How to price agency retainers
A simple framework for setting retainer fees that stay profitable as scope shifts.
How do you price agency retainers?
Price an agency retainer on the value and the capacity it reserves, not just an hour count: estimate the monthly hours the scope needs, multiply by a rate that covers your fully-loaded cost plus target margin, then track delivered hours against that budget every month so you can re-scope before the retainer goes underwater.
Start from capacity, not a round number
Decide how many hours a month the scope realistically needs across the team. Retainers priced as a tidy round number, with no link to hours, are the ones that quietly lose money.
Use fully-loaded cost plus margin
Base the rate on each person's fully-loaded internal cost (salary, overhead, non-billable time), then add your target margin. Charging your salary cost alone leaves nothing for the business.
Track delivered hours every month
A retainer is only profitable if you watch consumption against the budgeted hours in real time. When a client trends over, you can have a re-scope conversation early instead of absorbing the overage.
Review and re-price on renewal
Use the actual hours and margin from the last term to set the next one. Data-backed renewals are easier conversations and protect your margin.
FAQ
Should agency retainers be priced hourly or by value?+
Price on value and the capacity reserved, but always model the hours behind it so you know your effective rate and can catch unprofitable scope.
What margin should a retainer target?+
Aim for a gross margin above 50% on delivery and a healthy net after overhead, typically a 20-30% net margin for the agency overall.
How many hours should an agency retainer include?+
Estimate the monthly hours the scope realistically needs, then add a small buffer for coordination. Set the figure from delivered hours on similar work rather than a round number, so the budget reflects what the client actually consumes.
What happens when a client goes over their retainer hours?+
Flag it the moment the trend shows, not at month-end. Show the delivered hours against the budget and offer a re-scope or a top-up, so the overage becomes a clear commercial conversation instead of absorbed margin.
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