What is a retainer agreement?

A retainer agreement is the written contract behind a retainer: the recurring arrangement in which a client pays a fixed fee, usually monthly, to keep an agency working for them. The retainer is the commercial relationship; the retainer agreement records its terms. Retainers are common. Promethean Research's 2025 Digital Agency Industry Report found that 91% of digital agencies offer retainers and 88% offer both retainers and projects. The four main retainer types need different terms: • Hour-based: the client buys a set number of hours a month (for example, 20 hours at $150 = $3,000) • Deliverable-based: the client buys defined outputs (for example, four articles and one report a month), regardless of hours • Availability: the client pays to reserve priority access and response times, with work billed separately or drawn down • Hybrid: a base package of deliverables plus a block of hours for ad-hoc requests A monthly four-article package is not the same as reserving 20 hours. The first promises outputs; the second promises time. Write the agreement around the unit you actually sell. What a retainer agreement should specify: • The unit of work (hours, deliverables or availability) and the monthly fee • What is included and excluded, with examples • Revision limits and turnaround or response times • What happens to unused hours or deliverables: rollover (with a cap), expiry, or credit • Overage rates for work beyond the retainer • Reporting: what the client receives each month • Billing date and payment terms (billing at the start of the month avoids financing the client) • Minimum term, renewal and notice period for termination Track delivery against the agreed unit every month. A client who consistently uses less than they pay for may cancel; one who consistently uses more is eroding your margin. Both are reasons to adjust the agreement at the next review. Worked example (retainer utilization): a client pays $3,000 a month for 20 hours at $150. Over a quarter they use 12, 13 and 14 hours, about 65% of what they buy. Under a "use it or lose it" clause the unused 21 hours expire; under a one-month rollover cap, up to 20 hours could carry forward and be worked later. Either way, a client paying for time they do not use is a renewal risk, so propose a 14-hour plan or a deliverable package at the review. If the same client used 26 hours a month, the 6 extra hours at a $150 overage rate would add $900 a month, but only if the agreement names that rate. Scope example: "monthly SEO reporting" invites disputes; "one 2-page report on the first business day of each month covering rankings, traffic and leads for up to 20 keywords" does not. If you need a document to start from, use the retainer agreement template linked below and adapt it with legal advice for your jurisdiction.