Agency owners face a fundamental pricing question: should you charge by project or by retainer? Both models have passionate advocates, and both can be highly profitable when used in the right context. The catch is that "right context" depends on your services, clients, team structure, and growth goals. Choose wrong, and you leave money on the table or trap yourself in unprofitable work. Choose right, and you build predictable revenue and happier clients.
Key Takeaways:
- Project pricing rewards efficiency and suits well-scoped, discrete deliverables
- Retainer pricing provides predictable revenue and deeper client relationships
- Hybrid models (project + retainer) give flexibility while stabilizing cash flow
- Document scope clearly in both models to prevent margin-eroding scope creep
This guide breaks down how each model works, when to use it, how to transition between them, and how hybrid approaches can give you the best of both worlds.
How Each Model Works
Project-Based Pricing
With project pricing, you quote a fixed fee for a defined scope. The client pays for deliverables—a website, a branding package, a marketing campaign—with a clear start and end date. Payment is often structured around milestones: deposit upfront, mid-project payments, and final payment on delivery.
Characteristics:
- Scope is defined in advance (ideally in a scope of work or statement of work)
- Total price is agreed before work begins
- Timeline is typically weeks to a few months
- Relationship ends when deliverables are complete (unless renewed)
- Revenue is lumpy—feast and famine cycles depending on pipeline
Retainer Pricing
With retainer pricing, the client pays a recurring fee (usually monthly) for ongoing access to your services. The relationship is continuous rather than project-bound. Retainers can be hours-based (e.g., 20 hours/month), deliverables-based (e.g., 8 blog posts/month), or value-based (access to your team and expertise).
Characteristics:
- Ongoing relationship with no fixed end date
- Predictable monthly revenue for your agency
- Scope can be flexible within agreed boundaries
- Clients get priority access and continuity
- Revenue compounds over time if you retain clients well
For a deeper dive into retainer structures, see our retainer agreements guide and retainer agreement template.
Pros and Cons
Project-Based Pricing
Pros:
- Rewards efficiency: Work faster, pocket more—incentive aligns with your improvement
- Clear value exchange: Client knows exactly what they're getting
- Easier to sell: Concrete deliverables are easier to pitch than abstract "access"
- No ongoing management: Project ends, you move on
- Flexibility to say no: Don't have to renew if the fit isn't right
- Simplicity: One scope document, one price, one timeline
Cons:
- Revenue unpredictability: Pipeline determines income; gaps mean no income
- Constant sales pressure: Always hunting the next project
- Scope creep risk: Fixed price + vague scope = margin erosion. PMI research shows scope creep affects nearly half of all projects
- Ramp-up overhead: Every new project has onboarding and context-building costs
- Client churn: No natural reason to stay after delivery
Retainer Pricing
Pros:
- Predictable revenue: Forecast and plan with confidence
- Higher lifetime value: 12-month retainer often exceeds single project revenue—Harvard Business Review research confirms that increasing customer retention by just 5% can boost profits by 25-95%
- Deeper relationships: Ongoing work builds trust and better results
- Less sales overhead: Focus on retaining and growing vs constantly closing
- Smoother capacity: Easier to plan team workload and hiring
- Recurring billing: Tools like AgencyPro streamline recurring billing and reduce admin
Cons:
- Scope ambiguity: "Ongoing support" can mean different things to different clients
- Client dependency: Losing a large retainer hurts more than losing a project
- Potential for underutilization: Client pays but doesn't use hours—ethical and practical considerations
- Harder to sell: Abstract "access" is trickier to pitch than concrete deliverables
- Management overhead: Retainers require ongoing relationship and value delivery
When to Use Which
Use Project Pricing When:
- Your work is inherently project-based (websites, branding, video production, campaigns)
- Clients have one-off or occasional needs
- You're early-stage and building case studies and reputation
- The scope is clearly definable and you can estimate accurately
- Clients prefer to pay for specific outcomes, not time
- You have strong scope management and change order processes
Use Retainer Pricing When:
- Clients need ongoing support (marketing, content, design ops, maintenance)
- Your services are naturally recurring (SEO, social, PPC, design retainer)
- You want to reduce sales burden and stabilize cash flow
- Clients value continuity and strategic partnership
- You can define clear boundaries (hours, deliverables, or value) that prevent scope creep
- You're ready to invest in client success and retention
Transitioning Between Models
From project to retainer:
- Offer post-project retainers (e.g., "monthly support" after a website launch)
- Bundle follow-on work into a retainer instead of ad-hoc projects
- Propose ongoing packages: "6 months of content" instead of "6 blog posts"
- Use success from a project to justify ongoing investment
From retainer to project:
- Some clients prefer project work; don't force retainers where they don't fit
- For one-off needs, offer project add-ons alongside the retainer
- If a retainer isn't being utilized, suggest a smaller project-based engagement
Hybrid Approaches
Many agencies use both models strategically:
- Project + retainer: Charge for the initial project (e.g., brand identity), then offer a retainer for ongoing implementation and support
- Retainer with project add-ons: Base retainer covers core deliverables; major initiatives (website, campaign) are scoped and billed as projects
- Flex retainers: Guaranteed minimum (e.g., 10 hours) with ability to add project work when needed
- Tiered retainers: Different levels (e.g., 10/20/40 hours) so clients can scale up or down
Hybrid models give clients flexibility while giving you a mix of predictable revenue and project-based upside.
Client Communication
For project pricing:
- Document scope in a detailed SOW—deliverables, revisions, exclusions, timeline
- Use a scope of work generator to standardize and avoid gaps
- Establish a change order process: anything out of scope requires written approval and additional fee
- Set clear milestones and payment triggers
- Communicate progress regularly so clients feel informed
For retainer pricing:
- Define what's included: hours, deliverables, response times, or outcomes
- Use a retainer agreement that spells out boundaries
- Provide monthly reports so clients see value
- Conduct quarterly business reviews to adjust scope and renew
- Have a clear policy on unused hours (roll over, expire, or credit—and document it)
Platforms with strong client portals make it easier to share reports, track usage, and keep communication transparent—reducing the "what are we paying for?" friction that kills retainer relationships.
Pricing Psychology and Client Perception
How clients perceive your pricing matters. Research from McKinsey shows that pricing strategy is the single biggest lever for profitability. Project pricing feels "done" when the project ends—clients may not immediately think about renewal. Retainer pricing creates an ongoing mental commitment—clients think in terms of monthly investment. Frame retainers around value and outcomes: "You're investing in continuous growth" rather than "You're paying for our time." For projects, emphasize deliverable clarity and milestone payments—clients feel progress when they see discrete outputs. See agency pricing statistics for benchmarks that help you position your rates confidently.
Combining Models in Practice
A common pattern: win with a project, convert to retainer. A website redesign project leads to a monthly maintenance and support retainer. A branding project leads to ongoing design retainer for marketing materials. The project proves value; the retainer locks in revenue. Another pattern: retainer for core work, project add-ons for big initiatives. Your retainer covers content and social; the website rebuild is scoped as a separate project. This keeps the retainer manageable while capturing large one-time work. Document both in your agency pricing models and train your team to recognize conversion opportunities.
Conclusion
Retainer vs project pricing isn't a binary choice. The best agencies use both, matching the model to the client, the service, and the moment. Projects work best for discrete, well-scoped work and for building pipeline. Retainers work best for ongoing needs and building predictable revenue.
Assess your services, your clients, and your goals. Many agencies start project-heavy and shift toward retainers as they mature. Others maintain a healthy mix. Whatever you choose, document scope clearly, communicate proactively, and use contracts that protect both parties. With the right model—and the right execution—you'll build an agency that's both profitable and sustainable.