Ask HN: Ok to ask retainer fee for being avail during office hours? | Hacker News Reader

Ask HN: Ok to ask retainer fee for being avail during office hours?

57 pointsgbrits53 comments

I'm in the middle of negotiating a nice freelance gig. The client now wants me to be available large parts of the day during office hours so internal developers can run things by me and be more productive.

That's all fine, except that part of the reason I'm freelancing is being able to be flexible in how I schedule my day.

Is it common to negotiate for an upfront retainer fee based on this? After all, I'm committing myself to be available for solely said client during the agreed on hours.

Another way would of course be to try and get a higher hourly wage, but it seems better from a negotiating standpoint to split to two.

Thoughts?

-EDIT- To be clear, the time that I need to be available for them are billable hours, i.e.: to get the primary job done for which I'm hired.

On top of that I need to be available for internal developers during those hours should the need arise. I therefore have to structure my working hours around the office hours of the client.

Therefore a retainer fee would sit on top of billable hours and would compensate for my lack of flexible working hours NOT incurred opportunity costs.

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The way to handle it is to offer it but don't require that they take it.

"OK we have three options regarding tech support. First is best effort response time which costs you nothing, next option is 3 day response time which costs $X, final option is 365 X 5 days 9-5 on call tech support which costs $300/week plus $100/hour per call out." Which would you like?

$300 per day and $250 per call-in hour.

An obligation to answer all phone calls immediately affects other obligations. A one person shop has no slack staff.

quite 15! years ago at BT the call out rates where $750 per month for 30 min response for 1 in 4 (plus toil at OT rates)

Can you explain what "30 min response for 1 in 4" means? Does that mean 25% of calls will be answered within 30 mins?

1 in 4 likely means you are on call 24 hours a day for 1 week out of each 4 weeks. The support is then shared between 4 people. That's a fairly typical arrangement in largish companies.

You had to make contact within 30 mins when paged/called and be working on the problem within 2 hours.

1 in 4 is being on call 1 week in 4 though some DBA's where on 4 in 4 and got called about twice a year very lucrative.

Thanks, that makes sense. Where does the 2 hours come from? I don't see that included in the original thing, or is it implied/standard?

Part of deal you had to make contact within the first time 20 or 30 min and be logged in and working within the 2h.

Another option, since the guys whose job it is to point this out seem to have taken the morning off, would be to simply charge more.

If somebody is paying several thousand dollars per day for your time, two things will happen. First, they'll be more respectful of your time, partly because it's so damn expensive, and partly because they don't seem you as that kid who does their web stuff, but rather as a professional like themselves who are not to be bothered lightly.

But secondly, you'll find that there is in fact a dollar figure for which you won't really mind being woken up at 10:30 am and asked to do a few hours' work.

When you make a good income, it turns your thinking from "Can't believe I gotta do this stuff for these assholes" to "As long as these assholes keep paying me like this I'll do this dumb stuff".

Are you in the UK? If you're freelancing through a limited company (as opposed to being a sole trader) you should check with your accountant to make sure you're not running afoul of IR35 before agreeing to this. On the other hand, if you're a sole trader they need to be careful to make sure that such an arrangement would not count as "deemed employment".

Nope I'm in the Netherlands, but we have similar rulings, e.g.: need 3 clients per year at least for contract not to be considered 'employment'. I'll need to lookup if these type of 'retainer agreements' can affect this. Cheers for bringing this up.

I disagree with the prevailing sentiment here. Availability during standard office hours is an expected part of any free-lancing gig. Nobody expects you to be available for the full 8 hours, but it is always expected that you will be available during a predetermined part of the day. Just ask any contractor in India or Poland doing a contract for a North American company.

In other words, you should say something like "$X for office hours availability. I'll give you a discount if you drop that requirement".

Charging separately for that will raise flags at the client's end. Also, many enterprises find it easier to deal with higher bundled rates than with more complicated structures.

That being said, what kind of availability are they asking for? AFAICT, the standard is for "same day" response. If they send a question in the morning, a response of some kind is expected in the afternoon, and vice versa. Much more than that justifies higher rates, IMO.

Agreed, I was expecting this to be about late night/weekend calls of "everythings broken! help!". I don't know how you'd say you charge extra for normal office hours.

I don't know how you'd say you charge extra for normal office hours.

It's the same reason that as the operator of a small business you can't just walk into your accountant's or lawyer's or bank manager's office and expect to see them without making an appointment. You could probably have a dedicated account manager at those places, and they'll probably be happy to provide one as long as you're paying them some multiple of the corresponding employee's annual salary for doing so.

Remember, you're running a business. You're not a member of your client's staff. That means they're paying you for the product or service you're providing according to your contract, not for being a bum on a seat for some fixed hours. It also means you will have necessarily other commitments in terms of business administration and potentially other clients. Anything that reduces your flexibility to do these other things or particularly that requires a degree of exclusivity for a single client is a big commitment and should be charged accordingly.

Personally, I wouldn't accept a long-term gig with fixed hours or on-site working. I also value the freedom that comes from working independently, and I have no wish to go back to more of an employer-employee relationship. If a client wants to work that way for a sensible reason and over short period (a few days during a crucial period leading up to launching a product, for example) then I wouldn't turn it down automatically, but my rates would be much higher (several times the normal rate I work off for my time, and multiplied up again if the engagement might then be deemed disguised employment and taxed accordingly).

I don't think it's that you're charging extra for normal office hours, but you're charging extra for rapid response and for making house calls. I try harder than most programmer freelancers (IMHO) to simply answer my phone and answer my emails, but in the OP's situation I'd also try to charge extra for what his client is asking.

> Availability during standard office hours is an expected part of any free-lancing gig

"Freelancing" for 6+ years here. I disagree that this is the case and in fact IMHO you should treat the client as though they are one of the many demands on your time schedule, not as though you need to fit into their time schedule. Our clients have always understood that I fit them into my availability and not the other way around unless we have worked out an agreement ahead of time and they are compensating us for it.

Further, one of the primary determining factors of whether you can claim to be a 1099 worker is if your clients dictate where and when you do your work - if they get to tell you where to be at what time, you are an employee.

My advice is as another poster stated, negotiate the hell out of this with 2-3 pricing options.

Whenever I'm billing ~40 hours / week to a client, they've always expected that I'm available for a couple of hours every day at a time convenient for my primary contact.

If I'm billing substantially less than 40 hours, clients have always been much more flexible.

That may be a good out for the OP. If you want flexibility, perhaps a 20 hour / week contract would be a good option?

You use a retainer when you're worried they're not going to use you enough and you need a minimum amount of cash just to make it worthwhile.

The danger here is this arrangement can turn into you being an effectual employee that's getting shafted on everything an employee gets. The proper deterrence here is a sufficiently high hourly rate so that it becomes really painful for them to do that for more than a short time.

So yes, absolutely raise your hourly. The fact that they can ask you to be so available means your rate is too low. So raise your rates such that you'd be really, really comfortable, rich even, if they decide to do that. Then when they do, you won't feel like you're getting shafted.

$250 an hour (or the equivalent in your currency) is a good start.

Normal professional availability is one thing. A contractual obligation to be responsive at a client's beck and call is another. Charging a my-time-costs-real-money-and-this-is-a-pain-in-the-ass rate for fast service is perfectly reasonable.

It is also reasonable to flat out refuse. A client who doesn't think a designated point of contact is a good way to handle a contract may be a bit if a red flag.

Finally, it is perfectly reasonable to recognize that it is not a service you can provide as a small consultancy and walk away. A high maintenance client can kill the ability to maintain a diverse backlog.

Good luck.

Freelance doesn't mean you aren't responsible to clients during normal hours. But it does mean that you can generally can have a more flexible schedule.

My comments below assume this client knows you are not a dedicated resource to them, if they expect you are then you are really just a contract employee and then you need to be available all X hours of their workday and it is not reasonable to charge any additional fees.

First, set your hourly rate: $XXX/per hour of working hours. This doesn't vary.

For support/training questions, 24 hour response on all questions no additional costs. You should always make an effort to answer fairly quickly even with this. Cap it to Weekday only, meaning a question answered on Friday afternoon may not be answered until Monday.

Optionally, 4 hour response on all questions, additional cost of $xxxx per month for the guaranteed response time. If the question takes more than 15 minutes to research and answer then you also get your billable rate in increments of 15 minutes with a 1 hr minimum. Also, put a cap on the number of questions within an 24 hour period that qualify for the 4 hour response time. Ask me how I know, DOH!

From this template you can play with the numbers, response time etc. But effectively if they know you are not dedicated to them, then all this is reasonable. We sign these regularly with clients and don't really hear any complaints. In fact we went to this because we would get complaints from clients that sent us an email on Tuesday at 2pm and didn't get a response from us until late that night or the next morning. So I instituted the 24hr response unless you pay for dedicated access. Since then I haven't had any complaints and honestly we get back to people faster because they are paying for it. The other side affect is you can hire contractors yourself to help cover questions when needed because you have the revenue to support it.

Since you took on freelancing in order to have freedom, then I would not surrender that freedom for a marginal financial bump.

I would tell the client you are available by phone or email during business hours, and that you will answer the phone, but you might not be at your desk. If you have a lot of conflicting meetings (ie. other clients) then lay out specific hours of availability to at least answer the phone.

I feel the client would be assured if you just answered the phone when needed during business, but you don't necessarily have to be sitting at your desk when the phone rings.

I would try this arrangement as best effort, and avoid hard-coding your hours into a contract, and as long as the client doesn't complain that you haven't been answering the phone then all is well.

Upsell.

"Unfortunately I don't offer that particular service."

"However I can offer a six month package of weekly onsite training at my onsite training rates."

It's definitely ok, and it will probably work out better for you than asking a higher hourly wage. The client may of course be reluctant to accept this if they haven't done any similar arrangements before.

As a side note, having flexible hours is great if you need that kind of flexibility in your life. If you don't, consider billing by day/week.

How about instead you discussu a SLA (Service Level Agreement). For example you agree that emails / calls are to be acknowledged or responded within 1 hour during 9-5 Mon-Fri for £/$XXX per month.

You could go a step further any have different levels, so for a higher monthly rate you'd respond within 30 minutes, etc etc.

For a couple of years, back in 2008-2009, I had a freelance support gig with a former employer who I'd built a system for when I was a permie. We didn't have any real solid agreement on my availability, and the deal was for £100 a week, paid 4 times a year. I'd moved on to contracting, so I had to juggle my new full-time work with the support phone calls.

I'd stick with keeping it separate, rather than the higher hourly wage. I'd also try and put a limit on the amount they can contact you (perhaps a maximum number of hours per day), as I had occasions when for weeks I'd have no phone calls, and then on one day spend 6-7 hours on the phone to them.

I am also pro-retainer. I look at it this way: If under this agreement you realistically need to spend some time every day (or every other day, or even one day a week) for this client you need to plan ahead for this. And that means you cannot offer full-time work to other clients. So if you turn down other clients and then only sit around waiting for a call that never comes, you are losing money.

A retainer that guarantees your availability and a fixed amount of hours seems to benefit both sides and is not at all unusual in my experience.

Check with your accountant/tax advisor about this too. If a client is requiring specific hours or availability, the IRS may consider you to be an employee not a contractor. (I'm assuming you are based in the US but similar considerations may apply elsewhere).

One of the key "tests" for contractor status is that you determine when you do the work. It's not the only consideration, but combined with other requirements of the contract it could tip in the direction of you being considered an employee.

I would be apt to think that if there was a fair meeting of the minds, and not a Uber based over the barrel "agreement", then this is a non-issue.

Every case where 1099's have complained, is because they are employees where the company tried to shove employment risk to the 1099.

I would be apt to think that if there was a fair meeting of the minds, and not a Uber based over the barrel "agreement", then this is a non-issue.

I don't know about the US, but the fixed hours/degree of client control is definitely an issue for employee vs. independent status in some places, and something you need to check in your local rules if you're in this position. Different places have very different rules about when to consider someone a disguised employee and probably tax either or both parties accordingly, and in some places the rules seem to be quite black and white.

If they are paying you to work on-site, then it makes sense for them to have some say in when that happens, or you might as well have been working remotely. It's hard to fault them for wanting to let their own team get a chance to understand the tech, so your project does not become yet another "PoS left by some consultant" that nobody wants to touch.

I'd suggest seeing if perhaps you can reach a compromise where you retain some flexibility, but there's a bunch of your hours that are sure to overlap with the office hours (e.g. always be on-site for 3-4 hours around noon). And maybe you'd even only have to do this part of the week, e.g. mon-wed-fri? With most conflicts, the solution is usually to have both parties answer the question "what are you trying to achieve?" and then working together to find a third solution that satisfies both parties, instead of focusing too much on the schism between the two proposed solutions that the parties had come up with individually.

If all this is a big hassle for you then by all means, charge accordingly, and in the future think more about what kinds of gigs you take on and how much face time they are likely to require. Maybe 'remote only' is a better fit for you?

It's certainly OK to ask. Think about what you are prepared to negotiate if the client seems inflexible. For example, does your fee really need to be paid upfront? Sometimes if you are dealing with a large/inflexible client it can be hard to get them to do anything outside their 'standard shape' of deal, but of course that depends on your bargaining power and the level of influence of your client within the organisation.

[start quote] The client now wants me to be available large parts of the day during office hours [end quote]

I'm not sure what "be available" means in this context.

I just lost a client because they wanted responses--including completed development--within an hour. I said I had other clients / projects / commitments and couldn't guarantee dropping everything for their [relatively] small commitment.

I tried to negotiate a "Same day acknowledgement" and "next day look at code"; but that seemed to be a no-go.

I did not try to negotiate on-call rates because I didn't want to give up my flexibility [but it may have been a valid approach]

So, do they expect you to be on call? Do they expect immediate response, or hourly response? If so, then I'd take one of two approaches. Either a retainer for being available and then your normal hourly rate. Or no retainer; but double your normal hourly rate.

Or can you get on by just negotiating office-hours with this client; as others have suggested. "The best time to reach me is between 2 and 4; and I'll get back to you as soon as possible that time in the unlikely case that I miss your call/IM/Text/Email."

Or can you just make it up as you go. "As long as you call before noon; I'll get back to you the same day; otherwise it may be after close of business, or during the next business day"

Overall, a client request that you are available during office hours is perfectly reasonable. But, the level of commitment required from you is what needs to be determined would affect billing rates.

I think the bigger question is when you say "available large parts of the day" do they want you on site at their location during that time or simply available via phone/email during that time?

If it simply phone/email, you could consider like @hoodoof said with setting up a tiered support pricing plan. With phone/email only you can still work on other projects you just need to respond to their requests promptly during that time which can be worth an additional amount.

On the flip side if they want you onsite during that time it becomes a completely new ball game as you are unable to service other clients during that time which can impact your income. In this case I would build that cost into the contract, not necessarily charge a retainer.

Finally, as @y0mbo was saying, if the client just wants to know you are available during their office hours compared to working at night then no you can't charge an additional fee for this. This may be the case if they are in a different time zone and want to ensure that they can reach you to discuss the project and such. Again, if this is the case I would build the cost into the contract.

If they want you to to be available when it isn't convenient for you, either:

- refuse

- negotiate some sort of middle ground (like being available during overlapping work hours if you are in different time zones or 3-4pm every day)

- charge an "on call fee" for the X hours a day that they want you available on call - whether they use those hours or not.

As a professional, many things you do have a real value to your clients and you shouldn't feel weird charging for them. You probably would place real value on having a locksmith come out to on Sunday to get you back into your house for example. The locksmith is going to charge you a certain premium over what he might normally charge if you called him out on a weekday.

Examples of things you should charge for or charge more for:

- Driving out to the clients for a meeting. That 2 hour meeting cost you 2 hrs plus X hours of commute time during which you can't do paying work for another client.

- Anything that transfers risk to you from the client. If you would charge $100 hour for something, charge $150 (at least) for doing the same thing under a fixed price contract.

- Anything that helps make the client more money - even if it is "easy" for you.

If it's a retainer, then they pay you up front for a certain number of hours you'll be available. This can be at a higher fee than the other work.

Another alternative is to just have an on-demand hourly rate that is higher than your normal rate. You could have pre-scheduled "office hours" at the regular rate, but if they want you at other times, they get to decide to pay you a little more.

I'd harden your mind a little bit. You're not some lowly supplicant "asking" for x, y or z. You are a skilled professional (hopefully). You REQUIRE or DEMAND rates that befit your skill. If you go into a negotiation with the mindset of asking, you have already lost. Strange, but true.

I second this suggestion.

It is your life, so you decide what price you want to put on the reduction on your freedom and flexibility. It might also help to understand the full ramifications of what you are being asked for. Unfortunately, I've seen retainer agreements come to grief because the terms and conditions were not sufficiently clearly spelt out.

Many clients ask you to yield an inch and then take a whole mile. Very hard to push back on escalating demands when you haven't set limits clearly.

I think you make a good point. In a similar situation (I wasn't personally involved), I know the consultant charged 20 % of the normal rate for being "on duty" and charged the normal rate for every begun half hour of active service. Had it been me, I would have used a similar model.

IMHO it's pretty much standard. If you're "on call" for another company, even during business hours, that needs to be written in a contract, and you should put a dollar figure on it.

It's a service you provide, ask for a higher overall hourly fee during office hours, split the hourly fee between standby time and normal fee so the client knows the difference.

I think a retainer fee is a bad idea and this isn't really what a retainer fee is for anyways, so it's kind of weird.

Your client doesn't really care why you are freelancing and unless you are like the best of the best at what you do, I'd urge you not to bring this up as part of your pricing strategy. It makes it sound like you are a pita to work with.

I only do day rate. No hourly, no project based pricing. Covers this kind of situation perfectly.

And, of course they want you available during office hours.

I wouldn't structure it like this. It's more complicated and risks giving the impression that you are nickel and diming them or are too much trouble to deal with.

I would work out a flat rate that is as competitive but still makes it worth your while to accommodate their requests. Later they may even relax the requirement and you'll still be getting the higher rate.

Standard accounting practice is to bill everything billable.

Collecting the nickels and dimes is just good business. If the client wishes to avoid being billed for nickels and dimes, they may wish to negotiate terms based on the value of avoiding it. However, any going concern will already have an accounts payable process in place that swallows up all nickel and dime invoices regardless of source.

Any client who complains about nickel and dime invoices is just nickeling and diming. Nickling and diming while trying to make the nickels and dimes as large as possible is the core principle of the time and materials consulting business model. Eating invoices is a way of marketing a company as not-neccessary-to-pay.

None of which is to say that you should nickel and dime your friends. Just your friends' businesses.

Yes, you should do it. Don't forget to bill for commute time & expense (I mean factor it into higher cost for the client, do not make it explicit). It's also good to discuss what happens if you're ill and should not be commuting to clients' office - you just don't bill them for onsite mode.

I'm of the opinion that a retainer (+hourly) generally works out best for both parties. The value derived from a better working relationship far outweighs simply being available for quick phone calls.

Why not agree to let them schedule meetings at least 24 hours in advance during office hours instead of you sitting there waiting? Pull versus push is always better. Then just bill them the regular rate.

Guaranteed income without having to do any work? Sign me up! You can crank low focus jobs like email and get paid to do it. I don't know why you wouldn't want a retainer.

Your client wants to be able to communicate with you? How dare they!

I'm not sure I understand why this is something you should be compensated for outside of the gig itself. Communication is a basic part of any business relationship.

You are a freelancer. Yes, that means you have the freedom to schedule your day. It does not mean, however, you can completely disappear and ignore your client's team just because you'd rather work at night. That's unprofessional.

OP never said he/she didn't want to be available for the project, its about committing to be available during office hours thats troubling him/her.

It sounds to me more like the OP doesn't want to be peppered with 30-second bits of communication all day while he's trying to work on something else. You can't keep billing Client A while you're responding to an email from Client B, but if it's a 5-minute thing, what are you going to do, clock out and clock back in again all day?

So the communication from one client could be disruptive to other work, i.e. it could make a person lose money. If making a certain agreement with a client would cause me to lose money, it doesn't seem unreasonable to me that I would either charge for it or not agree to do it at all. In my experience, reasonable clients respect this.

So they want exclusivity for those hours then bill those hours ie a full day.

Why not agree to let them schedule meetings during office hours instead of you sitting there waiting? Push versus pull is always better.

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