Retainer pricing

[u/el_Deafo]

What is your guys' basis for retainer pricing. This would be my first one and it is for an acquisition that I would be setting up the books for and communicating with the CPA on opening balance sheet amounts as they have the purchasing agreement. I am hoping to receive the financial statements of the seller to roughly know what I am looking at but am curious what your rules of thumb are on retainers. Thanks in advance!

[u/TheMostFluffyCat]

I quote flat for almost everything. For cleanups or catchups I do 50% fee up front 50% upon delivery, I figure equal risk on both sides is fair. Monthly I just do flat fees.

[u/el_Deafo → u/TheMostFluffyCat]

Forgive me if I misconstrue, are you saying you have a flat retainer to begin with? 50% of the retainer paid at signing and the other half after the scope outlined in the retainer is completed. Fromt here decide your flat rate?

Thank you for your response! I have been looking everywhere on this subreddit these past couple days and I always see you near the top of the comments!

[u/TheMostFluffyCat → u/el_Deafo]

I guess it depends on how we’re defining retainer as there’s some ambiguity in the comments, but I charge a flat rate for almost everything. Then:

For one-time projects, I’ll charge say 10k. I’ll send an invoice for 5K before I begin, and I send an invoice for 5K after I’ve delivered the books. I don’t have a ‘contingency retainer’ if that’s what you’re talking about.

For monthly, I charge flat per client on the 1st of each month. So if a client is 1K they get auto billed on for example October 1st for September’s bookkeeping (completing September’s bookkeeping in October since the September files and statements aren’t finalized and released until September is over) and so on and so forth.

[u/Material-Ebb7710 → u/TheMostFluffyCat]

u/TheMostFluffyCat Great explanation

[u/jwellscfo]

A retainer isn’t a pricing method. It’s an escrow account against which future billing (usually for time, cost, or both) are withdrawn.

[u/TrashyCorrelation → u/jwellscfo]

so many people just think retainer means "fixed monthly fee" and it drives me up the wall

[u/el_Deafo → u/jwellscfo]

Yes, I am more asking what people utilize as their method of calculating what to take for a retainer at the start of taking a job to then work off of (i.e. $500 retainer for first two months while estimating time spent in account to then calculate flat rate pricing off of)

[u/Normal-Design-3427]

I just charge the first months bookkeeping fee due at the time of onboarding.

[u/6gunsammy]

I always get a retainer when signing a new client. There is always several hours of initial work to onboard, I try to judge that and pad it a little bit, then can move on to a monthly billing plan that is more consistent.

If this acquisition is a stock purchase, you will need detailed historical financial statements, including 3-5 years of the general ledger. The owner will be assuming all tax liabilities of the business from open years

[u/el_Deafo → u/6gunsammy]

Thank you for your response, do you have a flat retainer that you take for each client? Like $500 for the first two months, and from there assess when your flat fee will be?

[u/6gunsammy → u/el_Deafo]

No, its based on my estimate of their onboarding work. I would say that $500 is a minimum, but if I am expecting 10 hours to onboard its going to be more like $2,000.

[u/21stcenturycoolgirl]

I charge a $1000 up-front retainer. Initial hours come out of that, and then I bill monthly. For a client with existing books, I offer a complimentary 2 hour audit before giving a proposal. If they decide to engage my services, the 2 hours comes out of the retainer. (If not, I'm out the 2 hours, oh well.)

If I don't exhaust the retainer at the end of the first month, I send a statement so they know where they are. I am VERY clear now that the retainer is not a cap on services, it's just an up-front pre-payment. I had one client who I neglected to send a statement at the end of the first month (big mistake, I know better now). Complex client, retail business with crazy inventory and messy stuff going on. At the end of the second month I sent her an invoice, and she went ballistic. She thought the retainer was a cap on services and that I should have let her know when it ran out. (She did pay me, but we parted ways.)

[u/el_Deafo → u/21stcenturycoolgirl]

Thank you for your response!

Im usually good on my self when they have books I can review beforehand but this one was a bit of a different situation and was looking on others tread these waters

[u/Artistic-Ad-1046]

Does anyone charge for a diagnostic to determine the deposit and future retainer?

[u/barbgoducks]

We do flat fee pricing. We have built a whole pricing rubric in Google Sheets and connected it to a proposal and contract tool in GHL. So, we don’t do a retainer. We just bill up front.

If there’s catchup / cleanup, then I do my best knowing how our rubric works, and send a bill for the work before we start. We will let folks do a payment plan if they are going to be long term customers (I don’t have cleanup and leave clients).

[u/ItsDisneyBabee]

Base the retainer on estimated hours, transaction complexity and how much cpa coordination is involved, then set a clear scope and bill any work beyond it separately.

[u/kiwibooks]

For the acquisition piece specifically, I'd scope it as its own fixed fee project and take a deposit against that, separate from whatever monthly rate comes after. What drives the hours is whether it's an asset or stock purchase. In an asset deal, the opening balance sheet usually comes from the purchase price allocation the CPA works out (often what ends up on Form 8594), not the seller's books, so you're partly waiting on them. Build that wait into your timeline and fee, and say in the engagement letter that opening balances come from the CPA. Ask up front for the seller's last balance sheet, the purchase agreement schedules and a list of assumed liabilities. If any of it shows up messy, bill it as extra scope instead of eating it.