Retainers are the most valuable revenue an agency can have: predictable, recurring and easier to plan around. They're also where agencies quietly lose money through scope creep and late invoices. Here's how to set them up properly.

What is a retainer?

A retainer is a fixed monthly fee a client pays for an agreed scope of ongoing work, such as social media management, content, PR, IT support or advisory hours. Unlike a project, it has no end date. It renews until either side gives notice.

How should I price a retainer?

Start from cost, not from what you think the client will pay:

  1. List the monthly deliverables (posts, reports, meetings, campaigns).
  2. Estimate hours per role to deliver them.
  3. Multiply by each role's cost per hour: salary plus employer pension and overheads, divided by productive hours.
  4. Add third-party costs (tools, freelancers).
  5. Add your margin. Service businesses commonly aim for 30–50% gross margin on retainers.

Example: 60 team hours at an average fully loaded cost of ₦9,000/hour = ₦540,000, plus ₦60,000 tools = ₦600,000 cost. At a 40% margin, the retainer is about ₦1,000,000 a month before VAT.

What goes in a retainer agreement?

  • Scope: deliverables per month, in numbers ("12 posts, 1 report, 2 meetings")
  • Limits: hours included, and the rate for extra work
  • What's not included: ad spend, production, printing
  • Billing: amount, invoice date, payment terms, billed in advance
  • Term and notice: minimum term (often 3 months) and notice period (often 30 days)
  • Rollover: whether unused hours carry forward (usually not)
  • Price review: annually, or tied to scope changes
  • Late payment: the right to pause work after a set number of days

Should retainers be billed in advance?

Yes. Bill on the 1st for the coming month. Billing in arrears means you fund a month of work for the client and wait another 30 days on top. Clients used to arrears billing will usually accept advance billing for new contracts if it's in the proposal.

How do VAT and WHT apply?

If you're VAT registered, add 7.5% VAT to each retainer invoice. Corporate clients usually deduct 5% withholding tax on the fee before VAT, as agency and consultancy services. Show it on the invoice so the payment matches. See the VAT & WHT calculator.

How do I stop scope creep?

  • Track work against the retainer monthly.
  • Report delivery: what was done against what was agreed.
  • Quote extras separately the moment a request is outside scope.
  • Review quarterly. If you're consistently over, re-price or re-scope.

Automate the invoice

The easiest way to get retainers paid on time is for the invoice to go out automatically on the same day every month, with a payment link and reminders. In BizBooks, set the retainer up once as a recurring invoice and it's emailed on schedule, with VAT, WHT, the client's PO number and a "Pay now" link.

Frequently asked questions

How do agencies price retainers?

By estimating the monthly hours and costs to deliver the agreed scope, adding third-party costs, then adding a target margin, rather than guessing a round number.

Should a retainer be paid upfront?

Best practice is to bill monthly in advance, on the 1st, with 14–30 day payment terms.

What happens to unused retainer hours?

That's set in the agreement. Most agencies don't roll unused hours forward, because the team capacity was reserved either way.

How long should a retainer contract be?

Many agencies use a minimum term of three months with 30 days' notice after that.