Contracts | How to Build a Killer Long-Term Contract
A man might have his dog, and a girl may have her diamonds, but a rock-solid contract is a freelancer’s best friend. If you’re not using a contract for every agreement, you’re not practicing safe freelancing and you’re leaving yourself and your business vulnerable.
Reasons to get your legal affairs in order
1. Having a contract prevents issues of nonpayment
Did you know that 71% of freelancers experience client nonpayment at least once in their career? Within that 71%, the average freelancer loses almost $6,000 in income.
If you want to avoid lining your pockets in IOUs, a contract will communicate payment terms at the outset—and let otherwise unscrupulous clients know that they won’t get away with scamming you.
Furthermore, if it comes to it, a contract is the best asset to have on hand if you have to take a case of nonpayment to court. (You can learn more about the nonpayment issue and join the Freelance Isn’t Free Campaign at Freelancers Union).
2. Use a contract to set clear deliverables
We’ve all been there: communication lines get crossed and you wind up doing twice the work because you didn’t deliver what the client wanted the first time around. A contract is a handy excuse to get all your deliverables down in writing—so your client knows what to expect from you, and you know what you need to do for your client.
That way, if there’s some dispute about the scope of work later, you can point to the contract and renegotiate if appropriate.
3. Contracts outline contingencies for worst-case scenarios
Spent hours on a project only to hear from your client that it’s been cancelled? A contract can stipulate what will happen in this kind of situation. Do you charge a kill-fee? Are you paid for work completed?
Similarly, if you and your client need to part ways, a contract will set out expectations in that scenario—for example, how many weeks' notice you or your client needs to give, what happens to your work when you no longer work for the client, etc.
4. Contracts help you keep accurate tax records
Sure, you can rely on digital invoices and payment receipts, but contracts provide a pretty indisputable explanation of from where your income is derived. If the IRS comes knocking, you’ll have a nice stack of evidence to prove that you are indeed the freelancer you say you are.
5. Contracts make you look more professional
It’s more psychological than legal, but just like your bright, shiny website, fancy business cards, and workplace-appropriate attire, a contract can go a long way in proving your legitimacy to a client. As freelancers, we know that reputation is a big part of the game, and emphasizing your professionality means that you’ll be more likely to score bigger, more lucrative clients.
What to include in your on-retainer contract
When you’ve evaluated whether your client might be open to the idea of you working on retainer, it’s time to start putting together a basic contract for the agreement.
For on-retainer clients, we recommend starting out with a traditional contract template, then augmenting it with special clauses applicable to a long-term agreement.
We recommend doing this before pitching to your client for a couple
of reasons. First, it helps you define your vision for how the relationship will go—which will make it easier to sell to your client. Second, leading the agreement gives you the upper hand in negotiations.
As you’re coming up with appropriate terms for your contract, be sure to include the following:
- The amount you are entitled to receive each month—are you charging by the hour or by the project? (For example, 25 hours per week of consultation services, versus four blog articles
- per week.)
- A detailed description of the “scope of work,” including milestones, deliverables, and the dates they are due.
- A definition for how the terms of the arrangement can be altered (i.e. “mutually agree to changes in the scope of work, which must be written and attached as an addendum to the original agreement”).
- Contact information, including the business addresses of both you and your client.
- Terms that protect you in case of late or nonpayment.
- Any invoicing procedures you’re expected to follow.
- During what hours you’re available for your client to contact you.
- At what date your client needs to let you know about the next month’s work.
- What notification you need before the retainer relationship can be ended.
Be sure to research your specific industry for any particular clauses that you may need to include. For example, many writers like to include indemnification clauses, while many artists and photographers will want certain clauses around licensing their work.
How to pitch an on-retainer contract to a client
You’ve evaluated your client and project for long-term potential and outlined the terms of your ideal partnership. Now, all you have to do is convince your client to climb on board!
Here are a few strategies for a successful conversation.
1. Lay the foundation
Start the conversation by reminding your client about your past successes with them and your dependability. Let them know how much you enjoy working with them to reinforce their perspective on your great working relationship.
2. Talk value, not rates
This is not a time to negotiate your rates, but it can be a good time to pitch additional services for more money. You can and should embed discounts in your on-retainer agreement, but you should also take the opportunity to show your now-trusting (and trusted) client how you can add value to their business with a few more offerings. Focus on how your client can profit from your services long-term.
3. Suggest a trial period
We’re all a little bit commitment-phobic, so ease the transition by suggesting a trial period. It’s a great way to ease into the partnership and find out if this new agreement works for both you and your client.
About the author
Laura Murphy is a new soul and media geek who writes about sustainability, pop culture, and freelancing. She manages the blog at Freelancers Union which hosts free events and provides educational resources.