How to use the retainer fee calculator
- Enter the hours included in the retainer each month.
- Enter your hourly rate, the rate you would charge without a retainer.
- Enter the retainer discount you want to offer for a fixed monthly payment, or 0 for none.
- Read the monthly retainer, the effective hourly rate and a table showing what happens if the client uses fewer hours.
Formula
Hours at your full rate = hours x hourly rate
Retainer = hours at your full rate x (1 - discount %)
Effective rate = retainer / hours included
Rate if fewer hours are used = retainer / hours used
The retainer is a fixed fee. If the client uses fewer hours than included, you still receive the full retainer.
20 hours at $80 with a 10% discount
Twenty hours at $80 is $1,600. A 10% discount brings the retainer to $1,440 a month, or $17,280 a year. If the client uses all 20 hours, you earn an effective $72.00 an hour.
If the client uses only 15 hours the same $1,440 works out to $96.00 an hour, and the retainer is $240 above what those 15 hours would earn at $80. At 10 hours it is $144.00 an hour and $640 above full-rate billing. The table makes this trade-off visible when you discuss terms.
What a retainer trades
A retainer gives the client access to your time and gives you predictable monthly income. The discount is a way to share the value of that predictability, and the amount is a business decision for you and the client.
The effective rate shows what you earn per hour if every included hour is used. When clients use fewer hours, the effective rate rises, and when they ask for more, you may need an overage rate.
Setting terms
Agree on what happens to unused hours (lost or carried over), what counts as an hour of work, how extra hours are billed and how either side can end the arrangement. None of that is modeled here.
To work out a base hourly rate from an income goal use the freelance rate calculator or the income goal calculator. For one-off work try the project quote calculator, and for how much of your time you bill see the billable utilization calculator.
Assumptions and limits
- The hours included and the hourly rate are the same every month.
- The discount applies to the whole retainer.
- The retainer is paid in full even when fewer hours are used.
- Taxes, overage rates, rollover and contract terms are not modeled.
Frequently asked questions
How do you calculate a monthly retainer?
Multiply the hours included by your hourly rate, then apply any discount. Twenty hours at $80 with 10% off is $1,440 a month.
Should I discount a retainer?
That is your call. A discount can reward the client for a steady commitment, but it also lowers your effective rate. The calculator shows both so you can decide.
What is the effective hourly rate?
It is the retainer divided by the hours included, which is what you earn per hour if every hour is used. If fewer hours are used it is higher.
What if the client needs more hours than the retainer includes?
That is what an overage rate covers, and you set it in your agreement. This tool only prices the included hours.