Retainers are the steadiest revenue a consultancy or agency can have: predictable income, ongoing relationships, no constant selling. They're also a common source of friction, when the client thinks they've bought more than you think you've sold, or an invoice for extra hours arrives without warning.
Most of that friction is avoidable with a clear agreement and clear invoices. Here's how to set up both. The invoicing side is what Branded Invoices handles, and the same rules apply in any billing tool.
Three kinds of retainer
| Type | What the client buys | Best for |
|---|---|---|
| Fixed scope | Defined deliverables each month, e.g. four blog posts and a monthly report | Repeatable work with a clear output |
| Hours bank | A set number of hours each month, used as needed | Varied work that's hard to scope in advance |
| Advisory access | Availability: calls, reviews, advice within agreed limits | Senior advice, fractional roles |
Many retainers mix them, but the client should be able to say in one sentence what they're paying for.
What to agree in writing
- Scope: what's included, with examples, and what isn't.
- Hours or deliverables per month.
- Rollover: whether unused hours carry over, how many, and for how long.
- Overage: the rate for extra hours, and whether the client approves them in advance.
- Billing: invoice date, payment terms and how overages are billed.
- Reporting: what the client receives each month, such as an hours report.
- Term and review: minimum term, notice period and a regular review point.
Invoicing a retainer
- Invoice the retainer in advance, on the same day each month, usually the 1st. Describe it with the period: "November retainer: 30 hours, November 1–30".
- Bill overages in arrears, on a separate line on the next invoice, with the month and the hours: "October additional hours: 4 × $165.00".
- Attach the hours report for the month just finished: hours available, used, rolled over and over.
- Keep the numbering and terms consistent with your other invoices. The checklist in What to put on a professional services invoice applies here too.
A worked example
A fictional agency, Pinecrest Digital, has a retainer with Beacon Outdoor Supply: 30 hours a month for a fixed $4,500, billed on the 1st. Up to 10 unused hours roll into the next month only, and extra hours are $165 each, billed the following month. In September, Beacon used 26 hours, so 4 rolled into October.
| October hours | Hours |
|---|---|
| Retainer hours | 30 |
| Rolled over from September | 4 |
| Available | 34 |
| Used: campaign landing pages | 21 |
| Used: monthly reporting and calls | 8 |
| Used: holiday promotion set-up (approved Oct 14) | 9 |
| Total used | 38 |
| Over the retainer | 4 |
The November 1 invoice has two lines:
| Description | Qty | Rate | Amount |
|---|---|---|---|
| November retainer: 30 hours, November 1–30 | 1 | $4,500.00 | $4,500.00 |
| October additional hours (see hours report) | 4 | $165.00 | $660.00 |
| Subtotal | $5,160.00 | ||
| HST 13% | $670.80 | ||
| Total due (CAD) | $5,830.80 |
The four extra hours don't surprise anyone. The holiday promotion was approved on October 14, the hours report shows where the time went, and the overage is on its own line. If Beacon's books are in QuickBooks Online or Xero, each line imports cleanly; the layout is covered in How to import invoices into QuickBooks Online or Xero from a CSV.
Keeping retainers healthy
- Warn before an overage. At around 80% of hours used, let the client know and agree what happens next.
- Review quarterly. Three months of overages means the retainer should be bigger. Three months well under means the client will soon question it.
- Don't let rollover pile up. A large balance of owed hours is a liability you'll be asked to deliver all at once.
- Report value, not just hours. A line on what the hours achieved makes renewals easier.
Common mistakes
- Vague scope. "Ongoing marketing support" means whatever the client needs that week.
- Overages without approval. Extra hours the client didn't agree to are the ones they dispute.
- Billing in arrears for the retainer itself. It turns predictable revenue into a monthly chase.
- Bundling overages into the retainer line. A total that's different every month raises questions; two clear lines don't.
Frequently asked questions
What is a retainer in consulting?
A retainer is an agreement where a client pays a regular fee, usually monthly, for ongoing work or access, instead of paying per project. It can cover a defined scope of work, a set number of hours, or availability for advice.
Should retainers be billed in advance?
Usually, yes. The retainer fee is invoiced at the start of the period it covers, often on the 1st of the month. Hours used beyond the retainer are billed afterwards, in arrears, once they're known.
Should unused retainer hours roll over?
It's a business decision, but a limited rollover is common: for example, up to a third of the monthly hours, for one month only. Unlimited rollover builds a balance of owed work that's hard to deliver.
How should retainer revenue be recorded?
A retainer billed in advance is often recorded as deferred revenue until the work is done, depending on your accounting basis and local rules. Ask your accountant how they want it treated, and keep the invoices clear about which period they cover.