Retainer model

A retainer is a recurring fee that a client pays for an agreed volume of work in each period, usually a month. It gives the supplier predictable revenue and the client predictable access. Its weakness is that consumption is rarely watched until the period is already over.

What is included in a retainer?

Either a number of hours, a defined set of services, or availability itself. The three are not interchangeable: an hours-based retainer can be measured, a service-based one has to be scoped, and an availability retainer is only profitable when it is not fully used.

How is a retainer tracked?

By recording hours against the retainer as the work happens and comparing them with the agreed volume before the period closes. A retainer checked at month end can only be reported. One checked in week two can still be managed.

What happens when a retainer is overrun?

That depends on what was agreed, and the agreement is often vague. The usual options are carrying hours forward, invoicing the excess separately, or absorbing it. Absorbing it quietly is the most common, and it is why retainers often look more profitable than they are.

How is a retainer different from a fixed price project?

A fixed price covers a defined piece of work once. A retainer covers an undefined amount of work repeatedly. The fixed price ends. The retainer renews, which means an unprofitable one stays unprofitable until somebody measures it. A retainer's weakness is that consumption is rarely watched until the period is already over.

troi shows retainer consumption before the period closes. See reporting and controlling.