How to Build a More Profitable Retainer Model for Your Agency

Sep 10, 2025

Carson Pierce, a recurring guest and expert on agency operations, joins the conversation to dissect the complex world of retainer models. He emphasizes the core benefits of retainers in generating consistent revenue while critiquing traditional ‘bucket of hours’ that can overwhelm teams. The discussion covers modern variations of retainers, the significance of tracking deferred revenue, and innovative pricing structures that balance risk and profitability. Carson also highlights the need for proactive client partnerships to enhance overall agency performance.

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INSIGHT

Retainer Is A Broad Capacity Concept

A retainer is fundamentally about recurring capacity rather than a single billing style.
Modern retainers are a broad container that can include T&M, flat fees, performance, or licensing.

ADVICE

Track Prepaid Hours As Deferred Revenue

Avoid selling large prepaid hour buckets without tracking the deferred liability.
Record prepaid hours as deferred revenue on the balance sheet to prevent hidden cash-flow risk.

ANECDOTE

Prepaid Hours Caused Payroll Crisis

An agency was barely making payroll despite having prepaid work on the books.
They owed work they'd been paid for but had no cash to pay staff to deliver it.

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Points of Interest

1:08 – 1:44 – Defining Retainers: Marcel and Carson introduce the topic of retainers, noting how different agencies define them in varied ways.
2:05 – 2:37 – Core Benefit of Retainers: Carson explains that retainers create recurring revenue and provide clients with consistent access to agency resources.
2:50 – 3:33 – Historical Context: Marcel traces retainers back to traditional professional services, where upfront payments secured future capacity.
3:44 – 5:19 – Modern Variations: The conversation highlights how retainers have evolved into many models, including time-and-materials, flat fees, and performance-based pricing.
5:32 – 7:04 – Pitfalls of Prepaid Hours: Carson critiques “bucket of hours” retainers, emphasizing their lack of control and operational strain.
7:10 – 9:29 – Accrual Accounting Risks: Marcel outlines how prepaid hours create deferred revenue liabilities that are often untracked, leading to serious cash flow problems.
11:05 – 11:41 – Operational Consequences: Carson notes that unexpected claims on rollover hours can overwhelm teams, forcing agencies into overwork or costly freelancer hires.
12:04 – 14:33 – Pricing Model Quadrant: Marcel introduces the value–risk quadrant, showing how agencies should align retainer structures with engagement value and project risk.
15:07 – 16:31 – Abstracted T&M Models: For high-value, high-risk work, Marcel explains why abstracting hours into larger time blocks or cross-functional teams improves leverage and profitability.
17:00 – 18:21 – Low-Risk Models: The hosts outline flat retainers tied to deliverables and performance-based pricing tied to client outcomes, noting challenges with attribution.
19:00 – 20:27 – Pricing Dynamics: Carson and Marcel discuss how flexibility and overages influence rates, with retainers often discounted for predictability but charged higher when clients exceed agreed capacity.
37:06 – 38:14 – Account Management Posture: Marcel contrasts T&M models, where account managers say “yes and” to client requests, with fixed-scope retainers, where the posture shifts to “yes but” requiring tradeoffs or renegotiation.

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