In the early years of Planet Argon, all of our design and development projects were broken down into short iterations. Prospective clients would approach us with their big idea and we’d provide some ballpark estimates to help them determine if they had the budget to make it happen. We’d then propose an initial discovery phase, which would help us draft a Product Roadmap with corresponding iteration schedules and cost ranges on each of those. After each iteration, we’d refine our estimates for the subsequent iterations and make sure we were still on-track. Iterate. Iterate. Iterate. Launch!
This approach did work great for clients looking to have a Minimum Viable Product (MVP) built.
This approach didn’t work quite so well for clients looking to have us, also, provide maintenance and support to their product that was already running in production.
In the scenario where a client’s project was already in production, we opted to build a retainer model that would allow them to reserve time, each month, with our development (and design) team. This budgeted time could be used to support and tackle those smaller, iterative improvements that production applications regularly need.
We set up a structure where clients could build and prioritize a living Product Backlog at their discretion. At the beginning of each month, they’d pre-pay for a bucket of time that could be used on tasks such as “add two new fields to form X on page Y”, “add e-commerce tracking code to the shopping cart checkout process”, “implement A/B testing on landing page X”, “export the following data as a CSV for my investor meeting next week”, “fix a bug where…”, “oh shit, the API is down at 2 AM!!”, etc. These smaller one-off type requests support issues could be performed against a planned budget without needing to go through our regular iteration-based Statement of Work process. Simpler for our clients. Simpler for us.
While we knew it would save us a lot of proposal writing, we didn’t, initially, think about how much time this would save our clients who worked at larger organizations. We had one client, in particular, who called and thanked me for moving them to this model. She said something along the lines of, “I was able to go to my boss and request an annual budget to contract Planet Argon on a monthly basis. Last year, I had to get approval on over twenty Statement of Work proposals for your team, which required me to sit down and explain what all the deliverables were going to be… twenty times.”
One important caveat to this approach was that it required a lot of earned trust and expectation management. With our iteration work, there was an amount of risk accounted for in our pricing models to protect both parties. One of the reasons so many agencies sell two-week iterations is to manage risk. When you provide a client with a list of deliverables with corresponding estimates, the smaller the scope of work, the lower the risk on any of those items opening up pandora’s box and blowing the overall project budget.
It was, also, great to know that our retainer model was mutually beneficial. So, we began pitching this model to prospective clients and within two years, nearly half our revenue was from secured retainers. For new projects, we’d work in an iterative fashion and for in-production applications, we’d propose a retainer. In the scenario where a client approached us with a collection of work that was much larger than what could be accomplished, timely, within a retainer, we would still propose a series of short iterations for those deliverables. We’ve had great success running these two models in parallel over the years.
From a business owner perspective, the retainer model drastically increased my confidence that we weather our seasonal sales cycles.
In a future post, I’ll share some additional benefits that we’ve been able to begin offering our clients within a the retainer model.
If you’re selling iterations that are expected to take more than a month, I can’t help but wonder if you’re some sort of daredevil or a little insane?