Which partnership model is the best for your business?
DateJul 25, 2019
Choosing the right model usually depends on the type, scope and goals of the project
When a client wants to start a project, there are usually two routes it could take. It could use its in-house team of specialists (or start hiring to build a team if they don’t currently have one) or hire an outside development company or an agency. Specific pros and cons of using agencies have been covered in numerous articles, but if a client decides to hire an agency to bring its project to life, it should also know more about the specific models of client-agency partnerships that agencies, as well as the types of projects specific models are better for. These four models are some of the most widely used ones among agencies.
Fixed price model
Fixed price is a model where a client sends its project brief and specs to the agency, and the agency sends back an offer with a fixed price according to the received information. This offer includes detailed information on what the client will get for the set price and available rounds of feedback, as well as the timelines for both project delivery and payment. When the client signs off on the offer, agency starts working.
This partnership model is usually used for short-term projects (three months are the upper limit) that have all of the aspects clearly defined right from the start. When I say aspects I mean the project brief, business goals, ways to measure success and all functionalities that the final product needs to have. Basically, this model is used when clients know exactly what they want to get out of the final product and how it should perform.
Fixed price model is ideal for smaller projects, like simpler corporate and presentational websites, or ones with a fewer number of pages and without any complex functionalities.
Time and materials model
This model, as the name suggests, means that the client pays for the exact number of man-hours and materials (e.g. font licences, photo sessions) spent on production of its project. Nothing more and nothing less.
Time and materials model is used when the project can’t be fully scoped right from the start or when it requires continuous long-term work. This model is also used for complex digital products, custom software or mobile applications that may require continuous work, large upgrades or the implementation of additional features that could change the entire initial scope of the project.
This model is great for both clients and agencies because all sides get exactly what they agreed upon. The only downside of this model is that the client doesn’t have a dedicated team ready to start working at a moment’s notice. As agencies usually work with multiple clients, those who choose the time and materials model might sometimes have to wait to get specific specialists (for example, a couple of software developers who worked on the previous features of their product) because they are currently assigned to other projects. That’s something clients who choose the retained partnership model don’t have to worry about.
Retained partnership model
Retained partnership model is most commonly used for clients who have long-term projects that are larger and more complex in the overall scope, features that need to be implemented or technologies that need to be used. Clients who choose this model basically get a dedicated team that works full-time only on their projects and they pay a predefined daily rate for every single member of the project team.
During the first phase of this partnership model, an agency and a client define the general vision and goals of the project, as well as its scope and specific specialists that will be working on it. When both sides agree on the timeline, team-members and specified goals, that’s when the work starts.
Retained partnership is an excellent option for clients who need a team of specialists to work full-time on their projects, but don’t want to employ and create in-house teams because of the large costs that come with the employment and onboarding processes, or a lack of experience when it comes to employing specific types of specialists. Getting a well-coordinated team from an agency on a retained partnership model is a simple plug-and-play solution that takes minimal effort from the client and gives great long-term results. Clients get the manpower needed to deliver the proposed solution, but they also get business and strategic support from the agency.
Consulting and training model
This last model is different from the previous three because it’s specifically created for clients who need specialist educations. As agencies usually employ top-level developers, designers and business strategists, clients may often ask them to train and hold educations for their in-house teams.
As this model can be very broad, a good rule of thumb is to split them into three distinct categories based on client needs:
This category covers all types of educations, presentations, seminars and webinars where members of agency teams share their knowledge and expertise with clients and their teams. These are usually short-term deals based on a fixed price bid.
2. Strategic sessions
Strategic sessions are also fixed price deals, but instead of sharing knowledge, they cover more robust business development activities. Examples of this would be business workshops with members of Business Development or Strategic Partnerships departments, as well as specialized discovery workshops used to validate the viability of client’s project ideas.
3. Long-term consulting
Unlike the previous two, this last category is usually based on a monthly retainer because it’s created for clients willing to pay to have an agency available whenever they’re in need of assistance. Services in this category include holding business and specialist consulting sessions, as well as conducting research and various types of project analysis, like code reviews and UX/UI reviews.
All these models are viable partnership options, but the key is to find a system that works best for both the client and the agency.