Work out the real hourly rate on a retainer.

Freelance retainers trade hourly flexibility for income stability. A 3,000/month retainer for 20 included hours gives an effective 150/hour rate - often lower than the freelancer's standard rate, but the predictable income and reduced sales burden often justify the discount.

This calculator works out the effective hourly rate, the value of extra hours billed at standard rates, and the lifetime value of the client based on the typical engagement length. A 3,000 retainer with 200 extra hourly and 5 hours of extras a month generates 4,000 monthly. Over an 18-month engagement, that's 72,000 lifetime - often worth a 30-50% hourly discount from the freelancer's side.

The tool is useful for both sides. Freelancers can see whether a proposed retainer is worth accepting; clients can see whether the effective hourly rate makes sense compared to pure hourly engagements. Retainers work best when the work is recurring and predictable; they fail when scope creeps and the freelancer ends up doing 40 hours for a 20-hour rate.

Quick example

With monthly retainer amount of 3,000 and included hours of 20 (plus extra work hourly rate of 200 and typical extra hours per month of 5), the result is 72,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Monthly Retainer Amount, Included Hours, Extra Work Hourly Rate, Typical Extra Hours per Month, and Expected Engagement Length. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

What's happening under the hood

Effective hourly = retainer / included hours. Monthly total = retainer + (extra hours × extra rate). Annual value = monthly × 12. Lifetime = monthly × engagement months. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Re-running after each rate change

Freelance rates aren't set once. After any rate change, re-run this — the monthly and annual totals drift faster than people expect, and your runway number changes with them.

What this doesn't capture

Freelance income is lumpy. The calculation assumes steady work; reality includes dry spells, delayed invoices, and client churn. Plan against a pessimistic version of the result, not the central case.