How retainers work
A retainer states a fee and a number of hours, but rarely the hourly rate those two imply. Divide the fee by the hours you worked, because that rate is the figure to watch.
The rate a retainer does not state
A retainer agreement names two things: a fee and, usually, the hours it covers. Divide one by the other and you get the rate the arrangement implies. For example, 2,000 a month for up to 20 hours is 100 an hour. The fee was priced on that figure, and it's rarely worked out again.
What you earned is the fee divided by the hours you worked. At 20 hours the two match. Say the month runs to 30. The same 2,000 is then 66.67 an hour, a third less, with no renegotiation and nothing that looks like a pay cut from the outside.
| Implied rate | fee ÷ hours the agreement covers |
|---|---|
| Effective rate | (fee + overage billed) ÷ hours you actually worked |
Why the quiet months do not cancel the busy ones
The usual defence of an overrun is that it evens out, with a light month making up for a heavy one. Sometimes it does. However, the two aren't symmetrical: an overrun has no ceiling and an underrun does. You can work 40 hours on a 20-hour retainer, but you can't work less than nothing, so the most a quiet month can give back is the 20 hours it was worth.
Check the months instead of assuming they even out. I recommend running a few real months through the calculator, not just the one you remember, which is usually the bad one.
An overage rate is what stops the drift
A rate for hours past the limit keeps the retainer worth what you priced it at. With one, the extra work is charged by the hour, the effective rate stays near the implied one, and neither side has to raise it as a problem. Without one, every hour past the limit is unpaid, and the retainer calculator shows how many of them there were.
That doesn't mean you must add one. Plenty of retainers are deliberately loose, and in my view a client who never overruns is worth keeping on generous terms. Knowing the figure lets you decide.
Unused hours belong to your contract, not to the arithmetic
If you worked fewer hours than the retainer covers, the calculator counts what was left and stops there. Whether unused hours roll into next month, expire at the end of it, or were never meant to be tracked at all is a question the agreement answers. Some retainers buy availability rather than output, and on one of those a quiet month is the arrangement working as intended.
Short version: Divide the fee by the hours it covers to get the rate it implies: 2,000 a month for up to 20 hours is 100 an hour. Divide it by the hours you worked to see what the month paid, and use an overage rate to keep the two close.
Last updated 22 September 2026