Methodology
Retainer Rate Equivalent methodology
Educational only: Work and pay decision support, not tax, legal, financial or career advice.
Privacy: Calculations run locally; Wage101 does not receive your work or pay inputs.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral work and pay planning using your own assumptions.
1. Formulas and units
effectiveHourlyRate = (retainerPerPeriod − directCostsPerPeriod) ÷ (deliveryHoursPerPeriod + nonDeliveryHoursPerPeriod)Where
- retainerPerPeriod
- Retainer per period (currency units/period)Source: User assumption
- deliveryHoursPerPeriod
- Delivery hours (hours/period)Source: User assumption
- nonDeliveryHoursPerPeriod
- Non-delivery hours (hours/period)Source: User assumption
- directCostsPerPeriod
- Direct costs (currency units/period)Source: User assumption
- effectiveHourlyRate
- Effective hourly rate (currency units/hour)Source: Calculated output
minimumRetainerPerPeriod = targetHourlyRate × committedHoursPerPeriod + directCostsPerPeriodWhere
- directCostsPerPeriod
- Direct costs (currency units/period)Source: User assumption
- targetHourlyRate
- Target hourly rate (currency units/hour)Source: User assumption
- minimumRetainerPerPeriod
- Retainer needed for target rate (currency units/period)Source: Calculated output
annualNet = netRetainerPerPeriod × periodsPerYearWhere
- periodsPerYear
- Periods per year (periods/year)Source: User assumption
- annualNet
- Annual net retainer value (currency units/year)Source: Calculated output
Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Pay, time, benefits and work-related costs use the units stated beside each input.
2. Worked example
Input assumptions
6,000 per month for 70 committed hours and 600 direct costs at an 80 target rate.
Calculation and outputs
Example
6,000 per month for 70 committed hours and 600 direct costs at an 80 target rate.
- Effective hourly rate
- 77.14 currency units
- Retainer needed for target rate
- 6,200.00 currency units
- Annual net retainer value
- 64,800.00 currency units
The engine returns 5,400 net, 77.14 per hour and a 6,200 target retainer.
Interpretation
Use effective hourly rate only after counting delivery and non-delivery time.
3. Validation and boundary checks
- The worked example is calculated through the same shared-work-logic engine as the planner.
- Non-finite and out-of-range assumptions return an input error.
- Result cards, trace, CSV, PDF and methodology bind to named engine result fields.
4. Assumptions and source classification
- All delivery and non-delivery hours are entered.
- Direct costs recur every selected period.
This calculator has no current policy-data dependency. Its work and pay assumptions are user supplied. Registered family-level regression suites exercise the shared work-logic engine and worked-result reconciliation.
5. Limitations
- Tax, payment risk, scope creep and utilization changes are excluded.
- The target rate is a user decision, not a market benchmark.
This is educational decision support, not personalised tax, legal, financial or career advice. Check the treatment of your circumstances under the rules that apply to you and seek qualified advice where appropriate.
6. Update and evidence policy
Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this calculator. Work and pay inputs remain user-supplied because they vary by person, job and contract.
Change history
- : Initial public release of the Retainer Rate Equivalent planner and methodology.
Related reading
Use these practical guides to interpret the decision and its assumptions.
- How to use the Retainer Rate Equivalent calculator
Convert recurring retainer pay, delivery time, non-delivery time and direct costs into comparable rates.
Read guide