Is this retainer actually profitable?
Retainers advertise themselves as predictable income. In practice they're often the most under-priced work on a freelancer's book — the agreed hours are a floor, the actual hours are a ceiling, and the effective hourly rate silently drifts below your target. This calculator makes the drift visible: nominal vs effective rate, the hidden discount %, and the overrun hours point where you're actively losing money.
Retainer profitability
Reading the output
- Nominal hourly rate = fee ÷ agreed hours. The theoretical maximum.
- Effective hourly rate = fee ÷ (agreed + overrun). The number that actually pays your bills.
- Effective discount = (target − effective) ÷ target. The invisible subsidy you're giving the client.
- Break-even hours = fee ÷ target rate. Any more than this and you're subsidising.
Scope-control patterns that fix it
- Hard cap at the agreed hours. Anything above is a change request at your day rate.
- Overflow bucket. Allow 10-15% extra hours baked in, bill at day rate above that.
- Monthly reset. Unused hours don't roll over, which keeps clients using you consistently rather than hoarding for a big push.
- Quarterly review. Rerun this calculator every quarter; adjust the retainer fee or hours if the drift is more than 15%.