Payment Models: Monthly Retainer vs Scoped Proposal
There are several ways to fund a software project. This article seeks to clarify two of those payment models:
Monthly Retainer
A retainer based project is one where the client deposits funds with the development company in order to retain a commitment of focus from the company for a certain number of hours each month. The development company works closely with the client to define and prioritize the work on a daily, weekly or other defined periodic basis. The development company discusses the used and available time, tracks their time detail, and provides a detailed accounting of time billed against the available balance.
Scoped Proposal
A scoped proposal based project is one where all details of of a project (“the full scope”) is defined before a project begins so that a full project price can be determined. The development firm commits that they understand the scope and features and commit to complete it for a certain price. The Client also commits that they agree to the scope and feature and agrees to pay a specific price.
| Feature | Retainer | Scoped Proposal |
| Scope Preparation Time | Low | High |
| Changing Priority of Features | Easy | Medium |
| Clarity of Software Project Size | Less | More |
| Financial Risk of Beginning Project | Lower | Higher |
| Contract Complexity | Lower | Higher |
| Change Orders | No | Required |
| Software Pivot | Easy | Difficult |
