Every agency founder eventually faces the same question: should we charge per project or lock into a retainer?
Projects are clear-cut. They have defined deliverables, and a one-time fee. Retainers, on the other hand, bring stability with recurring revenue, deeper client ties, and room to plan. Both sound good, but when you’re juggling client demands, and cash flow, the decision isn’t always straightforward.
The truth is neither model is better. They’re different tools, and the right one depends on your services, and your growth goals.
In this guide, we’ll break down the pros and cons of each and explain how tools like 5day.io can help you manage both without the chaos.
What is project-based pricing?
At its core, project-based pricing means you charge a fixed fee for an entire project rather than billing by the hour or a retainer.
The project has a clearly defined project scope, and a set of deliverables that both you and your client agree on upfront.
Once the project wraps up, the financial commitment ends.
- A website redesign with wireframes, design, and development all included
- A campaign launch with strategy, creative assets, ad placements, and performance tracking
- A brand identity package covering logos, color palettes, typography, and guidelines
Each of these is a project with a start, an end, and a tangible output, perfectly suited for this pricing structure.
Why clients often prefer project-based pricing
One of the biggest reasons clients gravitate toward this model is predictability.
They know exactly what they’re paying and what they’ll receive in return. This removes the anxiety of hourly billing, where costs can balloon if the project takes longer than expected.
For new clients, project-based pricing feels especially safe. Think of it as a trial period, where rather than committing to a retainer right away, they can test the waters by working with you on one specific project.
If the process goes smoothly and they love the results, that project often becomes the steppingstone to a longer, ongoing partnership.
The agency perspective
On one hand, you can price based on value rather than time. For instance, if you know a rebrand could dramatically elevate your client’s market position, you can charge accordingly.
On the other hand, scope creep is the hidden danger. A client might start adding “just one more thing” to the project, and unless your contract is airtight, you risk doing extra work for free.
That’s why this model works best when the project scope is crystal clear and documented upfront.
When to choose project-based pricing
So, when does it make the most sense to go project-based?
A few scenarios stand out:
| When the scope is well-defined | You know exactly what the deliverables are, and there’s little ambiguity. |
| When working with new clients | It creates a low-commitment way for them to experience your work |
| When the deliverables are tangible | Things like logos, websites, ad campaigns, or videos have natural endpoints |
| When you can work efficiently | If you’ve mastered your process, you can deliver high-value work in less time, making the fixed fee model more profitable for you |
Pros of the project-based model
Clear deliverables and timelines — Easy to sell to clients
Agencies thrive on clarity, and project-based pricing delivers exactly that. By presenting a client with a defined timeline, and tangible deliverables, you remove ambiguity. This makes it much easier to pitch and close deals, especially with decision-makers who need predictable outcomes to get internal approval.
Quick revenue boosts — Strong for cash flow
Large one-off projects such as a seasonal marketing campaign, or a rebrand can inject significant revenue into your agency in a short time.
For agencies balancing payroll, software subscriptions, and overhead, these projects can provide crucial cash flow infusions that help keep operations smooth.
Lower commitment for clients — Easier acquisition
New clients are often cautious about signing a long-term retainer with an agency they’ve never worked with before. A project-based agreement lowers that barrier, giving them a trial run with your team. This makes it easier for your agency to acquire fresh clients and showcase value without demanding a heavy upfront commitment.
Flexible pricing per project type
Unlike retainers, where pricing tends to be standardized, project-based models allow agencies to tailor fees according to scope, and perceived value. For example, you might charge a premium for a multi-channel campaign versus a single landing page design.
This flexibility lets your agency maximize profitability across different project types.
Ideal for new or seasonal agencies
If your agency is just starting out, project-based work is often the fastest way to build a portfolio and credibility. It’s also a smart strategy during high-demand seasons, like holiday campaigns or product launches, when businesses need quick, high-impact results.
Cons of the project-based model
Revenue unpredictability — Peaks and valleys
Agencies that rely heavily on project-based work often experience financial rollercoasters. A big contract might land one month, followed by weeks with no new deals. This lack of predictable revenue makes it harder to manage agency growth or commit to long-term investments.
Scope creep — Hidden profit killer
Agencies are particularly vulnerable to scope creep in project-based models. Clients may push for just one more round of revisions or sneak in requests that weren’t part of the original brief.
Without tight contracts and strong account management, agencies can easily end up working twice as hard for the same fee, cutting into profitability and burning out your team.
Constant sales grind — Never-ending pipeline pressure
Every project has an expiration date, which means your agency is always chasing the next deal. Business development becomes a continuous grind, requiring dedicated sales resources or significant time from leadership. Agencies without a strong sales engine often find themselves in feast-or-famine cycles that disrupt operations and morale.
Difficult to forecast growth
Since project-based revenue is inconsistent, it’s challenging to plan headcount, or technology investments when you don’t know what the next quarter’s pipeline will look like. For agencies with growth ambitions, this unpredictability makes scaling far riskier than with recurring retainer contracts.
Limits deeper, strategic relationships
Project-based pricing often positions agencies as doers rather than strategic partners. You’re hired to deliver a specific output, and once it’s done, the engagement ends. This limits your ability to embed yourself in a client’s long-term strategy, which is where the most valuable and profitable agency relationships usually come from.
What is a retainer model?
Instead of charging clients per project, you agree on a recurring monthly fee in exchange for ongoing services. It’s essentially a subscription to your agency’s expertise, and clients know what they’ll pay every month.
This model works especially well for services that don’t have a natural end date but instead require continuous attention, or optimization.
For example:
- Monthly SEO services where you’re constantly optimizing keywords and tracking rankings
- Social media management with content calendars, posting, community engagement, and reporting
- Continuous content marketing like blogs, newsletters, videos, or whitepapers published on a regular cadence
- Paid ad management (Google, LinkedIn, Meta) where campaigns need ongoing adjustments and monitoring
Pros of the retainer model
Income predictability
With project-based pricing, revenue can spike one month and plummet the next, leaving agency leaders scrambling to cover costs or meet payroll. Retainers solve that problem.
By locking in monthly payments, you gain consistent cash flow that makes it easier to budget, plan, and scale. This financial stability also helps reduce the stress of the constant sales grind, allowing you to focus on scaling.
Deeper client relationships
Retainers naturally nurture long-term partnerships. When a client commits to a monthly agreement, your agency becomes more than just a vendor delivering one-off projects. You become a strategic partner invested in their ongoing success. This deeper involvement gives you access to higher-level conversations and helps you influence decision-making.
Easier resource planning
A steady flow of retainer clients also allows for smoother operations. Agencies often struggle with capacity planning when juggling unpredictable projects, but retainers give you a clearer picture of workload.
Knowing you’ll be delivering X campaigns or Y deliverables each month makes it far easier to allocate staff and forecast hiring needs. Financially, this also means you can predict expenses and profitability more accurately.
Increases agency valuation
From a growth and investment perspective, recurring revenue is gold. Agencies built primarily on project work tend to have volatile financials, which can make them less attractive to investors or buyers. By contrast, agencies with a solid base of retainer clients can demonstrate predictable recurring revenue (PRR), a metric that significantly boosts valuation.
Investors and acquirers value stability and scalability, and a retainer-heavy model signal both.
Cons of the retainer model
Harder to sell upfront
One of the biggest challenges with retainers is convincing clients to commit in the first place. Unlike a project, which has a clear start and finish, a retainer feels like an open-ended investment.
From the client’s perspective, this means more risk: they’re paying month after month without always knowing if the value will continue to match the cost.
For agencies, this translates into longer sales cycles and the need for more trust-building.
Potential for stagnation
The very stability that makes retainers attractive can also create problems. Over time, both the client and agency may fall into a routine where deliverables become repetitive. The client may start to feel like they’re locked in to paying for the same thing month after month without seeing fresh results.
This stagnation can damage the relationship and even lead to churn if not managed carefully. Agencies need to consistently bring new ideas to the table to keep retainers results driven.
Demand for consistent delivery
With projects, you can sprint hard to the finish line and move on. Retainers don’t allow that breathing room. Clients expect sustained effort and visible value every single month.
There’s no hiding behind a “quiet period” or regrouping between projects, your agency must show up every month with results, and progress reports. For some agencies, particularly smaller ones with lean teams, maintaining that rhythm without lapses can be difficult.
Risk of burnout without scope management
Another common pitfall is the way clients interpret retainers. Since they’re paying a monthly fee, many assume they’re entitled to unlimited access to your agency. What starts as a clear agreement can quickly spiral into endless requests, and additional revisions.
If your team isn’t equipped to push back or renegotiate, the workload balloons while fees stay the same. Over time, this leads to margin erosion and staff burnout.
The only way to prevent this is through clear contracts, and strong account management.
Project-based vs. Retainer comparison table
| Factor | Project-Based Pricing | Retainer Model |
| Revenue predictability | Low (one-time) | High (recurring) |
| Client acquisition | Easier (low barrier) | Harder (needs trust) |
| Scope | Fixed per project | Flexible, ongoing |
| Cashflow | Spikes & gaps | Stable, consistent |
| Best for | Short-term deliverables | Long-term growth |
How to choose the right model for your agency
The right choice depends on your agency’s services, and your clients’ expectations.
To help you decide, here’s a step-by-step process agency can use to zero in on the best fit.
Step 1: Evaluate your services
Start by looking at what you offer. Are your services naturally campaign-based, like launching a product, designing a website, or producing a video series? If so, project-based pricing may feel like a more natural fit because each deliverable has a clear beginning and end.
On the other hand, if your services are ongoing in nature, such as SEO, content marketing, social media management, or brand reputation work, then retainers may be the smarter route.
Step 2: Analyze your client base
The type of clients you attract (or want to attract) also plays a huge role. Newer clients or startups often prefer the flexibility of projects because they’re testing both your agency and their own budgets.
Established companies value stability and want a partner who can work with them long-term.
If your ideal client is more strategic and growth-oriented, retainers will help position your agency as a partner rather than a vendor. But if your clients tend to be budget-sensitive or only need work occasionally, project-based pricing might be a better fit.
Step 3: Review your cash flow needs
Your agency’s financial reality can’t be ignored. If you need quick cash injections, for example, to cover overhead or fund growth, then larger one-off projects can provide that boost. However, if your priority is long-term stability, retainers are the way to go. They create a predictable revenue stream that supports steady operations.
Step 4: Factor in scalability
Think about how each model will impact your ability to grow. Project-based work is exciting but unpredictable, which makes it difficult to hire confidently, you never know what your pipeline will look like in three months.
Retainers, by contrast, allow for smoother resource planning because you know exactly how much work is coming in.
This helps with staff allocation, onboarding, and even negotiating vendor contracts. If scaling your agency is a priority, retainers will likely give you more breathing room to grow in a sustainable way.
Step 5: Experiment with hybrids
The truth is that many successful agencies don’t pick one model exclusively, they use hybrid pricing.
A popular approach is the hybrid retainer model for agencies, where you secure a base monthly fee for core services (like SEO monitoring, social media, or reporting) and then layer on project-based add-ons for larger campaigns or seasonal pushes.
This gives you the best of both worlds, in terms of stable recurring revenue plus the flexibility to take on high-value projects when they arise.
Hybrids are especially effective when working with clients who want long-term support but also have occasional bursts of big creative needs.
How to manage both models without the headache using PM software like 5day.io
Most agencies eventually find themselves running a blend of pricing models: project-based work to attract new clients or handle seasonal campaigns, and retainers for ongoing, long-term partnerships.
On paper, it’s the best of both worlds. But in reality, it often creates operational chaos.
Juggling two different models leads to task overlap, and billing headaches. One team is delivering a high-pressure website redesign, while another is handling steady retainer tasks like social posts and SEO reports.
Meanwhile, finance is stuck in reconciling hours, and approvals across two completely different workflows.
Without the right systems, things slip through the cracks.
This is exactly where modern project management platforms like 5day.io shine.
Track retainer hours vs. Project scope
With built-in time tracking and timesheet approvals, you can monitor exactly where your team’s time is going. For retainer clients, 5day.io helps prevent over-servicing by showing when hours start creeping past the agreed monthly allocation, before it becomes a problem.
For project-based clients, add custom fields, KPIs, and overtime tracking to get a complete view of time spent on projects. Additionally, classify all allocated time into billable vs. non-billable hours for a clear picture per project and per resource. These insights make your billing cycles faster, and more factual during client reviews.
Automate reporting and client visibility
Clients today expect transparency, whether they’re paying per project or via a retainer. 5day.io’s analytics and project dashboards automate updates in multiple visual formats bar, line, pie, or tabular, making it easy for clients to understand progress at a glance.
You can pull timesheet data and milestone progress into ready-to-share reports,without spreadsheet support.
What’s more, custom client permissions and role-based access allow you to control exactly what each client sees. You can grant view-only rights for project dashboards, or full access to timesheets, all without compromising internal data.
To close the loop, set up automation triggers to send out evaluation or feedback emails at key milestones. It’s a small touch that strengthens relationships and ensures you’re always improving based on real client input.
Streamline collaboration across teams
Agencies thrive on collaboration, and 5day.io makes it effortless.
With file sharing, threaded discussions, your entire team can work from one shared source of truth without endless email chains or misplaced briefs.
You can also define workspace-level roles and permissions, ensuring the right people see the right information. This combination of structured collaboration and automation keeps your agency lean, organized, and scalable.
Wrapping up
At the end of the day, the debate between project-based vs. retainer pricing isn’t about which model is universally better. It’s about which model best fits your agency’s services, your clients’ needs, and your own growth ambitions.
Project-based work offers speed, flexibility, and quick wins, while retainers provide stability, and deeper client relationships. Both have undeniable strengths, and real challenges.
Agencies don’t have to lock themselves into just one model. Many of the most successful agencies run hybrids, using project-based work to attract new clients and seasonal campaigns, while relying on retainers to provide steady revenue and strategic partnerships.
This balance gives you the best of both worlds: cash flow from projects and recurring income from retainers.
