What Is a Retainer Agreement? Free Template + Step-by-Step Guide

What Is a Retainer Agreement?

A retainer agreement is a contract between a service provider (a freelancer, consultant, or agency) and a client, where the client pays a fixed monthly fee to retain the provider's services and availability for an agreed scope or number of hours. Think of it as reserving a seat on an expert's calendar every month.

Unlike a project-based contract with a defined end date, a retainer creates an ongoing relationship. The client gets priority access and predictable costs; the provider gets recurring revenue and a stable income stream.

Types of Retainer Agreements

What to Include in a Retainer Agreement — 10 Clauses

1. Parties. Full legal names of the service provider and client.
2. Services included. Exactly what is covered by the monthly fee — hours per month, deliverable types, response time SLAs.
3. Services excluded. What requires a separate project invoice — anything outside the monthly scope.
4. Retainer fee. The fixed monthly amount, when it is invoiced (e.g. 1st of each month), and how it is paid.
5. Rollover policy. Whether unused hours roll over to the next month (most providers avoid this — it creates liability).
6. Additional hours rate. Your hourly rate for work beyond the monthly scope.
7. Term and renewal. The initial term (3, 6, or 12 months), and whether it auto-renews or requires signed renewal.
8. Termination notice. How much notice either party must give to end the retainer (30 days is standard).
9. Intellectual property. Who owns the work produced under the retainer — typically the client on full payment.
10. Confidentiality. Both parties agree not to disclose confidential information.

Retainer Fee — How to Set Yours

The simplest formula: estimate the average hours you'll spend per month, multiply by your standard hourly rate, then subtract a modest discount (5–15%) to reward the client's commitment and your revenue certainty.

Example: 15 hours/month × £85/hour = £1,275. With a 10% retainer discount: £1,147/month.

Alternatively, define the retainer by deliverable: "4 blog posts per month, 2 social media reports, and up to 2 strategy calls" — and price based on the value of those outputs, not just your time.

Retainer Agreement Example (Excerpt)

Services Included: Provider will deliver up to 20 hours per month of digital marketing services, including: SEO content strategy, monthly analytics report, and up to 3 client calls of up to 1 hour each.

Retainer Fee: £1,500 + VAT per month, invoiced on the 1st of each month, payable within 7 days.

Additional Services: Work requested beyond the 20-hour monthly scope will be invoiced separately at £90/hour, agreed in writing before commencement.

Unused Hours: Unused hours within a month do not roll over to subsequent months.

Termination: Either party may terminate this agreement with 30 days' written notice. Fees are non-refundable for the current month's notice period.

Frequently Asked Questions

Is a retainer fee refundable?

Generally no — the retainer is paid in advance for availability and priority access. Once you have reserved the month for a client, those hours are not available to other clients. State clearly in your contract whether retainer fees are refundable under any circumstances.

What happens if the client doesn't use all their hours?

Define this in your rollover policy. Most freelancers do not allow rollover — unused hours expire at the end of each month. If you do allow limited rollover (e.g. one month's worth), cap it clearly in the contract.

How do I transition a project client to a retainer?

At the end of a successful project, propose the retainer as a natural next step: "Based on our work together, I'd like to offer you ongoing support at £X/month — here's what that would include." Most clients who are happy with project results will consider it.

What if the client consistently exceeds the monthly hours?

Renegotiate the retainer fee — it should reflect the actual level of engagement. Invoice overages immediately and consistently, so the client understands the value they are receiving and is incentivized to move to a higher-tier retainer.

Do I need a separate NDA with a retainer agreement?

If you handle sensitive information, yes — include a confidentiality clause in the retainer itself, or reference a separate NDA. A standalone NDA is useful if you deal with especially sensitive industries (healthcare, finance, legal).