Professional services
Law Practice Retainer Revenue Calculator
Works recurring retainer revenue, where earned and unearned are different things.
Result
Service lines rarely carry the same margin. Splitting them is the only way to see which part of the business is paying for the rest, which is frequently not the part that looks busiest.
Get a Free Business AuditHow the calculation works
Retainer clients times the monthly fee, less the cost of delivering the work, giving monthly and annual contribution, with retention determining how much of the base survives the year. Recurring retainers suit clients with continuing needs and give the practice predictable revenue rather than matter-by-matter uncertainty.
What moves the number
- Number of retainer clients and the monthly fee.
- Hours actually consumed against hours assumed.
- Retention, which compounds the base.
- What the retainer includes and excludes.
Where this one goes wrong
The accounting distinction is fundamental: a monthly fee earned for work performed is practice revenue, while funds received in advance against future work are client money held in trust until earned. Which applies depends on how the arrangement is structured, and the conduct rules in your state determine the handling rather than the practice's preference. On the commercial side, a retainer with undefined scope becomes unlimited access at a fixed price, and the clients who use it most are the ones who make it unprofitable.
Before you quote
- Structure the arrangement clearly and hold unearned funds in trust.
- Define what the retainer includes and what is billed separately.
- Track hours consumed per retainer client against the fee.
Where the rules come from
Questions
About this calculator
Is retainer income revenue when received?
It depends on the arrangement. A fee earned for work performed in the period is revenue; funds received in advance against future work are client money held in trust until earned. Your state's conduct rules govern the handling, not the practice's preference.
What makes a retainer arrangement unprofitable?
Undefined scope. It becomes unlimited access at a fixed price, and the clients who use it most heavily are the ones who make it lose money. Stating what is included and what is billed separately is what keeps it viable for both sides.
Why offer retainers at all?
Predictable revenue instead of matter-by-matter uncertainty, and a client relationship that produces the larger matters when they arise. For clients with continuing needs it is often genuinely better value, which is why it can be sold on merit rather than on price.
The formula
revenue = matters x average value; gross profit = revenue x margin
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How to use this calculator
- Matters opened per month. Enter your own figure; the page starts at 28.
- Average value ($). Enter your own figure; the page starts at $2,600.
- Gross margin on this work (%). Enter your own figure; the page starts at 58%.
- Share of total revenue (%). Used to show what the whole business turns over.
The result updates as you type, so you can try a figure, see what it does to matter revenue per month, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Matters opened per month | 28 |
| Average value | $2,600 |
| Gross margin on this work | 58% |
| Share of total revenue | 40% |
What comes out
| Result | Value |
|---|---|
| Matter revenue per month main result | $72,800 |
| Per year | $873,600 |
| Gross profit per year | $506,688 |
| Implied total business revenue | $2,184,000 |
The repair line brings in $873,600 a year and earns $506,688 of gross profit on it.
How sensitive the answer is
Holding everything else steady and changing only average value, this is what happens to matter revenue per month. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Average value ($) | Matter revenue per month |
|---|---|
| $1,300 | $36,400 |
| $1,950 | $54,600 |
| $2,600 example above | $72,800 |
| $3,900 | $109,200 |
| $5,200 | $145,600 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Matters opened per month
- A number, between 0 and 10000, starting at 28.
- Average value ($)
- A money amount, starting at $2,600.
- Gross margin on this work (%)
- A percentage, between 0 and 95, starting at 58%.
- Share of total revenue (%)
- Used to show what the whole business turns over.
What the results tell you
| Result | What it is |
|---|---|
| Matter revenue per month | The headline result. A money figure. |
| Per year | A money figure. |
| Gross profit per year | A money figure. |
| Implied total business revenue | A money figure. |
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.