I thought this article might help clear up some confusion for anyone uncertain about implementing retainer pricing in their virtual assistant practice. Great practical information!

How To Use Pre-paid Retainer Packages In My Virtual Assistant Business

For many virtual assistants, offering a pre-paid monthly ‘retainer’ package can be a valuable option for both the VA and their clients. I offer my clients their choice of being billed on an hourly basis for actual use at the end of the month or purchasing pre-paid hours at a discount.

Read the full article here.

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Since I've taken down the Start a Virtual Assistant Business site and collection of articles, I'm pasting the entire original article in the body of this post:

For many virtual assistants, offering a pre-paid monthly ‘retainer’ package can be a valuable option for both the VA and their clients. I offer my clients their choice of being billed on an hourly basis for actual use at the end of the month or purchasing pre-paid hours at a discount.
When a client purchases a pre-paid block of hours for the month, I can better determine how many hours I need available for the client during that month and they can budget their support expenses for the month, as well.

I base my initial retainer hours on client needs. For example, I have 1 client who uses 5 hours/month, 1 who uses 12-13 hours/month (I get a 10 hour retainer from her and bill the excess on the last day of the month) and another one who averages 5 hours/week (20 hours/month). If a client CONSISTENTLY goes over their pre-paid retainer hours, I request a larger retainer for the following months to help me budget my time. I can usually calculate how many hours any given client will use based on past experience and their specific support needs. Since I plan my work week based on my schedule and not theirs, this helps me to ‘budget my time’ as well as being sure I get paid for actual time worked.

The end of each month is the expiration for pre-paid hours. I bill retainer clients for a minimum set amount of hours during the month based on my client’s anticipated needs. If they go over the retainer amount, the additional hours are billed at the end of the month at my discounted hourly rate, payable with the next retainer. If they go under, they lose the excess. To date, none of them have gone under. If they consistently go over, I request them to ‘up’ their retainer accordingly.

At the end of each month, I send my clients their invoice for that month showing how much was paid out of their retainer funds and the balance due (if any). I also send them a reminder to send me the next month’s pre-paid retainer amount.

I use QuickBooks to track retainer accounts as follows:

When retainer funds are received
Create sales receipt
Customer job
Item: Retainer ($ received from client)
Deposit funds into physical retainer bank account; record deposit in QuickBooks retainer bank account
When client work is completed/end of month
Create invoice
Customer Job
Item: [actual expense account]
Item: Retainer (enter $ as negative amount earned from client]

The invoice will show as paid and the funds will be removed from the retainer liability account. If you use a separate retainer bank account, you will need to transfer the funds from the retainer bank account to the operating bank account and make a g/l entry to record the transfer.
DB: Operating Bank Account
CR: Retainer Bank Account

About the author: Lily E. Chambers is a Certified Professional Secretary (CPS), Certified QuickBooks User (CQU) and owner of The Virtual Office Goddess, LLC. Her specialty is handling the necessary bookkeeping and administrative tasks for entrepreneurs so they can focus on growing their business instead of running it. Lily is a contributing writer to Business Darlings.

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Hi.. This is a great (and timely) article! I've been trying to figure out how to handle retainer accounts. Do you have to have a separate retainer bank account, or is this just your preference?

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Lisa Salem
Monarch Virtual Assistance LLC

I use the same bank account but track my retainers in QuickBooks. If the funds were going to be kept long-term (three or more months) I would open a separate, interest-bearing account. However, my retainer packages are only good until the end of the month and whatever funds aren't used are forfeited.

I ALWAYS make sure that the amount of retainer funds listed in QuickBooks are, at a minimum, in my bank account balance. Make sense?

Thank you for posting this. I have started to Bill Retainers for a few clients and this helped me out alot.

Jessica

Thanks for posting this article! Very helpful.

Thank you! This is a great article! I was wondering about that myself. I really like the idea of giving discounts for prepaying, I think it's a great way to secure business. I also like how she explains how she bills at the end of the month. I'm just getting started, don't have any clients (yet!), and want to be sure I get all my ducks in a row before I dive in.

Years ago I worked in a law firm and had to reconcile the client trust account each month. A retainer technically isn't your money. It belongs to the client until it is billed. I think a separate bank account for retainer money keeps things on the up and up. That being said, we're probably not dealing with hundreds of thousands of dollars on a monthly basis, so comingling the money may not be such a problem. I think for now I'll keep them together, but look forward to a time when a trust account will genuinely be necessary.

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&rea and Associates, LLC
"Dedicated to Helping Small Businesses Compete"

Thanks for sharing this, have bookmarked. I'm currently working on my retainer packages.

I am thinking of whether or not to use retainers. This is great info. Thanks.

This information is very helpful, thanks for posting!

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Karin Seifert
Seifert Virtual Solutions

Thanks for posting. Very helpful article. I will use this for future reference for sure.