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Self-employed & tax / Retainer Profitability Calculator

Retainer Profitability Calculator

What a monthly retainer pays per hour once scope creep and admin time are counted, and the fee that would hit your target rate.
$

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h

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Hours actually spent this month
h

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h

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$

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Realized hourly rate
$95.24 / hour
$125.00target rate
$5,250fee needed for these hours
40.0%over planned hours
Monthly fee$4,000.00
Rate as priced · 30 planned hours$133.33
Hours actually spent · 38 work + 4 admin42 h
Realized rate$95.24
Hours the fee pays for at target32 h
Hours given away10 h
Fee shortfall per month · $15,000 a year$1,250.00

You gave away 10 hours this month. Either raise the retainer to $5,250, cap the hours in the contract and bill extra at $125/h, or cut the scope back to 32 hours.

See breakdown

How the retainer profitability calculation works

  1. Start from what you priced

    A $4,000 retainer planned at 30 hours a month is $133.33 an hour, above a $125 target.

  2. Log every hour the client takes

    38 hours of work plus 4 hours of calls and reports is 42 hours: 40% more than planned.

  3. Divide the fee by real hours

    $4,000 ÷ 42 = $95.24 an hour, $29.76 below target.

  4. Reprice or rescope

    At $125 an hour, 42 hours is worth $5,250, so the retainer is $1,250 a month short ($15,000 a year). Raise it, cap hours, or cut scope to 32 hours.

Worked example. A $4,000 monthly retainer priced at 30 hours turned into 38 hours of work and 4 hours of admin. The realized rate is $95.24 an hour against a $125 target. Covering 42 hours at $125 needs a $5,250 fee, so the retainer is $1,250 a month short and 10 hours were given away.

Retainer Profitability FAQ

What is a retainer fee?

A fixed amount a client pays to reserve your time. Freelancers, consultants and agencies usually charge it monthly for an agreed scope of hours or deliverables. Lawyers often use the term for an upfront deposit drawn down as they bill. This calculator covers the recurring monthly kind.

How does a monthly retainer work?

The client pays the same fee every month for an agreed block of hours or deliverables. You get predictable income; the client gets priority access. It stays profitable only while real hours stay close to the hours you priced: $4,000 for 30 hours is $133.33 an hour, but at 36 hours it drops to $111.11.

How do I calculate a retainer fee?

Multiply the hours you expect each month by your target hourly rate, then add a buffer for meetings and admin. 30 hours at $125 is $3,750; with 10% admin time, about $4,125.

What is a realized hourly rate?

What you earn per hour worked: the fee divided by every hour the client took, including unbilled calls and revisions. It is usually lower than the rate you quoted.

How do I stop scope creep on a retainer?

Write the hours or deliverables into the contract, track time every month, and bill extra hours at your hourly rate. Share a monthly hours report so the client sees usage before the overage.

Should meetings and email count toward retainer hours?

For your own profitability, yes: they take time you could sell. Whether you bill them is a contract question, but leaving them out hides the real rate.

When should I raise a retainer?

When realized rate stays below target for two or three months in a row. Show the client the hours log and offer a choice: a higher fee or a smaller scope.

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