Retainer profitability calculator
A retainer pays a fixed fee but is consumed in hours, so the monthly margin and the effective hourly rate are two different numbers — and only one of them survives a busy month. Enter your retainer, the hours it included, the hours actually consumed, and your own hourly cost.
- Retainer revenue
- ₹60,000
- Total revenue in period
- ₹60,000
- Cost of hours consumed
- ₹36,400
- Gross profit
- ₹23,600
- Margin in this period
- 39.33%
- Effective rate incl. one-off work
- ₹1,153.85 / hr
- Rate the retainer implies
- ₹1,500 / hr
- Margin on that implied rate
- 53.33%
- Allowance consumed
- 130%
- Hours beyond the allowance
- 12 hrs
- That overrun was delivered for
- ₹13,846.15
Hours consumed exceed the included allowance by 12 hrs. The retainer funds 40 hrs and paid ₹60,000, so the work beyond the allowance was delivered for ₹13,846.15 without additional revenue. That is the honest reading of the month: the retainer is being consumed faster than it funds, and the effective rate has fallen to ₹1,153.85 an hour. The three ordinary responses are to raise the allowance or the fee, price the extra work as a separate quotation, or treat the overrun as the cost of scope you agreed to absorb.
How this is calculated. Retainer revenue = the monthly fee. Total revenue = retainer + one-off work. Cost of hours consumed = hours consumed × your hourly cost. Gross profit = total revenue − that cost. Margin = gross profit ÷ total revenue × 100. Effective rate realised = retainer revenue ÷ hours consumed. Rate the retainer implies = retainer revenue ÷ hours included. Margin on that implied rate = (implied rate − hourly cost) ÷ implied rate × 100. Allowance consumed = hours consumed ÷ hours included × 100. Hours beyond the allowance = hours consumed − hours included, and its value = those hours × the effective rate realised.
The effective rate is the number that matters, because a retainer does not pay for hours — it pays a fixed fee, and the hours are the cost. A healthy margin in the month can still be an unprofitable rate per hour, and a weak month can still be a good rate if the retainer is not the only revenue on the account. Your retainer, your hours, and your hourly cost are all inputs you supply; this is a planning model, not a measured benchmark, and it knows nothing about what the work involved.
Want retainers priced from the work, not from a habit?
The figure that matters is the effective rate, and it is only visible when the hours sit next to the fee. In NoxOrigin, work billed against a client reads alongside what has been invoiced, so the retainers and one-off work on an account can be reviewed from records rather than remembered at month end. Every rate in this calculator is one you supply — it is a planning model, not a benchmark.
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