A retainer trades a discount for certainty: the client commits to a fixed block of hours every month, and you commit to a lower rate than you'd charge for one-off work. Done right, it's a good trade for both sides — but only if you know exactly how much that discount costs you before you agree to it. This calculator takes your monthly hours, your standard hourly rate, and the discount you're considering, and shows you the standard price, the discounted price, and the effective hourly rate you're actually working for once the discount lands.
How it works
The calculator starts with your standard monthly total: the monthly hours you're committing to, multiplied by your normal hourly rate. That's the number you'd invoice if there were no discount at all. Then it applies your commitment discount as a percentage off that total, giving you the discounted monthly price — the number that actually goes on the retainer invoice.
From there it works backward to your effective hourly rate: the discounted monthly total divided by the same monthly hours. That figure is the real rate you're being paid once the discount is baked in, and it's the number worth comparing against your usual hourly rate before you sign anything. A discount that looks reasonable as a percentage can still drag your effective rate below what you'd accept for a one-off project, and this is the fastest way to catch that before it's a contract.
Worked example
Say you're offering a client 20 hours a month at your standard rate of $90/hour, with a 10% commitment discount for guaranteeing those hours every month.
- Standard monthly: 20 × $90 = $1,800
- Discounted monthly: $1,800 × (1 − 10%) = $1,800 × 0.9 = $1,620
- Effective hourly rate: $1,620 ÷ 20 = $81
So a 10% discount on paper turns into an $81 effective hourly rate against a $90 standard rate — an $9-per-hour cost for the guarantee. Whether that trade is worth it depends on what you get in return: predictable income you can plan around, fewer hours spent pitching new clients, and a standing relationship that's usually cheaper to maintain than starting from scratch with someone new each month.
How to interpret your result
The effective hourly rate is the number to watch, not the discount percentage in isolation. A 10% discount sounds modest, but stack it against a client who also negotiates extra scope into the retainer without paying more, and your real effective rate can slide much further than the headline discount suggests. Recalculate it any time the monthly hours or the discount changes, not just once at signing.
That said, a discounted retainer can still be the better deal even when the effective rate is lower than your standard one. Guaranteed monthly income smooths out the feast-or-famine cycle that comes with one-off projects, and it cuts the time you'd otherwise spend finding, pitching, and onboarding new clients — time that has a real cost even when it isn't on an invoice. The math here tells you the price of the discount; it doesn't tell you whether the predictability is worth paying it, and that call depends on how much you value a calendar that doesn't need refilling every month.
Methodology & sources
The formula is standardMonthly = monthlyHours × hourlyRate, discountedMonthly = standardMonthly × (1 − commitmentDiscountPercent / 100), and effectiveHourlyRate = discountedMonthly / monthlyHours — all three computed from the unrounded inputs before any rounding is applied, so the figures stay internally consistent.
Retainer pricing sits alongside hourly and project-based billing as one of the standard freelance pricing models; the Freelancers Union's overview of how to price your freelance work covers where a retainer fits relative to hourly and fixed-price engagements. And because a retainer is still gross business revenue, self-employment tax — a flat 15.3% on net earnings, per the IRS — still comes out of it before it becomes take-home pay.