

How many of you have clients on retainer?

Are retainer-based engagements commonplace in your part of the world?

Okay, that's a couple of questions and I even have a couple more, depending on your answers. This is an issue that I have given thought to over the years, but one that I have never really found a satisfactory answer for.

What, exactly, does the Client get out of it? I can see what the Investigator gets; a degree of fiscal certainty.

How do you make the idea of a monthly retainer sound like an attractive proposition?

More questions!

In my never-ending quest for trying to secure new clients (the repeat business rather than the one-off kind), I'm toying with the idea of a retainer-based offer. Here's my plan for local law firms:

Say my standard hourly rate is $120.00. If a Client retains my services at, say, a modest $400.00/month not only do they get 5 investigative hours (or 5 document serves), but also all additional billing is at that reduced rate of $80.00/hour.

There is obviously a benefit to them - savings of 33% off the standard rate. A good deal, no? 

Now if I can get myself 10 such clients, that's a guaranteed income of $4000.00/month - whether or not they need my services.

Of course I can foresee a few problems. Firstly, law firms don't generally foot the bill for investigative services themselves - it is on-charged to their clients, so the savings offered are not really an issue. And while $400.00 is around an hour's billable time for a senior partner, my experience is that they generally don't like forking it out.

Fair enough, who does?

So that means perhaps a different kind of offer is needed.

Alright, so what about other business clients? What is going to motivate them into paying a monthly retainer when they might only utilise your range of services a couple of times a year, at best?

So, investigators:

  1. Do you have clients paying you a monthly retainer?
  2. What kind of clients are they (ie lawyers, insurers, bankers etc)?
  3. What do they get for their retainer?
I certainly would appreciate any advice or pointers on this.

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