Why I stopped believing in retainers

An exploration of why the traditional agency retainer model is flawed and how shifting to value-based engagement creates better alignment for businesses.

For as long as agency owners can remember, the retainer has been the closest thing the industry has to a reliable foundation; predictable income, forecastable revenue, the kind of commercial visibility that makes running a business considerably less stressful than the alternative.

I understand the appeal because I've been on both sides of that relationship, and for a long time I believed in the model as wholeheartedly as anyone. I don't any more, and I want to explain why. I think a lot of agency owners are building on ground that's considerably softer than they think. I'll explain.

What happens after eighteen months

Retainers can work well for both parties at the beginning of relationships. That's when things are fresh; the agency is sharp, the client is demanding and there's genuine energy in the relationship. It's when both sides are still directly connected to and engaged in solving the original brief. But that connection, that energy and that sharpness is tough to maintain over time. Things soften. The agency starts suggesting ideas to keep the retainer, the client sends more and more trivial work to use up the time. The client did nothing wrong, the agency did nothing wrong, it's just how retainers go when the initial focus has drifted.

By month eighteen, another familiar pattern tends to emerge alongside that drift. The person who bought the retainer, who felt the original pain and understood why they were spending the money, has often moved on or moved upwards, and the person now managing the relationship inherited it. They feel no particular ownership of the decision and carry none of the original context. The work has quietly become routine, the agency is executing rather than thinking, and execution without visible strategic input starts to look expensive for what it is.

There's something else, and this is the part no-one really wants to admit. The agency stops bringing new ideas and stops up and cross selling; not out of laziness or indifference. Retainers remove the commercial pressure to come up with new ideas, to sell more. When the invoice goes out regardless of what happened that month, the urgency to impress drains away gradually, and comfort kills the energy that made the relationship worth having. Maybe that's why at least four accounts I personally introduced to agencies came back to me later and said: " No-one ever tried to upsell me. They never asked my about updates to my business. They just did what we first agreed."

The numbers aren't flattering about any of this. According to Function Point's 2025 Industry Trends Report, 79% of creative agencies routinely work beyond scope without additional compensation. Instead of the retainer creating the stability it promises., quite often it's quietly generating resentment on both sides whilst everyone pretends otherwise.

What buyers are actually looking for

Agency owners are frequently told that retainers are what make a business valuable at exit. The logic goes that predictable, recurring revenue is what a buyer will pay a premium for, and that part is true. But the conclusion people draw from it is often wrong.

What a private equity house or strategic acquirer actually needs is revenue they can forecast and book debt finance against. Retainers are one way of achieving that, but they're not the only way. Increasingly, I don't believe they're the best way either, particularly when a buyer looks closely enough to see the scope creep, the client dissatisfaction hiding beneath the surface, and the margin erosion that comes with over-servicing accounts nobody wants to lose.

This worth thinking about because the valuation premium for predictable revenue is real and significant. According to current transaction data from Consortia Advisory, agencies with 80% or more of income anchored in recurring revenue fetch between five and seven times EBITDA at exit, compared to three to four and a half times for project-heavy peers. That's a meaningful gap, but it comes from predictability, not from the retainer contract itself. Those aren't the same thing, so before you build your model around a false assumption, it's worth stepping back and thinking.

The productised alternative, and why people often get it wrong

At this point the standard advice is to productise your services; define your offering, scope it tightly, price it clearly, and repeat. I've given versions of this advice myself, and the underlying logic is sound. But there's a version of productisation that simply recreates the retainer problem in a different wrapper.

A product is only a product if it has a defined start, a defined finish, and a deliverable that has genuine value in its own right. Without those three things, what you're selling is availability dressed up in different language, and the client will treat it accordingly. The scope will drift, the boundaries will soften, and the urgency that should exist on both sides will gradually drain away - for exactly the same reasons it drains away in a retainer. If you've changed packaging but not the thinking, it's not really a product.

What a value-building product actually looks like

The products I've found most effective share three characteristics, and in my experience it's rare to find all three in the same offering, which is why so many agencies fall back on retainers by default.

1. The first is that the product solves a problem the client feels acutely at a specific moment, not a general problem they're vaguely aware of all the time. Specificity of timing is what creates urgency, and urgency is what makes a fixed-price product feel worth committing to without the safety blanket of an open-ended arrangement.

2. The second is that the product is connected. It sits within a journey rather than standing alone, so that completing it naturally surfaces the next problem and the next conversation. An agency that designs its products this way doesn't need to sell hard at renewal because the momentum of the work itself carries the relationship forward.

3. The third is that the value is visible and attributable. The client can point to something concrete that didn't exist before the agency arrived, whether that's a pipeline of named targets, a body of placed content, a repositioned narrative, or a commercial outcome with a number attached. Invisible value is always vulnerable, and the retainer model has survived for so long partly because agencies have been slow to make their value visible enough to price it any other way.

What this means for valuation

Recurring revenue from a retainer is generally one contract renewed periodically. Renewal time is fraught with tension and risk. How close you are to renewal date will have an impact on the value a buyer will attribute to it.

The recurring revenue I'm describing is momentum created through a client journey, where each product solves one problem and creates the conditions for the next conversation naturally. It's when that journey is working that revenue becomes genuinely forecastable without the over-servicing trap that erodes the margins a buyer is ultimately paying for. Under these circumstances, as long as you are creating and demonstrating value, your relationship should hold. That's a better story to give a buyer.

There will always be agency relationships where continuity of counsel is the product and a retainer reflects that honestly, and I'm not arguing that the model is universally wrong. But for agency owners trying to build something worth selling, the retainer has too often become a habit dressed up as a strategy, and the two aren't the same thing. The alternative isn't less predictable. It's more honest, and in my experience it's considerably more valuable.

You can also learn more about how we structure these transactional models on our FAQ page.