What Is a Retainer in Business & How to Manage One

A retainer is a pricing model where a client pays a service provider a recurring fee, usually monthly, for ongoing access to their services, time, or expertise.

Unlike project-based work, retainers are used when services are needed on a continuous basis rather than as a one-off engagement.

Businesses that work on retainer fees span various professional service industries, including marketing agencies, law firms, design studios, IT support providers, and consultancy firms.

For example, a marketing agency might offer s ongoing social media management, SEO optimization, and performance reporting, while an IT provider may offer 24/7 system monitoring, regular updates, and helpdesk support.

While the structure of retainers is similar—recurring payments for ongoing work—the scope, deliverables, and pricing can vary widely depending on the service.

For example, creative services often focus on hours or output, while legal and consulting retainers emphasize access and availability.

Although a retainer agreement is a type of a pricing model in itself, there’s more than one way to structure and bill them. Here’s an overview of the most common types of retainer agreements:

A standard agreement, where clients pay for a fixed number of hours per month, usually as an advance payment.

Best for: Services where work volume is predictable but varied.

Clients pay for a set scope of work or deliverables, regardless of hours taken to complete them. Work can be either paid up-front, or on a half-half basis (for ex. 50% up-front, 50% once the deliverables are completed).

Best for: Agencies and freelancers offering packaged services.

Clients pay to have access to time, expertise, or tools—even if they don’t always use it. For example, different types of consultants often offer services on an ongoing basis (ex. legal services).

Best for: High-trust roles like legal, IT, or executive coaching.

A longer-term retainer tied to a larger project, billed in phases or monthly. For example, a website development project could be billed according to design, development, and testing milestones.

Best for: Creative or technical projects with evolving needs.

Clients pay an upfront fee to cover a defined set of services over a period of time. This usually doesn’t require defining a set number of billable hours, so pricing and scope should be defined carefully to avoid underpricing services.

Best for: High-trust, long-term engagements where the focus is on delivering outcomes

A survey by Productive shows the distribution of agencies according to recurring revenue: it’s found that more than half of the participating firms reported that 50% or more of their revenue is recurring.

A survey by Nimbus reports the services that are most frequently offered on a retainer-based payment model. These include:

These results aren’t surprising, as they include ongoing services that require consistent attention and optimization to remain effective.

How much money should you charge for your retainers, while avoiding underpricing (which might attract clients, but lowers your business profit margins) or overpricing (which can affect the number of potential clients you can sign)?

Promethean Research suggests the following formula for calculating your monthly retainer fee:

Here are the components of retainer model fee, explained:

Taking these elements, here’s an example of a retainer free for a digital marketing agency:

Your total team cost would be $1,600. If you want a 50% profit margin, you would multiply it by 100 and get 0.50. Here are these numbers, plugged into the formula:

For any potential external expenses, you’d just add them to this amount. For example, if you need a monthly software subscription of $300, your total price would be $3,500.

Here’s why professional services companies love to have their clients on retainer:

And here’s why clients want to hire service providers on a retainer:

While you can’t make a retainer happen out of nothing, there are some strategies to consider if you’re looking to transition into working on a retainer basis:

Writing a professional services retainer agreement involves clearly outlining the terms, expectations, and responsibilities of both the service provider and the client.

Common elements include:

While working on a retainer model has many benefits, there are some things to keep in mind to ensure that your cooperation is proceeding smoothly:

A successful agreement starts with clearly defined scope and deliverables. This ensures both you and the client understand exactly what is being provided, how often, and within what time frame.

Ambiguity in scope can lead to scope creep, client dissatisfaction, and strained relationships. Be specific about what services are included—such as how many hours of support, number of design revisions, or frequency of reports.

Also, identify what’s not included to avoid assumptions. Including measurable outcomes, timelines, and deliverable formats helps set realistic expectations.

Retainers are built on trust and long-term collaboration, so nurturing strong client relationships is key. This goes beyond just delivering services—it means proactively communicating, understanding the client’s goals, and positioning yourself as a strategic partner.

Check in regularly to align on expectations, provide updates, and show the value of your work. Personalized attention, responsiveness, and transparency are all important for long-term working relationships.

Building trust fosters client loyalty. It can also lead to better creative opportunities on your work and easier resolution of miscommunication or disagreements, if they occur.

Business needs evolve, and so should your retainer contracts. Reviewing and updating contracts at least once a year helps ensure your services, pricing, and terms remain aligned with the client’s goals and your capacity.

Over time, you may take on more work, shift focus, or adopt new tools, and it’s important your agreement reflects those changes. Annual reviews are also an opportunity to increase rates, adjust scope, or refine deliverables based on past performance.

Check out our article on managing your rate cards to learn more.

Relying too heavily on one or two retainer clients can put your company at risk if a contract ends unexpectedly. There are many horror stories of service providers shutting down their company because of a significant client leaving.

If possible, try to diversify your client base. This spreads your risk and provides greater financial stability. A good way to track this is by examining client concentration, or the percentage of yearly revenue brought in by your largest client.

Generally speaking, anything below 25% is considered a stable number.

Managing multiple retainers can get complex—especially when tracking deliverables, hours, deadlines, and communication. Using a professional servies automation tool can help you stay organized and efficient.

Some specific features to consider are:

Integrating the right tools into your workflow reduces manual errors, saves time, and gives you insights that can improve not only project outcomes, but your overall performance.

Productive is a purpose-built software solution for professional services businesses. It offers features from project, resource, to financial management, making it a one-stop-shop for business needs.

Recurring budgets in Productive make it easy to manage retainer and maintenance work with consistency and clarity. Automate budget creation, track time and expenses, and gain full visibility into profitability—month after month.

It’s a powerful way to streamline operations and keep work running smoothly.

Productive also includes an easy way to carry over unused or overused hours from one recurring budget period to the next. This simplifies monitoring time for recurring budgets, offering flexibility without compromising billing accuracy.

Book a demo with Productive to learn more.