Pros and Cons of Retainer Fees Versus Commission-Based Fees

A question about the service industry, which may be as old as the industry itself is this: Retainer fee versus commission-based fees? Which one is better?

Let’s begin with the basics. What are these two categories and what do they entail? In simple terms, a retainer is based on a flat rate (“à la carte” rate), while a commission is a rate that changes based on what you sell.

Still not sure which one you want to delve into? Read on to understand the pros and cons of both so you can make an informed decision for yourself.

Retainer fees

What are the pros?

  • Steady and reliable pay
  • Stronger clients who are easier to keep
  • Predictability of income and time required to complete work

What are the cons?

  • Scheduling conflicts may exist
  • Dependency on existing clients to a large extent
  • Potentially lower income
  • Can be misused i.e. overworked by clients
  • Levels of work vary greatly

 

Commission-based fees

What are the pros?

  • Higher level of flexibility
  • Potential for high incomes
  • Self-reliance and independence
  • Less monitoring and micromanaging by clients
  • Benefits of allowance
  • Pay for performance
  • Attracts the best of the best
  • Better value

What are the cons?

  • Constant and quick deadlines
  • Early pay-out expenses
  • A more aggressive approach
  • Unpredictable workload and hours
  • Unsteady income
  • Highly competitive environment
  • Percentage-based income
  • Refusal of career advancement
  • Low job security and stress

Now that you have the knowledge, it is time to shop! Head to gumtree.co.za or your Gumtree app (click for Apple & Android).

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