Free tool for marketing agencies and consultancies
Agency retainer profitability and hours-used calculator
Effective hourly rate = retainer fee ÷ hours used. Margin = fee − hours used × team cost per hour. Utilization = hours used ÷ hours included. In the example, a $4,000 retainer with 40 hours included, 46 hours used and a team cost of $60 an hour earns an effective $86.96 an hour instead of the contracted $100, leaves a $1,240 margin (31.0%), and runs 6 hours (115% utilization) over, worth $600 of unbilled work.
Last updated 2026-11-04.
- Effective hourly rate
- Margin this month
- Margin %
- Hours over the retainer
- Unbilled overage at the contracted rate
- Utilization (used / included)
- Break-even hours (margin reaches zero)
Check the inputs: hours included above 0, no negative amounts.
Example scenarios
Three sets of example inputs worked through the same formulas as the calculator above. They are illustrations, not averages or statistics.
| Scenario | Inputs (team cost $60 an hour) | Effective hourly rate | Margin | Margin % | Utilization |
|---|---|---|---|---|---|
| Low | $2,000 fee, 20 h included, 18 h used | $111.11 | $920 | 46.0% | 90% |
| Typical | $4,000 fee, 40 h included, 46 h used | $86.96 | $1,240 | 31.0% | 115% |
| High | $8,000 fee, 80 h included, 100 h used | $80.00 | $2,000 | 25.0% | 125% |
Method: Effective rate = fee ÷ hours used; margin = fee − hours used × team cost per hour; utilization = hours used ÷ hours included. Figures checked against the same formulas on 2026-11-04.
How the calculator works
A retainer sells a block of hours for a fixed monthly fee. Four numbers say how it is doing: the fee, the hours included, the hours the team really used, and what an hour of your team costs you. Team cost per hour should include salary or contractor pay plus a share of overhead such as software and rent, not just pay.
From those the calculator derives the contracted rate (fee ÷ hours included), the effective hourly rate (fee ÷ hours used), the cost of the hours used, the margin in dollars and percent, the hours over the included amount, the value of that overage at the contracted rate, and the utilization, which is hours used divided by hours included.
Worked example
A client pays $4,000 a month for 40 hours, so the contracted rate is $100 an hour. Your team logs 46 hours at a cost of $60 an hour, which is $2,760. The margin is $4,000 − $2,760 = $1,240, or 31.0% of the fee. The effective rate falls to 4,000 ÷ 46 = $86.96. The 6 extra hours are 15% over what was sold, utilization of 115%, and at the contracted rate they are worth 6 × $100 = $600 you did not bill.
The break-even point is fee ÷ cost per hour = 4,000 ÷ 60 = 66.7 hours. Past that number of hours the retainer loses money outright, even though every earlier hour was already below the contracted rate.
Reading utilization
Under 100 percent means the client did not use all the hours; whether that is good depends on your terms. If unused hours roll over, you may owe them later; if they expire, you were paid for work you did not do. Over 100 percent means you are giving away work or about to ask for an extra fee. A client that sits at 90 to 100 percent month after month is a well-sized retainer. A client far above, month after month, needs a conversation or a higher fee.
What to do with the numbers
Two common actions follow. If the effective rate keeps falling below your target rate, either raise the fee at renewal or cut scope to fewer hours of the work that drives the results. If margin is thin because cost per hour is high, check whether senior people are doing work a junior could do. The calculator tells you where you are; it does not tell you which of these is right for a given client.
What this tool does not do
It handles one client and one month at a time and forgets everything when you close the page. It does not track time, send invoices or know your contract. The full dashboard linked below is a planned Notion template that compares hours used with hours sold for every client on one page, and it is not available yet.
Questions
What is the effective hourly rate of a retainer?
The monthly fee divided by the hours actually worked. It is lower than the contracted rate whenever the team uses more hours than the retainer includes.
What should I count in team cost per hour?
Pay for the people who work on the account plus a fair share of overhead such as software, rent and benefits, divided by the hours they work.
Does this page store my client numbers?
No. The math runs in your browser; nothing is sent or saved.
We are also planning a paid product: Retainersdesk, Notion dashboard for marketing agencies. It is not available yet; its page shows the planned price, and reserving charges nothing. See the planned product