Set a monthly retainer fee
A retainer trades a predictable monthly fee for guaranteed availability. Clients often expect a discount for committing; sometimes you should charge a premium for being on call. This calculator shows the fee either way and, most importantly, what each hour of work actually earns you after the adjustment.
Result
- 20 h × $50.00$1,000.00
- Expenses$100.00
- Baseline$1,100.00
- Discount 10%$110.00
- Monthly fee$990.00
- Effective hourly rate$44.50
$11,880.00 over twelve months. Each hour of work earns $44.50 after expenses.
Formula and assumptions
Baseline = hours × rate + expenses. Monthly fee = baseline × (1 − discount) or × (1 + buffer). Effective hourly = (fee − expenses) ÷ hours
- The discount or buffer applies to the whole baseline, including expenses.
- Hours are the expected average; unused or extra hours are not modelled.
- Fees are before any sales tax or VAT.
Worked example
A developer agrees to about 20 hours a month of maintenance at her usual 50 an hour, plus 100 a month for hosting and monitoring tools she pays for. She offers a 10% discount for a 12-month commitment.
- Baseline: 20 × 50 + 100 = 1,100
- Discount: 1,100 × 10% = 110, so the fee is 990 a month
- Effective hourly rate: (990 − 100) ÷ 20 = 44.50
The retainer is 990 a month, 11,880 a year. Because the discount also covers the tool costs, each hour earns 44.50 rather than 50 — an 11% cut, not 10%.
The example uses round numbers in no particular currency. They are the values the calculator loads with.
What the inputs mean
- Baseline
- Hours × rate plus monthly expenses, before any discount or buffer.
- Discount
- A reduction offered in return for a longer commitment or guaranteed monthly volume.
- Buffer
- A premium added for priority response, being on call, or reserving capacity the client may not always use.
- Effective hourly rate
- What you actually earn per hour of work once expenses are taken out of the fee.
Common mistakes
- Offering a discount without agreeing what happens when the client uses more hours than planned.
- Discounting the tool costs along with your time.
- Not reviewing the retainer when the actual hours consistently differ from the estimate.
Limitations
- Uses an average month. Unused hours rolling over or overage billing are not modelled.
- The adjustment applies to the whole baseline, including expenses.
- Fees are before any sales tax or VAT.
Results are estimates based on the numbers you enter. They are not tax, legal or accounting advice. Read the disclaimer.
Questions
How big should a retainer discount be?
Many freelancers keep it between 5% and 15%. Beyond about 25% the hit to your hourly earnings is large; check the effective rate before agreeing.
When should I add a buffer instead?
When the client wants fast response times, weekend cover, or for you to hold time free whether or not they use it. Reserved capacity has a cost even when unused.
What if they use fewer hours than planned?
With a fixed retainer you keep the fee, so your real hourly earnings go up. That is part of the trade-off the client accepts in exchange for guaranteed availability.