Retainer agreements are the holy grail of agency revenue. They transform unpredictable project-based income into stable, recurring revenue that lets you plan, hire, and grow with confidence.
But retainers done wrong can trap you in unprofitable relationships, scope creep nightmares, and client dependencies that hurt your business. This guide covers everything you need to know about creating, pricing, and managing retainer agreements that benefit both you and your clients.
What Is a Retainer Agreement?
A retainer agreement is a contract where a client pays a recurring fee (usually monthly) for ongoing access to your services. Unlike project-based work with a defined end date, retainers create an ongoing relationship.
Types of Retainer Agreements
1. Hours-Based Retainers Client pays for a set number of hours per month (e.g., 20 hours at $150/hour = $3,000/month).
Best for: Variable workloads, advisory services, and clients who want flexibility.
2. Deliverables-Based Retainers Client pays for specific deliverables each month (e.g., 8 blog posts, 20 social posts, and a monthly report).
Best for: Content, social media, and services with predictable outputs.
3. Value-Based Retainers Client pays for access to your expertise and outcomes, regardless of hours or specific deliverables.
Best for: Strategic services, consulting, and high-value client relationships.
4. Hybrid Retainers Combines elements—perhaps guaranteed deliverables plus a bank of hours for ad-hoc requests.
Best for: Agencies wanting predictability while maintaining flexibility.
Why Retainers Are Valuable for Agencies
Benefits for Your Agency
Predictable Revenue Monthly retainers create forecastable income. You know what's coming, making it easier to:
- Plan hiring and capacity
- Invest in tools and training
- Weather slow periods
- Make strategic decisions
Higher Lifetime Value A client on retainer for 12 months generates more revenue than most single projects—and you're not constantly selling.
Deeper Client Relationships Ongoing work builds understanding of the client's business, leading to better results and stronger partnerships.
Reduced Sales Overhead Instead of constantly chasing new projects, you maintain and grow existing relationships.
Better Work Quality Familiarity with the client means less ramp-up time and more strategic, impactful work.
Benefits for Clients
Priority Access Retainer clients get prioritized attention and faster turnaround than project-based clients.
Consistent Quality The same team working on their account month after month means consistency and institutional knowledge.
Budget Predictability Fixed monthly costs make budgeting easier than variable project spending.
Strategic Partnership Rather than a vendor relationship, they get a strategic partner invested in their success.
How to Price Retainer Agreements
Pricing retainers requires balancing profitability with client value perception.
Pricing Approaches
Cost-Plus Pricing Calculate your costs and add a margin:
- Estimated hours × hourly rate
- Add 20-30% margin for management overhead
- Consider a 10-15% retainer discount as incentive
Example: 20 hours × $150/hour × 1.25 margin = $3,750/month
Value-Based Pricing Price based on the value delivered:
- What's the ROI for the client?
- What would it cost them to do this in-house?
- What are competitors charging?
Example: Your SEO work generates $50,000/month in organic leads. Charging $5,000/month (10% of value) is easily justified.
Market-Based Pricing Align with what the market will bear:
- Research competitor pricing
- Consider your positioning (premium vs. competitive)
- Factor in your unique value proposition
Retainer Pricing Tiers
Many agencies offer tiered retainer packages:
| Tier | Hours/Month | Includes | Price | |------|-------------|----------|-------| | Starter | 10-15 hours | Core services, monthly call | $2,000-$3,500 | | Growth | 20-30 hours | Full service, bi-weekly calls | $4,000-$7,500 | | Scale | 40+ hours | Dedicated team, weekly calls | $8,000-$15,000+ |
The Retainer Discount Question
Should you discount for retainer commitment?
Arguments for discounting:
- Guaranteed revenue has value
- Lower sales costs
- Builds long-term relationships
Arguments against:
- Devalues your work
- Clients expect increases to restore the "discount"
- Reduces profitability
Middle ground: Instead of discounting rates, add value—extra hours, priority access, or additional services at the same price.
Essential Retainer Agreement Terms
Your retainer contract should clearly define:
1. Scope of Services
Be specific about what's included:
Included services:
- Up to 8 blog posts (1,000-1,500 words each)
- 20 social media posts (across Instagram and LinkedIn)
- Monthly analytics report and strategy call
- Up to 2 hours of ad-hoc consulting
Not included:
- Paid advertising management
- Video production
- Website development
- Additional content beyond stated quantities
2. Hours/Deliverables Allocation
For hours-based retainers:
Client retains 20 hours per month. Hours are tracked and reported weekly. Unused hours do not roll over to the following month. Work exceeding 20 hours requires written approval and is billed at $175/hour.
For deliverables-based:
Monthly deliverables include: 8 blog posts, 20 social posts, 1 email newsletter, and 1 strategy call. Additional deliverables are available at: blog posts $350 each, social posts $75 each.
3. Rollover Policy
Will unused hours carry forward?
No rollover (recommended):
- Simpler to manage
- Encourages consistent engagement
- Protects your capacity
Limited rollover:
- Up to 5 hours roll over
- Must be used within 30 days
- Cannot accumulate beyond one month
Full rollover:
- All hours carry forward
- Can create capacity nightmares
- Not recommended
4. Communication and Reporting
Define expectations:
Client will receive:
- Weekly status update emails
- Monthly detailed report with metrics and recommendations
- Bi-weekly 30-minute strategy calls
- Response to inquiries within 1 business day
5. Payment Terms
Retainer payments should be:
Monthly retainer fee of $5,000 is due on the 1st of each month for services to be rendered that month. Payment must be received before work begins. Late payments will incur a 1.5% monthly fee. Retainer may be paused after 15 days of non-payment.
6. Term and Renewal
Initial term:
- 3-month minimum is common
- Gives time to demonstrate value
- Protects your investment in onboarding
Renewal:
- Auto-renewal with 30-day notice to cancel
- Or manual renewal requiring agreement
This agreement has an initial term of 3 months, automatically renewing for successive 1-month terms unless either party provides 30 days written notice of non-renewal.
7. Termination
How can either party exit?
Either party may terminate this agreement with 30 days written notice. Upon termination, Client will pay for all work completed and any outstanding retainer balance. Contractor will deliver all completed work and work-in-progress.
8. Rate Increases
Reserve the right to increase rates:
Retainer rates may be adjusted annually with 60 days written notice. Increases will not exceed 10% unless scope of work changes materially.
Managing Retainer Clients Effectively
A signed agreement is just the beginning. Here's how to manage retainers well:
Onboarding
First 30 days are critical:
- Kickoff call: Align on goals, priorities, and working relationship
- Access setup: Get all logins, permissions, and tools configured
- Strategy session: Document their business, audience, and objectives
- Quick wins: Deliver visible value early to validate their decision
Communication Cadence
Weekly:
- Status update (email or Slack)
- Hours/deliverables tracking
- Any blockers or needs
Monthly:
- Detailed performance report
- Strategy call to review and plan
- Invoice with work summary
Quarterly:
- Business review meeting
- Goal assessment and adjustment
- Relationship health check
Hours Tracking and Reporting
For hours-based retainers, transparent tracking builds trust:
- Track time on all activities
- Share reports weekly or bi-weekly
- Show remaining hours in retainer
- Alert clients when approaching limits
Scope Management
Retainers are scope creep magnets. Protect yourself:
Document everything in scope If it's not in the contract, it's extra.
Have a change order process When clients ask for more, send a quick email: "Happy to add this! It's outside the current retainer scope, so it would be an additional $X. Let me know if you'd like to proceed."
Track "scope gifts" When you do extras for free, note them. Occasionally mention what you've included at no charge—it demonstrates value and sets expectations.
Performance Reviews
Conduct quarterly reviews:
- What's working well?
- What could be improved?
- Are goals being met?
- Does scope need adjusting?
- Is the retainer still the right fit?
When to Propose a Retainer
Not every client is a retainer candidate. Look for:
Good Retainer Fit
✅ Ongoing, recurring needs
✅ Values long-term relationship
✅ Realistic expectations
✅ Good communication style
✅ Pays on time
✅ Respects your expertise
✅ Growth-oriented business
Poor Retainer Fit
❌ One-time or sporadic needs
❌ Constantly questioning value
❌ Scope creep tendencies
❌ Payment issues
❌ Micromanagement style
❌ Unrealistic expectations
❌ Declining or unstable business
When to Propose
After successful project work: "We've done great work together on this project. Many clients like you move to a retainer for ongoing support. Would you like to discuss what that might look like?"
During project scoping: "This project will get you started, but you'll need ongoing work to maintain momentum. I'd recommend discussing a retainer for the next phase."
When needs are clearly ongoing: "Based on what you've shared, this isn't a one-time need—it's ongoing. A retainer makes more sense than pricing individual projects."
Transitioning Project Clients to Retainers
Converting project clients to retainer clients is one of the best ways to build recurring revenue.
The Transition Conversation
Step 1: Demonstrate value Before proposing a retainer, ensure they've seen great results from project work.
Step 2: Identify ongoing needs "To maintain these results, you'll need ongoing [content/SEO/marketing]. Without it, you'll likely lose ground."
Step 3: Present the retainer as a solution "A monthly retainer would give you consistent support, priority access to our team, and predictable budgeting. Here's what I'd recommend..."
Step 4: Offer options Present 2-3 retainer tiers so they can choose their commitment level.
Step 5: Create urgency "We have limited retainer capacity, and I want to reserve space for you. Let me know by [date] if you'd like to move forward."
Handling Common Retainer Challenges
"We're not using all our hours"
Options:
- Proactively suggest valuable uses for remaining hours
- Propose scope expansion at no extra cost
- Discuss right-sizing the retainer
- Remind them unused hours don't roll over (use it or lose it)
"Can we pause the retainer?"
Response: "I understand things slow down. Here's how I can help:
- We can reduce to a maintenance tier at $X/month
- We can pause for up to 30 days with a $500 pause fee to hold your spot
- If you cancel and return later, you'll re-onboard at current rates with no guarantee of availability."
Make pausing less attractive than reducing scope.
"We need more than our retainer includes"
Response: "Great! I'm glad we're doing valuable work. You have three options:
- Upgrade to our Growth tier at $X/month
- Add ad-hoc hours at $X/hour
- We prioritize within current scope—what should we deprioritize?"
"Can we renegotiate the rate?"
Response: "I'm committed to providing value. Let's look at what's working and what isn't. If we need to adjust scope to fit budget, I have some ideas. Alternatively, if we're delivering strong ROI, the current rate is already a good value."
Never drop rates without reducing scope.
Client becomes unprofitable or difficult
Sometimes retainers need to end:
- Document issues and have honest conversation
- Propose solutions (scope change, rate increase, different working style)
- If unresolvable, give proper notice and exit professionally
- Maintain relationship for potential future work
Retainer Agreement Template Elements
Here's a checklist for your retainer contract:
Parties and term:
- [ ] Client and contractor identification
- [ ] Agreement effective date
- [ ] Initial term length
- [ ] Renewal terms
Scope and deliverables:
- [ ] Detailed service description
- [ ] Specific deliverables or hours
- [ ] What's excluded
- [ ] Change order process
Financial terms:
- [ ] Monthly retainer fee
- [ ] Payment due date and method
- [ ] Late payment terms
- [ ] Rate increase provisions
Hours management:
- [ ] Hours/deliverables included
- [ ] Rollover policy
- [ ] Overage rates
- [ ] Tracking and reporting
Working relationship:
- [ ] Communication expectations
- [ ] Reporting schedule
- [ ] Point of contact
- [ ] Response time expectations
Termination:
- [ ] Notice period
- [ ] Payment for work completed
- [ ] Transition obligations
- [ ] Post-termination provisions
Standard legal:
- [ ] Confidentiality
- [ ] IP ownership
- [ ] Limitation of liability
- [ ] Dispute resolution
- [ ] Independent contractor status
Scaling Your Retainer Business
As retainers grow, systematize for scale:
Productize Your Retainers
Create standard packages:
- Clear inclusions and pricing
- Documented processes
- Consistent deliverables
- Efficient onboarding
Build Systems
- Project management templates
- Reporting dashboards
- Communication workflows
- Time tracking processes
Hire for Retainer Work
Retainer revenue stability enables hiring:
- Account managers for client relationships
- Specialists for consistent delivery
- Processes for quality control
Set Capacity Limits
Know your limits:
- Maximum retainers per team member
- Revenue per team member targets
- When to hire vs. turn away work
Frequently Asked Questions
What's a reasonable minimum retainer term?
3 months is standard. It gives time to onboard, demonstrate value, and establish working rhythms. Some agencies require 6 months for larger retainers.
Should I offer a trial period?
A 1-month trial at full rate can work for hesitant clients. Don't discount the trial—you're providing full service. Frame it as "trying the relationship, not the price."
How do I handle clients who want to pay quarterly?
Quarterly payment can work if they pay in advance. Require full quarter upfront before work begins. Don't extend credit.
What percentage of revenue should come from retainers?
Many agencies target 60-80% retainer revenue for stability, with 20-40% project revenue for growth and diversification.
How do I know when to raise retainer rates?
Review annually. Raise rates when:
- Your costs increase
- You've added value beyond original scope
- Market rates have increased
- The client's business has grown significantly
Building Predictable Agency Revenue
Retainer agreements transform agency economics. They create predictable revenue, deeper client relationships, and the stability needed to build a sustainable business.
Key takeaways:
- Choose the right retainer type for your services and clients
- Price based on value, not just hours
- Document everything in a clear contract
- Manage scope proactively
- Systematize for scale as you grow
Ready to build your retainer business? AgencyPro helps agencies manage retainer clients with time tracking, automated invoicing, and client portals that make ongoing relationships seamless.