Retainer Calculator: Monthly Fee and Effective Hourly Rate

How to price a monthly retainer: formula, MRR and worked example

A monthly retainer fee equals included hours × base hourly rate × (1 − commitment discount) × (1 + SLA markup). With 25 hours at 120/h, a 10% discount and a 15% markup, it comes to 3,105 per client per month, a guaranteed MRR of 12,420 across 4 clients.

The tool's formula

Effective retainer rate = base rate × (1 − commitment discount) × (1 + SLA markup). Monthly fee = included hours × effective rate. Hours beyond the package are billed at base rate × overage multiplier. The realized hourly rate divides total billings (fee + overage) by all hours worked. Guaranteed MRR only counts the fees (fee × number of clients), and ARR is that MRR × 12, without overage.

Worked example (default values)

25 included hours, 120/h, 10% discount, 15% SLA markup, a 1.25 multiplier, 5 overage hours per client and 4 clients:

• effective rate: 120 × 0.90 × 1.15 = 124.20/h;
• fee per client: 25 × 124.20 = 3,105 a month;
• overage: 5 h × 150 = 750, so 3,855 per client;
• realized rate: 3,855 ÷ 30 h = 128.50/h;
• guaranteed MRR: 12,420, ARR: 149,040, for 100 committed hours a month.

The discount and the markup partly cancel out: without the SLA markup, the same package drops to 2,700 (108/h).

Assumptions and limits

Overage hours are an average you estimate, with no guarantee they will be used, which is why they stay out of MRR. The tool does not handle rolling unused hours into the next month; the contract clause suggested on screen (unused hours expire at month end) relies on that assumption. It deducts no taxes, VAT or non-billable time (sales, admin). Displayed amounts are rounded to the unit. This is a pricing aid, not legal or accounting advice.

Frequently Asked Questions

What discount should I give on a retainer?

The tool accepts 0 to 30% and starts at 10%. Each point of discount lowers the fee: at 25 hours and 120/h with a 15% SLA markup, going from a 10% to a 20% discount costs 345 per client per month (3,105 versus 2,760).

How should hours beyond the retainer be billed?

At the base rate times a multiplier between 1 and 2.5, set to 1.25 by default, which gives 150/h for a 120 rate. In the default example, 5 overage hours lift the rate actually earned from 124.20 to 128.50 per hour.

What is the difference between guaranteed MRR and estimated revenue?

Guaranteed MRR only counts signed fees: 3,105 × 4 clients = 12,420 a month, or 149,040 of ARR. The estimated total adds expected overage and reaches 15,420 a month, or 185,040 a year, but that part is not contractual.

How many hours should my team reserve for retainer clients?

The tool multiplies included hours by the number of clients: 25 h × 4 clients = 100 hours a month. With 5 overage hours per client, the load rises to 120 hours. Compare that total with the hours actually available once sales, admin and holidays are removed.

Is this tool really free?

Yes, all tools on Kristools are 100% free and accessible without registration.

Is my data protected?

Yes. All processing is performed directly and securely inside your browser. No personal data is sent to our servers.