The retainer that outlived its reason

The world did not begin this morning, and neither did the way you bill.

Most agencies I work with treat their commercial model the way fish treat water: as the medium they move through, not a thing with edges. The monthly retainer, the day rate, the pitch delivered free in the hope of winning the work — these feel less like decisions than like the weather. They are simply how the business is done.

They are not. Each of them is an artefact of a particular moment, shaped by conditions that may or may not still hold. And the single most useful question a historian asks — why is this the way it is, and would it have been different under different conditions? — turns out to be a commercial question of the first order. Historians call this contingency: the recognition that the present is not the only thing that could have happened, that prior choices and circumstances constrain today's options, and that what looks permanent is often just the fossilised shape of a problem someone solved a long time ago.

Where the retainer came from

Start with the retainer, because it is the model people defend most fiercely and examine least.

The monthly retainer did not arrive from nowhere. It inherited its logic from an older advertising world in which agencies were paid by commission on the media they bought, and the relationship with the client was assumed to be long, exclusive and continuous. The retainer kept the shape of that relationship — predictable, ongoing, relational — after the thing that produced the shape had gone. It promised the client a reserved slice of the agency's attention, and promised the agency a floor under its cash flow. For a certain kind of work, in a certain kind of market, it was an elegant answer to a real problem.

Marc Bloch, writing his defence of the historian's craft in occupied France, warned against what he called the idol of origins: the error of assuming that to find where a thing began is to explain it. The retainer's origin is interesting, but it is not a justification. That a model made sense in the world that produced it tells you nothing about whether it makes sense in yours. The origin is a clue, not an alibi.

The question contingency forces, then, is not "is the retainer good or bad?" It is: what problem was the retainer the answer to, and is that still your problem?

For a lot of agencies, it is not. The retainer assumed continuity of need — that the client would want roughly the same amount of roughly the same thing, month after month. Where that holds, the retainer still earns its keep. Where it does not — where the work is genuinely project-shaped, lumpy, or being quietly subsidised in the thin months by over-delivery in the fat ones — the retainer has become a costume. It is doing the historical work of looking like a stable relationship while the underlying economics have moved somewhere else entirely.

Context is the other half

Contingency tells you a thing could have been otherwise. Context tells you why it was that way then — and lets you check, honestly, whether the surrounding conditions still obtain.

Three conditions made the agency models of the last thirty years what they are, and all three are worth testing against your own situation:

• Scarcity of skill. For a long stretch, agencies were paid well because they held capabilities clients could not build in-house: first design and print, then the web, then social, then performance media. Scarcity sets price. Each wave followed the same arc from premium to table-stakes. A model priced for scarcity behaves strangely once the scarcity is gone.
• The client's procurement habits. How clients are allowed to buy — what their procurement function recognises, what their finance team will sign — shapes agency models at least as much as what agencies would prefer to sell. The free pitch persists not because agencies enjoy it but because the surrounding system rewards it. That is a contextual fact about the client's world, not a law of yours.
• The cost of being wrong. When switching agencies was expensive and slow, the retainer's lock-in was a feature both sides tolerated. As that cost falls, the same lock-in starts to feel to the client like a tax. The model didn't change; the context around it did, and the meaning of the model changed with it.

None of this is an argument that the old models are dead. That would be its own lazy analogy — the mirror-image of the founder who insists nothing has changed. The historian's discipline cuts both ways. The pattern is never exact; it is rarely entirely absent. The point of knowing the history is precisely to tell the difference.

The disanalogy — and the actual use

So this is not a piece that ends "burn the retainer." Plenty of agencies should keep it, because for their work the conditions that justified it still hold. The use of thinking historically here is narrower and more valuable than a recommendation: it is a way of telling a living constraint from a dead one.

A living constraint is load-bearing. Remove it and something real breaks — cash flow, the client relationship, the team's ability to plan. A dead constraint only looks load-bearing because it has been there so long that no one remembers it is optional. It is the retainer you offer because you have always offered retainers; the free pitch you do because that is what one does; the day rate pinned to a number you set years ago and have nudged for inflation but never genuinely re-derived.

You cannot tell them apart from inside the present. The information you need is historical: what was this the answer to, what were the conditions then, and which of those conditions still hold? Run that test on each of your commercial defaults and you will usually find one or two that are pure inheritance — kept not because they serve you now but because changing them was never quite this quarter's priority.

There is a way to run the test that is older than any consulting framework. Neustadt and May, teaching decision-makers at Harvard, had a deceptively simple instruction: before asking "what's the problem?", ask "what's the story?" — and then draw the time-line back to where the story actually begins, not where it is convenient to start. Most arguments about a commercial model collapse the history: they begin the story at "this is what we charge," which quietly smuggles the conclusion into the premise. Pull the line back to the conditions that first made the model rational, and you can see at a glance how much of that world is still standing.

It helps, too, to be honest about why a dead constraint survives, because the reason is rarely inertia alone. Gerd Gigerenzer calls it defensive decision-making: the quiet preference for the choice that protects the chooser rather than the firm. No one is ever individually blamed for offering a retainer; the partner who proposes scrapping it owns every awkward client conversation that follows. The model persists not because anyone has tested it and found it sound, but because no one is penalised for leaving it alone. Margaret MacMillan makes the same point about nations and their comfortable histories: we keep the story that reassures us, not the one that is true. Firms do this with their commercial models as readily as countries do it with their pasts.

Michael Oakeshott has the sharpest way of naming the underlying mistake. Human associations, he insisted, are practices, not processes — they are sustained by the continued understanding of the people in them, not carried forward by some momentum of their own. The moment a retainer stops being a choice anyone actively makes and becomes simply "how it's done," the practice has quietly turned into a process, and deliberation has stopped. Reopening the question is not disloyalty to the model. It is the only thing that keeps the model honest.

That is the quiet cost of forgetting. Not a dramatic failure, but a slow drift in which the shape of how you do business is increasingly set by problems you no longer have.

So before the next renewal, one question, asked in the historian's spirit rather than the consultant's: of everything in your commercial model that feels like simply how it's done — how much of it is still answering a problem you actually have, and how much is just the water you happen to swim in?

This is a companion piece to the argument. If it resonates — or if you want to push back on it — I'd be glad to hear from you: chris@christhurling.com.