Monthly Retainer

Per Year
$85/mo * 12 mo = $1,020
$130/mo * 12 mo = $1,560
$250/mo * 12 mo = $3,000
$425/mo * 12 mo = $5,100

$125/hr Hourly Rate

Roles
programmer $30 / hr
SEO Marketer $30 / hr
Designer $30 / hr
Manager $30 / hr
$120 / hr

1. Define Your Standard Hourly Rate: You've already set this: $125/hour. This is your baseline for all calculations and for any work outside of a retainer.

In a typical scenario for a Tech Firm charging $125/hour with a monthly retainer, the setup involves a base monthly fee that secures a certain amount of dedicated hours, and then an hourly rate for any time exceeding those retainer hours. This provides both stability for the Tech Firm and predictability for the client.

1. Determine the Base Retainer Hours:

• Assess Client Needs: Discuss with your client their average monthly AI workload. Are there recurring tasks, ongoing support, or specific project phases that require consistent attention?
• Your Capacity: How many hours are you willing to commit exclusively to this client each month as a baseline?
• Common Retainer Tiers:
  • Small Retainer: 10-20 hours/month (e.g., for ongoing consultation, small-scale model maintenance, or ad-hoc support).
  • Medium Retainer: 40-80 hours/month (e.g., for consistent project work, dedicated model development, or integration tasks).
  • Large Retainer: 100+ hours/month (e.g., for significant project leadership, multiple concurrent AI initiatives, or acting as a fractional AI lead).

2. Calculate the Monthly Retainer Fee:

Once you've determined the base retainer hours, multiply them by your hourly rate ($125/hour).

• Formula: Monthly Retainer Fee = Base Retainer Hours * \$125/hour

  • Example: If you agree on a 40-hour monthly retainer: 40 hours * \$125/hour = \$5,000/month

3. Define the Over-Retainer Hourly Rate:

This is the rate you charge for any hours worked beyond the agreed-upon base retainer hours. It's common to keep this the same as your standard hourly rate ($125/hour), but some Tech Firms might offer a slightly discounted rate for retainer clients or a slightly higher rate for overages as a disincentive for clients to consistently exceed their retainer. For simplicity and fairness, sticking to $125/hour for overages is often best.

2. Determine the Retainer Structure: A retainer means a client pays a fixed amount upfront each month to secure a block of your time. This guarantees your availability and provides them with a consistent cost for core services.

• Fixed Hours Retainer: This is the most common model for hourly-based services. The client pre-purchases a set number of hours per month at your standard rate.

  • Example Tiers (flexible, based on client needs):
    • Light Engagement: 10 hours/month = $1,250/month
    • Medium Engagement: 20 hours/month = $2,500/month
    • Heavy Engagement: 40 hours/month = $5,000/month
    • Dedicated Part-Time: 80 hours/month = $10,000/month

• Consider a slight discount for higher retainer tiers: While your base is $125/hour, for a client committing to, say, 40+ hours per month, you could offer a small discount (e.g., $120/hour for retainer hours) as an incentive for their commitment. However, it's perfectly fine to keep it at $125/hour for all work, especially given it's a specialist AI role.

3. Set the "Over-Retainer" Rate: This is crucial. What happens if the client needs more hours than their retainer covers in a given month?

• Option 1: Same Rate: Charge $125/hour for any hours exceeding the retainer. This is simple and transparent.
• Option 2: Higher Rate: Charge a slightly higher rate (e.g., $150/hour) for overages. This can serve as a soft disincentive for clients to consistently go over their committed hours and compensates you for fitting in unplanned work.
• Option 3: Discounted Rate (Less Common): Rarely, some Tech Firms offer a slightly lower rate for overages as a loyalty bonus, but this is less common with high-value services like AI.

Recommendation: For an AI Generalist at $125/hour, either keeping the over-retainer rate at $125/hour or slightly increasing it to $150/hour for true "urgent" or "unplanned" work is a good strategy. Make sure the client understands this clearly upfront.

4. Key Elements for Your Contract/Agreement:

A formal agreement is vital for clarity and protection. Include the following:

• Parties Involved: Your legal name/business name and the client's legal name/business name.
• Scope of Services: Clearly define what your "AI Generalist" services encompass. Be specific! (e.g., "AI Strategy Consulting, Machine Learning Model Development (specific types of models), Data Preprocessing for AI, MLOps Consultation, Prompt Engineering, AI Tool Integration"). List what is included and potentially what is excluded.
• Retainer Fee & Hours:
  • "Client agrees to pay a monthly retainer fee of $X for Y hours of AI Generalist services."
  • State the value per hour within the retainer: "This equates to an effective rate of $125/hour for the retainer hours."
• Over-Retainer Hours & Rate:
  • "Any hours worked beyond the Y retainer hours in a given month will be billed at a rate of $125/hour (or $150/hour, if applicable)."
• Billing Cycle:
  • Retainer: "The monthly retainer fee is due in advance on the 1st day of each month." (This is crucial for securing your time).
  • Overages: "Invoices for over-retainer hours will be issued at the end of each month, detailing the additional hours worked and total amount due."
• Payment Terms: "Invoices are due within [e.g., 15, 30] days of receipt." Include late payment clauses if desired (e.g., "A late fee of 1.5% per month will be applied to overdue balances").
• Hour Tracking:
  • Specify how you will track hours (e.g., "All work will be meticulously tracked using [Time Tracking Software, e.g., Clockify, Toggl, Harvest] and detailed reports will be provided [e.g., weekly, bi-weekly, with each invoice]."). Transparency builds trust.
  • No Roll-Over (Typically): Most retainers are "use it or lose it" for the client within the month. This ensures you're compensated for reserving your time. If a client consistently underutilizes hours, it might signal a need to adjust their retainer tier. (Some Tech Firms do allow limited roll-over, but it adds complexity).
• Communication Protocol: How will you communicate (email, Slack, project management tool), response times, and meeting schedules.
• Term & Termination:
  • "This agreement shall commence on [Start Date] and continue on a month-to-month basis thereafter."
  • "Either party may terminate this agreement with [e.g., 30] days' written notice." (This protects both you from sudden loss of income and the client from being locked in).
• Confidentiality: Essential for AI work, as you'll likely deal with sensitive data and proprietary models.
• Intellectual Property: Clearly state who owns the IP of the work created (typically you license it, or it transfers upon full payment).

5. Practical Tips for Implementation:

• Start Small (if new client): For a brand new client, sometimes a shorter trial period (e.g., a one-month retainer) or a smaller retainer package can be a good way to build trust before committing to a larger, ongoing agreement.
• Educate Your Client: Explain why a retainer is beneficial for them (guaranteed availability, predictable budgeting, deeper partnership, priority service) and for you (stable income, better planning).
• Regular Reporting: Provide consistent updates on hours used versus hours remaining in the retainer. This prevents surprises and allows clients to adjust their requests or approve overages proactively.
• Be Flexible (Within Reason): While your contract should be firm, a good client relationship sometimes benefits from slight flexibility (e.g., if they are 15 minutes over, you might not nickel-and-dime, but track it). For larger overages, always get explicit approval.
• Value-Based Discussions: Even with an hourly rate, frame your discussions around the value your AI expertise brings. This reinforces your rate and positions you as a strategic partner, not just a time-filler.

4. Outline the Agreement (Contract Essentials):

A clear contract is crucial to manage expectations and protect both parties. Include:

• Services Provided: Clearly define the scope of AI generalist services covered by the retainer (e.g., AI strategy, model development, data analysis for AI, MLOps consultation, specific project work). Be as specific as possible to avoid scope creep.
• Monthly Retainer Fee: State the fixed monthly fee.
• Base Retainer Hours: Specify the number of hours included in the retainer.
• Over-Retainer Rate: Clearly state the hourly rate for any hours exceeding the retainer.
• Billing Cycle:
  • Retainer: Typically billed at the beginning of the month for the upcoming month's services. This secures your time.
  • Overages: Billed at the end of the month, once actual hours worked are tallied.
• Payment Terms: Net 7, Net 15, Net 30, etc. (e.g., payment due within 15 days of invoice).
• Hour Tracking: Specify how hours will be tracked (e.g., using a time-tracking software like Toggl, Clockify, Harvest) and how reports will be shared with the client. Transparency is key.
• Communication Protocol: How will you communicate progress, receive feedback, and manage tasks? (e.g., weekly check-ins, specific project management tool).
• Notice Period for Changes/Termination: Define how much notice is required from either party to adjust the retainer terms or terminate the agreement (e.g., 30-day written notice).
• Scope Changes: How will out-of-scope requests be handled? (e.g., requiring a separate project agreement or a discussion to adjust the retainer).

5. Communication and Transparency:

• Regular Updates: Provide clients with regular updates on hours used, especially as they approach their retainer limit. This prevents surprises at the end of the month.
• Projected Overages: If you anticipate exceeding the retainer hours, communicate this to the client as early as possible to get their approval before incurring additional costs.
• Value Proposition: Continually demonstrate the value you bring, justifying both your hourly rate and the retainer arrangement.

Example Scenario for a Client Proposal:

"AI Strategy & Development Retainer

• Services: Comprehensive AI generalist services including [list specific services, e.g., AI solution architecture, custom model development, prompt engineering for LLMs, data pipeline design for AI, MLOps consulting, strategic guidance].
• Monthly Retainer Fee: $5,000
• Base Retainer Hours Included: 40 hours per month
• Over-Retainer Hourly Rate: $125/hour (for any hours exceeding the 40-hour base)
• Billing: Retainer fee invoiced on the 1st of each month. Overages invoiced on the last day of each month for actual hours worked.
• Payment Terms: Net 15.
• Time Tracking: All work will be meticulously tracked using [Your Preferred Time Tracking Tool], with detailed reports provided weekly/bi-weekly.
• Termination: 30-day written notice required for termination by either party."