Project-Based or Retainer? Choosing the Right Online Billing Model

Struggling to decide which billing model is best for your online business? You're not alone. Many entrepreneurs face the challenge of choosing between project-based and retainer billing, unsure of which option will suit their needs and their client's expectations. 


Struggling to decide which billing model is best for your online business? You’re not alone. Many entrepreneurs face the challenge of choosing between project-based and retainer billing, unsure of which option will suit their needs and their client’s expectations. 

In this article, we’ll break down the differences between these two popular billing methods, giving you the knowledge and confidence to make an informed decision. By the end, you’ll be equipped with the tools to understand invoices and streamline them to keep your cash flow steady. 

Understanding Project-Based Billing

Project-based billing is a straightforward invoicing method where you charge clients a fixed fee for completing a specific project or task. Essentially, you agree on a price upfront based on the scope of work, and once the project is completed, you send an invoice for the agreed-upon amount.

This billing model is like ordering a meal at a restaurant—you know the price of your dish before you even take a bite. It offers clarity and transparency for both you and your client, ensuring everyone is on the same page from the start.

With project-based billing, you’re paid for the value you deliver, rather than the hours you put in. It can be particularly beneficial for freelancers and small businesses who prefer a clear understanding of their earnings for each project.

However, it’s essential to carefully scope out the project and consider potential changes or delays that could impact your timeline and profitability. While project-based billing offers simplicity and predictability, it requires careful planning and communication to ensure success for both parties involved.

Exploring Retainer Billing

Retainer billing is a method where you establish an ongoing agreement with a client to provide a set amount of work or services each month in exchange for a fixed fee. Instead of charging for individual projects, you agree on a monthly retainer fee that covers a predetermined scope of work or availability for the client.

Think of retainer billing like subscribing to a service—you pay a set fee each month to access a certain level of service or expertise. It offers stability and predictability for you and your client, as they know exactly what to expect regarding monthly services and costs.

With retainer billing, you can build long-term relationships with clients, fostering loyalty and trust. It’s especially beneficial for businesses that provide ongoing services, such as marketing agencies, consultants, or virtual assistants.

However, managing retainer agreements requires careful planning and communication to ensure you’re delivering the agreed-upon services and value each month. Scope creep can be a concern, as clients may expect additional work beyond the initial agreement without additional compensation. Despite these challenges, retainer billing can provide a steady income stream and foster lasting client relationships.

Factors to Consider When Choosing

When choosing between project-based and retainer billing, several factors come into play. Here are three key considerations to help you make the right decision:

Nature of your work or business:

Consider the services you offer and how they align with each billing model. If your work involves one-off projects with clear deliverables, project-based billing may be more suitable. On the other hand, if you provide ongoing services or support, retainer billing could be a better fit.

Think about the complexity and variability of your projects. Are they typically short-term and well-defined, or do they require ongoing maintenance and support? Your billing model should accommodate the nature of your work to ensure fair compensation for your time and effort.

Frequency and predictability of work

Evaluate the consistency of your workload and income. If you prefer a steady stream of income and workload, retainer billing offers predictable monthly payments, regardless of project volume.

But if your business experiences seasonal or project-based peaks and valleys, project-based billing may provide more flexibility to adjust your pricing and availability accordingly.

Client preferences and expectations

Take into account your client’s preferences and expectations regarding billing. Some clients may prefer the simplicity and transparency of project-based billing, while others may value the stability and long-term commitment of retainer agreements.

Communicate with your clients to understand their needs and expectations regarding billing and payment terms. By aligning your billing model with your client’s preferences, you can strengthen your client relationships and build trust and loyalty over time.

Utilizing Online Invoicing Software

Invoicing software can significantly streamline your billing process and enhance your overall business operations. Here are some key benefits of using invoicing software:


Invoicing software automates many repetitive tasks, such as creating and sending invoices, tracking payments, and generating reports. This frees up your time to focus on more critical aspects of your business, such as serving clients and growing your company. Interestingly, a recent report highlights that 71% of individuals expect that invoice automation will emerge as a popular trend among online businesses.

Improved accuracy

Manual invoicing processes are prone to errors, such as typos, miscalculations, and missed deadlines. Invoicing software helps eliminate these errors by providing templates with pre-filled fields, automatic calculation of totals and taxes, and built-in reminders for overdue payments.

Faster payments

Online invoicing allows you to send invoices electronically, enabling clients to receive and pay them more quickly. Many invoicing software platforms also offer online payment options, such as credit card or PayPal integration, which can further expedite the payment process. Based on a Forrester study, invoicing software cuts down manual bill processing costs and time by as much as 80%.

Enhanced organization

Invoicing software centralizes all your billing information in one place, making it easier to track and handle unpaid invoices, payments, and client details. You can quickly access past invoices, monitor payment statuses, and generate financial reports to gain insights into your business’s financial health.

Professional appearance

Well-designed invoices reflect positively on your professionalism and credibility as a business. Invoicing software provides customizable and global-ready invoice templates with your logo, branding colors, and personalized messaging, helping you create professional-looking invoices that impress your clients.

Project-Based or Retainer: Which One Should You Choose

Ultimately, the decision comes down to what works best for you and your clients. Whether you’re leaning towards project-based billing or retainer agreements, remember to weigh your options carefully and choose the billing model that aligns with your business goals and values. Take the time to consider the benefits of each billing model to make an informed decision that sets your business up for success.