Hourly vs fixed-price vs retainer: which pays more?
No pricing model always pays more. Each one moves risk between you and your client, and what you really earn depends on how well your hours match your price. The fair way to compare them is by effective hourly rate: what you take in divided by the hours you actually work.
A worked example
Take a minimum rate of S$75.10 an hour, and a project estimated at 40 hours.
- Hourly: 40 hours at S$75.10 is S$3,004. You are paid for every hour, so you carry no estimating risk, but the client may hesitate with no fixed budget.
- Fixed price with a 15% buffer: 40 hours × S$75.10 × 1.15 is S$3,455. If the work takes 46 hours you still earn S$75.10 an hour. At 34 hours you earn S$101.60. At 55 hours you earn only S$62.81, below your minimum.
- Retainer of 20 hours a month: S$1,502 a month. If the client uses only 15 hours you earn S$100.13 an hour. If they use 25 hours you earn S$60.08.
What the numbers tell you
Fixed prices reward you for being fast and punish you for overruns. Retainers reward you when clients use less than they bought, so put a clear cap on hours and say what happens beyond it. Hourly pricing is the safest for you, and the hardest for clients to budget.
Creative ways to use each model
- Fixed price for well-understood work. Use it where you have done the job many times and can estimate closely.
- Hourly for discovery. Charge hourly for the uncertain first phase, then fix the price once the scope is clear.
- Retainers that lift your billable time. A steady retainer can fill hours that would otherwise go unbilled. If it moves you from 55% to 65% billable, your minimum rate drops from S$75.10 to about S$63.55, roughly 15% lower, for the same income. That is how much room you have to offer a commitment discount.
- Track what you actually earn. After each project, divide what you were paid by the hours you worked and compare it with your minimum rate.
Pro (Business licence), coming soon: Compare the three models for the same project, add an optional retainer discount, and see profit per client. Join the Pro waitlist.
Try it with your own numbers
Find your minimum rate and your project and retainer prices in the free RateFlow calculator, then build the quote in QuoteFlow.
Numbers in this article are examples in Singapore dollars; use your own. Income is take-home, and tax and social contributions are not included. Estimates only, not financial advice.