Retainer vs Project Contract
Last updated: February 2025
Quick Comparison
| Aspect | Retainer Contract | Project Contract |
|---|---|---|
| Payment structure | Regular recurring fee | Fixed price or milestone-based payments |
| Duration | Ongoing with periodic review | Defined start and end dates |
| Scope | Flexible within agreed allocation | Fixed scope with change control process |
| Availability | Provider is on call and prioritises the client | Provider is available only during the project period |
| Risk allocation | Client bears risk of under-utilisation | Provider bears risk of scope underestimation |
What Is a Retainer Contract?
An ongoing agreement where a client pays a regular fee to secure a provider's availability and a set amount of work each period.
Key Features
- • Fixed recurring fee paid monthly or quarterly
- • Guaranteed availability and priority access
- • Scope defined as hours or service level per period
- • Typically includes rollover or use-it-or-lose-it terms
Best For
- • Ongoing advisory or support services
- • Securing priority access to in-demand specialists
- • Predictable budgeting for recurring needs
What Is a Project Contract?
A contract for a defined piece of work with a clear scope, timeline, deliverables, and fixed or estimated price.
Key Features
- • Defined scope, deliverables, and completion criteria
- • Fixed price or capped estimate agreed upfront
- • Clear start and end dates
- • Payment often tied to milestones
Best For
- • One-off deliverables with clear requirements
- • Work with a defined start and end
- • Situations requiring competitive pricing
When to Use a Retainer Contract
Use a retainer when you need ongoing access to expertise, want predictable costs, and the work is continuous or unpredictable in timing. Common for legal, accounting, marketing, and IT support.
When to Use a Project Contract
Use a project contract when the work has clear boundaries, defined deliverables, and a natural endpoint. Ideal for website builds, audits, implementations, and one-off consulting engagements.
Which Does Your Business Need?
If your needs are ongoing and variable, a retainer provides stability and priority access. If you have a specific outcome in mind with a clear scope, a project contract gives you cost certainty. Many businesses use both depending on the type of work.
FAQ
What happens to unused retainer hours?
It depends on the contract terms. Some retainers allow hours to roll over to the next period, while others operate on a use-it-or-lose-it basis. Clarify this upfront to avoid disputes.
Can I terminate a retainer early?
Most retainer agreements include a notice period, typically 30-90 days. Check your contract for termination provisions and whether any minimum commitment period applies.
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Get Started FreeThis is guidance for UK businesses, not legal advice. Consult a solicitor for complex matters.
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