Most consultants can quote an hourly rate without thinking twice. Ask them to quote a monthly retainer, and the confidence disappears — because a retainer isn't just an hourly rate multiplied by some hours. It's a different pricing model, with a different set of trade-offs for both sides, and pricing it wrong in either direction costs you: too high and you don't win the deal, too low and you're working a discount you never agreed to.
Here's the framework, step by step, with worked numbers.
1. Start from your real hourly rate — not a guess
Before you can price a retainer, you need a defensible hourly number. That means taking your target income, adding your annual business expenses, and dividing by the hours you can realistically bill in a year — not your total working hours. Most consultants can only bill 50–70% of a standard work week once admin, business development, and delivery overhead are subtracted.
Target income $140,000 + expenses $15,000 = $155,000 required revenue. At 46 working weeks and 25 realistic billable hours/week, that's 1,150 billable hours/year. $155,000 ÷ 1,150 = a $135/hr minimum rate. Add a 20% margin and the recommended rate lands around $168/hr.
2. Convert the hourly rate into committed monthly hours
A retainer isn't "however many hours it takes" — it's a specific number of committed hours per month, agreed up front. Look at your last few engagements with this client type and estimate a realistic monthly hour count: delivery time, calls, and the admin overhead of staying available to them.
A fractional strategy engagement might realistically need 12 committed hours/month — two half-day sessions plus async availability. At $168/hr, that's a raw monthly value of $2,016.
3. Apply the retainer discount — deliberately, not by accident
Retainer engagements typically come at a 5–15% discount off your standalone hourly rate. This isn't you undercharging — it's the price of the thing the client is actually buying: guaranteed, recurring revenue for you, and guaranteed access for them, with lower BD overhead on both sides. Price the discount in on purpose, and hold the line there; going deeper than 15% erodes the rate you spent step 1 defending.
$2,016 raw value at a 10% retainer discount = ~$1,815/month. Round to a clean number your invoicing tool won't mangle: $1,800/month.
4. Build in a scope boundary, not just a price
The number one reason retainers go bad isn't the price — it's scope creep. A retainer without a defined boundary (committed hours, response-time expectations, what counts as "in scope") quietly turns into unlimited access at a discounted rate. State the hours explicitly in the agreement, and define what happens when a month runs over: rolled to next month, billed at your standard hourly rate, or simply flagged for a scope conversation before more work starts.
5. Revisit the number at renewal — not mid-engagement
Rates should move as your minimum and recommended rate move (new expenses, new income targets, more experience). But the retainer itself should stay fixed for the length of the term you agreed to. Renegotiate at renewal, not three months in — consistency here is part of what makes a retainer relationship feel stable to the client, which is the whole point of offering one.
Once you've settled on a number, the next step is turning it into an actual proposal. The free Consulting Proposal Generator takes this same pricing model — hourly, project, or retainer — and turns it into a ready-to-send document, with a PDF download included.