How to price a retainer: from hours to a monthly fee

To price a retainer, count every hour a normal month takes, including the call, the report and the admin, and multiply by your hourly rate. That is your floor. Add your margin to get the fee. Then set three rules that protect it: how many request hours the fee includes, the rate for hours above that, and how many unused hours may roll over. Test the result on a quiet and a busy month before you send it.

This guide is only about the number. What goes in the proposal around it, from notice periods to the three levels, is in the retainer proposal guide, with six terms and a sample.

Count the hours a normal month really takes

A retainer costs you more hours than the client sees. Besides the work itself there is the monthly call, the report, planning the next month, and the time it takes to pick up small requests between other jobs. They come back every month. Leave them out and every month runs at a loss you cannot see.

Count three kinds of hours:

1. Steady work: what happens every month whatever the client asks, such as updates, back-ups or a fixed number of articles.
2. Requests: the part that varies. Look at past months, or ask the client what they expect, and write down a quiet, a normal and a busy figure.
3. Running the retainer: the call, the report, planning and admin.

Multiply the normal month by your hourly rate and you have the floor. If you have not settled that rate yet, start with how to set your day rate, and the hourly rate it gives.

Set the fee and the three rules around it

The fee is the floor plus your margin. On its own it is a promise to do an unknown amount of work for a known amount of money, so three rules go with it:

• The allowance. How many request hours a month the fee includes. Steady work and running the retainer are in the fee whatever happens.
• The overage rate. What an hour above the allowance costs. It should be higher than the fee earns per hour in a normal month.
• Rollover. Whether unused request hours move to the next month, how many, and when they expire.

Write all three into the proposal, next to your rate for work outside the retainer. A rate for extra work that is only in your head will be negotiated the first time it is needed.

A worked example: one retainer, three kinds of month

The studio and its numbers are fictional examples: replace them with your own. Prices exclude VAT.

Example

A small studio looks after a homeware brand's online shop. Its hourly rate is €95.

Step 1: the hours in a normal month.

Hours a month	Hours
Steady work: updates, back-ups, monitoring	6
Requests: small changes and fixes	15
Running it: call, report, planning, admin	3
Total	24

Step 2: floor and fee. 24 hours × €95 = €2,280. That is the floor. The studio sets the fee at €2,500, which is €220 above the floor. In a normal month that earns €2,500 ÷ 24 = €104.17 per hour worked.

Step 3: the rules. The fee includes up to 15 request hours. Hours above that cost €120. Up to 4 unused request hours roll over to the next month and expire if they are not used then.

Step 4: three kinds of month. Requests take 8 hours in a quiet month and 22 in a busy one.

Month	Request hours	Hours worked	Billed	Per hour worked
Quiet	8	17	€2,500	€147.06
Normal	15	24	€2,500	€104.17
Busy	22	31	€3,340	€107.74

The busy month bills the fee plus 7 overage hours: €2,500 + 7 × €120 = €3,340.

What each rule does in these numbers.

• The overage rate. At €120, the busy month earns €107.74 an hour, more than the normal month's €104.17. Had the studio charged overage at its base €95, the busy month would bill €2,500 + 7 × €95 = €3,165, or €102.10 an hour: below the normal month, for the hardest month of the year.
• The rollover cap. The quiet month leaves 7 request hours unused. With the cap, 4 roll over, so the studio has 17 hours worked plus 4 still owed: €2,500 ÷ 21 = €119.05 an hour. Without a cap, all 7 roll over: €2,500 ÷ 24 = €104.17, no better than a normal month.

The example's conclusions come straight from the rules, not from the fee. Any fee works the same way: an overage rate below what the fee earns per hour makes busy months worse than normal ones, and uncapped rollover hands the quiet month's gain back to the client.

Choose the model before you set the rules

The example uses a fee with an hours allowance. Two other models change who carries the busy and the quiet month.

Fixed outputs is closest to a fixed price, and base plus hours to time and materials; the trade-offs are in fixed price or time and materials. Whichever you pick, the floor comes first.

A discount for a longer commitment

A client who commits for twelve months gives you predictable income, and a discount for that is fair. Check it against the floor first. A fee that clears the floor by a small margin cannot give much of it away.

Example

The same studio, with a floor of €2,280 and a fee of €2,500.

• 10% off: €2,500 × 0.9 = €2,250 a month. That is €30 below the floor: a normal month earns €2,250 ÷ 24 = €93.75 an hour, under the studio's own €95.
• 5% off: €2,500 × 0.95 = €2,375 a month, €95 above the floor, or €98.96 an hour in a normal month. The client saves €125 a month, €1,500 over twelve months.

Offer the longer term as a choice next to month-to-month, not as the only way in. Showing two or three options side by side works as in good, better, best pricing for proposals: the client compares your options, not you against someone else.

Price the start and the end separately

Two things do not belong in the monthly fee.

• A set-up. Onboarding, an audit or moving the client's site to your hosting is one-off work. Price it as a one-off line, so the monthly fee stays what it costs to run the retainer.
• Projects. A request that grows into a new feature is a project, not a request. Quote it on its own instead of letting it eat the allowance. How to spot it early is in how to handle scope creep.

Then say what happens after the first term: when the fee is reviewed and how much notice you give of a change. A review that was announced in the proposal is never a surprise.

Review the fee every quarter

Log your hours per client, overhead included. After three months, compare them with what the fee assumed:

• Requests above the allowance month after month: propose the next level up rather than billing overage every month.
• Requests well below it: keep the fee if the value is there, but check the client still feels the retainer pays off.
• Overhead creeping up: more calls, more reports. Price it in at the review, or agree a shorter report.

This is general information, not legal or tax advice. For your situation, ask a lawyer or accountant.

A retainer pricing worksheet you can copy

Template

Client and work: [client], [type of work] Hourly rate: [rate] excluding VAT

Hours in a normal month

• Steady work: [hours]
• Requests, quiet / normal / busy: [hours] / [hours] / [hours]
• Call, report, planning, admin: [hours]
• Total, normal month: [hours]

Floor: [normal hours] × [rate] = [amount] a month Fee: [amount] a month = [fee ÷ normal hours] per hour in a normal month

Rules

• Request hours included: [hours] a month
• Overage rate: [rate], higher than the fee's rate per hour in a normal month
• Rollover: up to [hours] a month, expiring after [one month]
• Work outside the retainer: [rate] an hour, or quoted as a project

Tests

• Quiet month: [fee] ÷ ([hours worked] + [hours rolled over]) = [per hour]
• Busy month: ([fee] + [overage hours] × [overage rate]) ÷ [hours worked] = [per hour]
• Longer-term discount: [fee] × (1 − [discount]) = [amount], above the floor? [yes / no]

How Propozit helps

Propozit has a Retainer template. Its monthly plan is a subscription line; add two or more and the client picks one, with plan choices and live totals updating as they choose. Optional extras the client can tick go next to it, such as an hour bundle, which counts in the one-off total, not per month. One-off and monthly amounts show as separate totals, never added together.

You can add deals, such as a discount for a longer commitment, which shows on the deck as a pill such as "−5%", and you set your extra-work rate in the proposal. An hourly rate line is never added to a total: it shows as "Billed as used". Propozit doesn't take payments, and its Pay card after signing has no row for monthly subscriptions, so the monthly fee is billed from your own accounting.

Propozit is in early access and free to start.