My price floor came out of a sentence I typed without really thinking about it. I was going through my own quarter at the end of August, one of the findings in front of me said I wasn’t delegating enough, and I wrote back: “Who else would I assign to? I’m a one-man company.” Once it was on the screen, the rest followed pretty fast. If the number of hours can’t grow, the only things left to change are what I charge and what I say no to. I set a floor of $2,000 a month for new engagements in the same message. It’s $3,000 now, for a coaching engagement, and it’s posted on my website.
Before that, I’d been doing a lot for clients at my old rate, because I felt the rate obligated me to. It turned out I could raise it, and the higher rate earned the work more respect from the people paying for it.
A price floor is the smallest engagement you’ll sign with a new client, and you set it by working backward from your capacity: the number of clients you can serve well, multiplied by your floor, is the most your agency can earn. A floor is a capacity decision you announce as a price.
What is a minimum engagement, and why does an agency need one?
A minimum engagement is the lowest monthly fee (or project fee) you’ll accept from a new client, written down before the sales call so you never decide it during one. Agencies need one because every client takes a slot, and the smallest client takes a slot just as completely as the largest one does.
Owners feel this and rarely count it. A $900-a-month client still gets a kickoff, a weekly check-in, a Slack channel, and a share of your attention on the day something breaks. Their problems don’t shrink to match the fee. So without a floor, your client list fills from the bottom, because small engagements close fastest, and you wake up one quarter fully booked at an average rate that can’t fund the business you meant to build.
A floor is narrower than a price list. It won’t tell you what to charge a specific client or which pricing model to use. It says one thing: below this line, I don’t sign a new engagement. (It’s also one of the few constraints a competitor can’t casually copy, because holding it costs you revenue on purpose.)
How do you calculate your agency’s minimum retainer?
Start with how many clients you can serve well at once, then divide the monthly revenue the business needs by that number. The answer is the lowest fee that still pays for the slot.
Here’s an illustration with round numbers. Say you can do good work for eight clients at a time, and the agency needs $24,000 a month to cover pay, tools, and the margin you want to keep. Your floor is $3,000. Sign anyone at $1,500 and the ceiling on the whole agency drops by $1,500 a month for as long as they’re in the slot.
Two things change the math, and the first one caught me out when I built a report on my own client list.
The first is that the floor should be judged on what you keep. One of my engagements includes a portion of the fee that goes straight to an outside agency doing part of the work, and the invoice total makes that client look bigger than they are. Money that passes through to a subcontractor was never your price. Measure the floor against the net.
The second is that capacity isn’t only hours. For a solo owner it usually is. For an agency with a team it might be senior strategist time, or the one designer everyone waits on. Find the constraint that fills up first, count slots against that, and the floor falls out of it. (If you’ve never named that constraint, this is a decent excuse to.)
Does a price floor mean you have to charge premium rates?
No, and for me it does the opposite job. I keep my own pricing on the accessible end on purpose, because my positioning is built around agencies that can’t justify a $5,000-a-month coaching program. A premium price would tell those owners I’m not for them.
The floor sits underneath that choice and protects it. It’s the line below which a one-person business can’t give the engagement the attention it was sold with. You can be the affordable option in your market and still have a floor, and you probably should, because the affordable shops are the ones most likely to fill up with clients who pay too little to keep.
If you want the upstream version of this, where the price itself comes from, pricing power comes from the problem you own, and the floor is just the part of that decision you refuse to negotiate.
What should you do with prospects who can’t afford your minimum?
Route them somewhere useful instead of sending them away empty-handed. If the floor only ever says no, you burn goodwill with people who might have referred you. Put a door underneath it and the same conversation can end in a sale or a future client.
In my business, agencies too small for coaching get pointed at the Advantage Intensive, a $2,000 fixed-fee pair of sessions and a written report they can use without me, and the smallest shops get pointed at the community. I wrote up how that first engagement is structured, but the principle carries to any agency: have one smaller thing that stands on its own. Then a prospect under your floor leaves with a place to start.
There’s a second reason to care about who sits under the line, and I learned it from client size rather than price. Back in June I moved my target band up, because smaller agencies kept pausing coaching the month their own biggest client left. Their cash ran out before the work did. A month later I moved the band back down, on purpose, because founders of smaller shops act on advice the same week, with less politics in the way, and I decided that mattered more to me than the cushion. Both calls were trades I made with my eyes open. The useful part for you is the question underneath them: can this client survive their own bad month and still pay you? A floor answers part of that before you ever ask.
What about existing clients who are already below your floor?
Grandfather them, write down that they’re grandfathered, and deal with each one at renewal. A new floor governs new engagements from the day you set it. It doesn’t reach back into contracts you’ve already signed, and treating it as a precedent for those clients turns one decision into a dozen awkward conversations at once.
When I set mine, five existing clients sat under it. I didn’t touch any of them that week, because pushing five price conversations into a quarter that was already behind would have put the month’s billing at risk. Instead each one got sequenced to its own renewal date.
If you’ve got clients under your new number right now, that doesn’t mean you priced them badly back then. It usually means the business grew past them, and honestly, that’s a good problem to have.
The first one to move did it on their own. The engagement had shifted from advice into production work, they could see the old fee didn’t fit what they were getting, and they asked what the options were. So a deferral like this protects you from pushing, and it doesn’t stop you saying yes when a client pulls.
The thing I’d copy is that the list exists somewhere other than my head. A short script I run against my books flags every client under the floor each time it refreshes, with a note that they’re grandfathered and should be raised or ended at renewal. If the list only lives in your memory, the floor slowly turns back into a suggestion, one renewal you forgot about at a time.
(Raising rates on clients you already have is its own process, with its own sequence and notice periods, and it deserves more than a paragraph here.)
Should you publish your minimum engagement?
Yes, put it somewhere a buyer sees it before they book. The most expensive place to apply a floor is forty minutes into a call with someone you like, after they’ve told you about their business and you’ve already started solving it in your head.
I’ve written about moving the filter in front of the conversation, and a floor is the simplest filter there is. A line on your services page, a “starting at” figure, or a budget question on the booking form all do the job. Then the discovery call only has to confirm fit, and it never has to deliver the number for the first time.
Mine is on my website, where anyone can find it before we talk, so I rarely have to say it cold. When it does come up, it’s one sentence: coaching starts at $3,000 a month, and the $2,000 Intensive is the smaller way in if that’s more than you need right now.
When is it fine to break your own floor?
When the exception doesn’t change the shape of your business. A one-off that fills an empty slot for a month, arrives through a friend, and leaves no service line behind is a different decision from a standing engagement you’d have to keep delivering at a loss.
The test I’d run is whether you’d want ten more of the same deal. If the honest answer is no and you sign it anyway, you’ve probably started a category, and categories have a way of becoming your client list whether you meant them to or not.
The Monday move
Count your slots. Write down how many clients you can serve well at once, the monthly number the agency needs, and divide one by the other. Then put that figure somewhere a buyer will see it, and make a list of every current client under it with their renewal date next to their name.
If the number you land on makes your stomach turn a little, that’s normal, and it usually means you’ve been running at capacity for less than you’re worth. You’re closer to fixing it than it feels. If you want a second set of eyes on where your line should sit, that’s a conversation we have all the time inside the Dynamic Agency Community.
FAQ
What is a good minimum retainer for a small agency?
There’s no market-wide right answer, because the floor comes from your capacity and your costs. Divide what the agency needs each month by the number of clients you can serve well at once. For a one-person shop with fixed hours, that tends to land higher than owners expect, since every slot has to carry a bigger share of the business.
Should my minimum be based on budget or on how big the client is?
Both, and they protect different things. The price floor protects your capacity. A floor on client size, like a minimum revenue band, protects you from clients who can’t survive a bad month of their own and pause the engagement when they hit one. Most agencies only need the price floor to start.
Will a price floor cost me clients?
It’ll cost you some prospects, and it’s meant to. The ones it filters out are the engagements that would have taken a full slot for a fraction of what the slot needs to earn. Keep a smaller standalone offer ready for the ones who aren’t there yet.
Do I have to raise existing clients to the new floor right away?
No. Grandfather them and handle each one at renewal, on your timeline. Keep a written list of who’s below the line so the exception doesn’t turn into the rule.