Retainer Calculator for Agencies

Frequently Asked Questions

How is the recommended retainer fee calculated?

The recommended retainer fee is calculated using a cost-plus pricing model with scope protection:

1. We add up all your monthly costs (team costs + tool costs + other expenses)
2. We calculate a scope creep buffer based on your expected additional work
3. We apply your desired profit margin to this total cost basis
4. The final figure represents the minimum you should charge to meet your profit targets while staying protected from scope creep

What's the difference between the three pricing tiers?

The three-tiered pricing strategy is designed to increase your chances of winning business at different price points:

• Basic tier: 75-80% of your standard price with reduced deliverables/services
• Standard tier: Your recommended retainer price with your full core service offering
• Premium tier: 125-150% of your standard price with enhanced deliverables and premium services

This approach gives clients options while psychologically positioning your standard tier as the best value.

Should I charge different clients different retainer fees?

Yes, retainer fees should vary based on several factors:

• The scope and complexity of services required
• The size and budget of the client organization
• The potential strategic value of the client relationship
• The industry and competitive landscape
• The client's expected ROI from your services

This calculator helps you determine your minimum viable retainer fee, but you should adjust upward based on the specific client's situation and the value you're providing.

What should I include in the "Team Costs"?

Team costs should include all personnel expenses for team members who will work on the client's account:

• Salaries or contractor payments for all team members who will touch the account
• Proportional allocation of management time
• Employee benefits, taxes, and overhead related to these team members
• Account management and client service time

Remember to account for the actual percentage of time each team member will dedicate to this specific client.

What profit margins are standard in the agency industry?

Agency profit margins vary widely based on agency type, size, and positioning:

• 20-30%: Common for larger, full-service agencies with higher overhead
• 30-40%: Typical target for established mid-size agencies
• 40-50%: Achievable for specialized boutique agencies with efficient operations
• 50%+: Possible for highly specialized agencies with premium positioning

The default 40% margin in this calculator represents a healthy target for most agencies.