Retainer Agreement

A retainer agreement establishes an ongoing relationship where a client pays a recurring fee—typically monthly—to retain your agency's services. Unlike project-based work where you complete a specific deliverable and the engagement ends, retainers create ongoing commitments that provide predictable revenue and deeper client relationships. Retainers can be structured in various ways: as a set number of hours per month, specific recurring deliverables, or "on-call" availability for ad-hoc needs. Retainers offer significant advantages for agencies. Predictable monthly revenue improves cash flow forecasting and reduces the feast-or-famine cycle common in project-based work. You can plan resources more effectively when you know you have X hours committed each month. Retainers also tend to create stronger client relationships because you're working together continuously rather than on isolated projects. This deeper understanding of the client's business often leads to more strategic work and additional opportunities. For clients, retainers provide priority access to your expertise, faster response times, and often better rates than one-off projects. They can budget more easily with fixed monthly costs, and they benefit from your accumulated knowledge of their business. Many clients prefer retainers because they know their agency is always available when needs arise, rather than having to negotiate each new project. The most common retainer structures include hourly retainers (client pays for X hours per month, unused hours may or may not roll over), deliverable-based retainers (specific recurring work like monthly blog posts or social media content), and hybrid retainers (combination of hours and deliverables). Some agencies offer "always-on" retainers where the client has priority access but pays for actual time used, while others use "use-it-or-lose-it" models where unused hours don't roll over. Pricing retainers requires careful consideration. You need to balance the value of predictable revenue against the opportunity cost of committing capacity. Many agencies price retainers at a slight discount compared to project rates (10-20% is common) to reflect the value of guaranteed work, but this discount should be offset by reduced sales and onboarding costs. Some agencies structure retainers to include a base fee plus overage rates for work beyond the retainer amount. Managing retainer relationships effectively requires clear communication about what's included, how unused hours are handled, and when work falls outside the retainer scope. Regular retainer reviews help ensure the arrangement remains mutually beneficial as client needs evolve. Many agencies use retainer agreements that auto-renew monthly but can be terminated with 30-60 days notice, providing flexibility for both parties. Common mistakes include underpricing retainers (not accounting for the full value of committed capacity), being too flexible with scope (allowing retainer work to expand without adjustment), and not tracking retainer utilization effectively. The most successful agencies treat retainers as strategic relationships, regularly reviewing and optimizing them to ensure they remain profitable and valuable for both parties.