Overview

A simple guide to understanding how retainers are set up, tracked, and calculated

Recurring retainers are a common way agencies and service teams structure ongoing work. Instead of billing based strictly on hours worked, a retainer provides predictable revenue and consistent client engagement over a defined period.

This article explains how retainers work in Parallax and how revenue, costs, and margins are calculated.

What Is a Recurring Retainer?

A recurring retainer is a fixed fee paid by a client at regular intervals (typically monthly or quarterly) in exchange for ongoing services.

Unlike Time & Materials (T&M) projects — where revenue is tied directly to billable hours — retainers are managed as fixed revenue amounts that recur over time.

In Parallax, this revenue is recorded as Service Revenue.

Project Financial Settings - Setup:

1. Blue - As a fixed retainer project, the way you record revenue is not through hours like T&M projects, but through “Service Revenue”.  The frequency of these service revenue entries will depend on the Red dotted settings.
2. Red - The period in which the retainer renews - Monthly
3. Yellow - Is the total number of hours planned which is used in the cost calculation in the shaper.

Note: In the absence of actual hours recorded to a project all individuals assigned to the project even if at $0 bill rate and/or no hours planned will have service revenue items in the past distributed equally amounts people on the associated offering.  For example, if you have 1 individual assigned to a role at $5,000 dollars revenue and you add a 2nd person to the service offering, Parallax will automatically split the revenue amount between the two even if plans only exist for 1 of the 2 assigned. 

If there are no plans during the times revenue is to occur, their rate will show at $0.00 / 0 Hrs on the financial settings and reporting. 

How Retainer Revenue Is Calculated

Retainers are calculated based on the agreed-upon contract amount and the contract frequency.

For example:

• A $10,000/month retainer = $10,000 in service revenue recorded each month

• A $30,000/quarter retainer = $30,000 recorded each quarter

Monthly Retainer (Financial Setting):

Rather than calculating revenue from logged hours, Parallax recognizes revenue based on these predefined service revenue entries Monthly

Each retainer period has its own revenue entry. This allows revenue to be forecasted accurately across the life of the project.

With a monthly retainer, the revenue is assigned to the month in which the retainer occurs rather than distributed across each week. In this case, reporting will display the revenue at the monthly level, and when viewing data weekly, the system may distribute that monthly amount across the weeks of the month or display it as tied to the month depending on the report. This can sometimes create larger spikes or uneven weekly margin projections because the revenue is recognized in a larger monthly block rather than smaller weekly increments.

In short, monthly retainers group revenue at the monthly level, which can affect how revenue and margin appear when viewed in weekly forecasting or project financial views.

Recording Service Revenue:

1. While in Pre-Sale, click the +Service Revenue button, you will get a modal to add a recurring revenue event for the period you have.  
2. You can add as many as you like, but Parallax’s recommendation is to add Service Revenue with the frequency of the retainer’s budget reset. 
   • Scenario #1:  Imagine you have a monthly recurring retainer, you could record your revenue monthly at the start of each month.
   • Scenario #2:  You could also record all your revenue for a contract (say, 12 months) at one time if you would like, as 12 separate service revenues.  The Operational reminders here are to make sure your organization gets ahead of the contract renewal, or removes the revenue should the contract end early.

Recording Sold Cost for Margin comparison:

If you would like to add a sold cost to generate a margin against the revenue entered, follow these steps:

1. While in “Awaiting Start,” add "Other Costs" as a total of the anticipated costs for the project to establish the % Sold Margin
2. Set the project to "In Progress"
3. Remove the "Other Costs" you added, as Actual costs will be generated by the hours put against the project, which will then be used to compare Sold Margin to Actual Margin
4. In this process, if you want Projected Costs, you would need to add planned work to each retainer, but it's not necessary to change the way that's currently happening.

Revenue & Costs tracked in the Shaper:

1. Blue - As a fixed retainer project, your Service Revenue events will now total to create the Projected Revenue for the Service Offerings.
2. Yellow - Is the total hours (projected) multiplied by the role & peoples’ cost rates.

How Costs Are Tracked

While revenue in a retainer is fixed, costs are dynamic.

Costs are based on:

• Team members assigned to the project

• Their billable cost rates

• The actual hours logged

Parallax compares:

• Planned Costs (what you expected to spend)

• Actual Costs (based on time logged)

This allows you to understand whether the project is meeting its target margin.

How Margins Are Calculated

Margin on a retainer is calculated using:

Revenue – Costs = Gross Margin

For example:

• Monthly Retainer: $10,000

• Monthly Actual Costs: $6,500

• Gross Margin: $3,500

• Margin %: 35%

Even if more or fewer hours are logged in a given month, revenue remains fixed at the retainer amount — so margin fluctuates based on delivery efficiency.

Forecasting Recurring Retainers:

1. The intent is to shape and resource the project to the project needs, so the Project or Program Manager is usually best suited to shape and forecast allocations.
2. Planned Work versus Unplanned Work
   • Planned work - means that in a given Period, a team is working against a known backlog of work or using a methodology like Agile to execute work.  This should be shaped like any other project and shaped to the Period of the retainer.
   • Unplanned work - could be emergency or support work that is on-call.  Unplanned work is always difficult to forecast.  But with Parallax, using the prior Periods, we recommend you shape your projects informed by historical patterns.  By using the shaper, you can average the number of hours each role used per Period and average out those hours over the upcoming Period.
     • It’s important to check in and use unplanned requests to quickly reshape your plan.  By its nature, it’s reactive but it will allow other departments or leadership to quickly reallocate and support the request and the team responsible for handling it
     • Best practice for requests that may create overages from the original set of hours is to have up to 3 additional service offerings:
       1. Non Billable for overhead management and write offs
       2. Depending on the contract, a T&M overage offering
       3. Depending on the contract, a “Jump to the front of the line” emergency rate and service offering

Ongoing Management Best Practices

To keep retainers financially healthy, teams should:

Weekly

• Review actual hours vs. planned hours

• Adjust resource plans if needed

Monthly

• Confirm service revenue entries are accurate

• Review actual margin performance

• Begin renewal discussions if the contract is nearing expiration

Department/Delivery Leads:

• Review department team member Planned versus Actuals

  • Discuss with Project/Resource Manager adjustments to team members as needed to support the project or ensure margin goals.

In Summary

A recurring retainer in Parallax:

• Uses Service Revenue entries to record fixed recurring income

• Tracks actual costs based on logged hours

• Calculates margin by comparing revenue to real delivery costs

• Supports forecasting and proactive management

This structure helps agencies and service teams maintain predictable revenue while ensuring profitability over time.