A Business Development Retainer Agreement is a contract between a company and a business development consultant or agency. The retainer agreement defines the terms and conditions of the services that the consultant or agency will provide to the company for a specific period of time.
When to Use
What Is a Retainer Fee in Business Development?
A business development retainer fee is a predetermined fee the company pays the consultant or agency for services over a fixed period. This fee structure provides a sense of security and reliability for both parties.
The consultant is assured of consistent work and compensation. The company benefits from regular support in meeting its business development objectives without the need for ongoing negotiations.
What Does the Fee Cover?
The retainer fee covers the services and activities that boost the company’s business development efforts, including:
- Market research
- Lead generation
- Strategic planning
- Partnership development
- Sales support
The agreement specifies what the fee covers. This ensures transparency and that all parties have the same expectations.
How To Price Business Development Retainers?
Pricing business development retainers can vary based on the scope of the services, the complexity of the company’s needs, and the expertise of the consultant or agency. Some common pricing models include:
- Fixed Monthly Fee: This is when the business development consultant or agency charges the company a predetermined, consistent amount each month for their services. This approach provides the company with predictability and stability in its expenses. Using a fixed monthly fee is particularly suitable for companies that require ongoing support and want to budget their business development costs effectively without worrying about fluctuations in pricing.
- Percentage of the Company’s Revenue Growth: This is when the business development consultant or agency ties their compensation directly to the company’s business performance. The fee charged is calculated as a percentage of the revenue growth or increase in sales generated by the consultant’s efforts. This approach aligns the consultant’s interests with the company’s because their earnings are directly linked to their ability to drive tangible results and contribute to business growth.
- Combination of Both Models: This is when the business development consultant or agency charges a base fixed fee to cover their regular services and operational costs. Additionally, they may negotiate a performance-based component, such as a percentage of the revenue growth achieved beyond a certain threshold. The hybrid model provides a balanced approach by offering stability through the fixed fee and incentives for exceptional performance through the revenue-based component.
Assessing the market rates, the value provided, and the company’s budget is crucial for a fair and mutually beneficial pricing structure.
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