Agency & Pricing
Retainer Pricing Calculator
Retainers go wrong when the scope quietly grows and the price does not. This prices a retainer from the hours the work genuinely takes, adds an honest buffer for the overrun that always happens, and shows the effective rate you end up earning.
Result
FormulaRetainer price = (hours × blended cost) ÷ (1 - target margin) × (1 + scope buffer)
Worked example
60 hours a month at a $95 blended internal cost is $5,700 of delivery cost. Grossing up to a 55 percent margin gives $12,667, and a 15 percent scope buffer takes it to $14,567 a month. That is a $243 effective hourly rate, $8,867 of monthly gross profit, and $174,800 of annual contract value.
What to watch for
Track hours against the retainer every single month, even on fixed-fee work. The retainer that was profitable in month one and is losing money by month eight is the most common way agencies quietly bleed, and only time data catches it.
Write the hour ceiling into the contract along with what happens above it. A retainer without a defined boundary is not a retainer, it is an unlimited support contract you priced as if it were not.
I raise prices at renewal by default rather than as an exception. Costs rise every year, and an agency that never revisits a rate is offering a discount that compounds silently.
Frequently asked questions
Should I price a retainer on hours or on value?
Use hours to find the floor and value to set the price. Hours tell you when a deal is unprofitable. Value tells you what the client should be willing to pay. Never let the floor become the ceiling.
What is a reasonable gross margin on a retainer?
For services work, 50 to 60 percent gross margin is a common healthy band before overhead and profit. Below 40 percent you have very little room for the month where something goes wrong, and something always does.
Read next
You might also like
Ranked by how closely each page overlaps with this one, using a similarity model over the whole library.
More Agency & Pricing calculators
Agency Hourly Rate Calculator
Calculate the hourly rate your agency must charge to cover salary, overhead, and target margin at your real utilization.
Project Margin Calculator
Calculate gross margin on a client project from price, internal delivery hours, and pass-through costs. Free, runs in your browser.
Billable Utilization Calculator
Calculate billable utilization and realization rate for your team, and see the revenue each utilization point is worth.
Client Profitability Calculator
Calculate true client profitability including delivery hours, account management, and unbilled servicing time. Free tool.
This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.