Fixed-fee & retainer billing software for professional firms

Published on Thursday 28 August 2025

Table of Contents

• Why firms are shifting to fixed-fee and retainer billing
• Benefits of fixed-fee and retainer billing for your practice
• How to manage client retainers effectively
• How to invoice fixed-fee projects with confidence
• Choosing retainer billing software that works for you
• Recurring billing strategies used by AU/NZ firms
• FAQs on retainers and fixed-fee billing

Key takeaways

• Professional firms across Australia and New Zealand are switching from hourly billing to fixed-fee and retainer models.
• Fixed-fee billing specifies a total cost for an entire project upfront, clarifying parameters and deliverables for both parties.
• Retainers help firms allocate time and resources for clients that pay a recurring fee for ongoing services.
• Clients value the predictability and transparency of these billing methods, avoiding disputes and building trust.
• Professional firms benefit from improved cash flow and simpler invoicing.
• Fixed-fee and retainer billing software like Xero makes implementation easier and scalable.

Why firms are shifting to fixed-fee and retainer billing

Professional firms across Australia and New Zealand are using hourly billing less often and opting for alternative arrangements like fixed-fee and retainer billing instead. As clients look for more predictable pricing, professional firms are adapting to meet those expectations.

The trend towards alternative billing structures is better for professional firms as well. They improve cash flow, reduce administration overhead, and shift the focus to service value rather than time spent.

BestLawyers conducted a survey of over 150 Australian legal practices and found that 91% are now using a fixed-fee model (via Lawyers Weekly). In New Zealand, the shift started as early as 2017 when an ALPMA/Crowe Horwath Financial Performance Benchmarking Survey found fixed-fee billing nearly doubled from 12% to 23%, while reliance on hourly billing declined by 8%. The alternative arrangements have only continued to become more popular.

Hourly billing can lead to ‘bill shock’ where clients owe more than they’re expecting for the services rendered. This is a common side effect of scope creep, when a project’s timeline, hours, and total cost gradually increase beyond your original estimate. Retainer and fixed-fee billing for law firms reduce the risk of bill shock and can strengthen relationships with clients.

Benefits of fixed-fee and retainer billing for your practice

Moving to fixed-fee and retainer billing models is a strategic shift. They both offer greater clarity for you and your clients, making it easier to forecast revenue and maintain consistent cash flow.

Fixed fees give clients cost certainty, while retainers involve automatic recurring payments. This transparency builds trust and strengthens long-term professional relationships. You’ll also save time on admin, as these models don’t require long itemised invoices or detailed time tracking. As the fees are clear and agreed on upfront, you will also likely spend less time disputing logged hours or chasing late payments.

Key advantages of fixed-fee and retainer billing

• Stable and predictable cash flow
• Greater focus on service value
• Improved transparency and client satisfaction
• Streamlined invoicing for administrative team members
• Fewer disputes over billed hours

How to manage client retainers effectively

Retainers are an effective billing structure for legal firms and other professional consultants, but it’s essential to follow retainer invoicing best practices. To manage client retainers well, work with them to identify what ongoing support they need. Start with a clear agreement that outlines scope and key deliverables. Be sure to define what the retainer does and does not include so you set clear and realistic expectations. Collect a deposit or request the retainer upfront and in full for the first billing period before any work begins to secure your availability.

Most professional firms schedule monthly or quarterly invoices. This consistency is mutually beneficial for consultants and clients. Xero automates recurring invoices and sends reminders to reduce the risk of late payments and protect cash flow. Revisit the terms of the retainer periodically so the pricing accurately reflects the value provided.

How to invoice fixed-fee projects with confidence

When considering how to invoice fixed-fee projects one of the most important factors is setting clear expectations with clients from the start. Share a detailed scope agreement to demonstrate what the project does and does not include. You can also incorporate a change-order clause so you can renegotiate if the client’s needs evolve.

There are several stages to fixed-fee invoicing. In most cases, professional firms will start with a predetermined upfront fee for the client to pay before any work commences. For smaller projects, that payment may cover the whole project.

Alternatively, milestone billing suits longer projects with key deliverables or stages, so you can invoice for a portion of the fixed total once the firm has met those requirements. The final stage of the billing process comes after completion and the client pays the last installment.

Choosing retainer billing software that works for you

Look for retainer billing software that simplifies the process with features like recurring invoice scheduling, automated payment reminders, and bank feed integration.

You can set up recurring invoices to go out at the beginning of every period — whether monthly, quarterly, or on another schedule. Automated payment reminders chase up outstanding retainer fees and help you manage cash flow without needing to contact clients personally. Software that integrates with bank feeds makes it easier to see up-to-date payment reports and accurate cash flow. Other features to consider include invoice templates, reporting tools, and support for multiple currencies.

Platforms like Xero simplify recurring invoices for legal and consulting professionals. The software makes it easy to generate reports, stay consistent, and manage multiple retainers as you move more clients to this billing model and scale your business.

Recurring billing strategies used by AU/NZ firms

Real professional firms across Australia and New Zealand are using fixed-fee and recurring billing strategies.

Lavan, a law firm based in Perth, offers several billing structures including retainers and fixed-fee pricing with a focus on total service value rather than time.

Luminate Legal in New Zealand offers fixed-fee project packages or a retainer model referred to as a ‘legal membership plan.’

Sprintlaw, an online-only legal firm that services Australia and New Zealand, uses fixed-fee billing for every project regardless of the industry or scope. Clients pay the amount in full before any work begins.

P&P Consulting in South Australia offers HR advice with a retainer billing model. A range of packages include a set number of hours for virtual consultation and unlimited access to resources like templates.

FAQs on retainers and fixed-fee billing

Here are common questions and answers small business owners may have about fixed-fee billing.

What is the difference between retainer and fixed-fee billing?

Retainers and fixed-fee billings for law firms and other professional organizations are both increasingly popular alternatives to hourly billing in Australia and NZ, but they serve different purposes.

Retainers reserve your ongoing availability whether the client requires your services or not. This billing model helps firms manage capacity and gives clients peace of mind. By comparison, fixed-fee billing is more suitable for one-time projects. You set a total price for the client to pay upfront or in installments as you complete specific project milestones.

What are the benefits of flat-fee billing for legal practices?

Fixed-fee billing helps legal practices predict revenue and manage cash flow. It also promotes a focus on the services delivered rather than the time it takes, benefiting both law firms and clients. Using software like Xero helps you automate invoicing and create clear financial reports for flat-fee legal projects.

Can I switch from hourly to fixed-fee billing mid-contract?

Yes, you can discuss switching from an hourly structure to fixed-fee billing before a contract is complete. You’ll need to review the existing agreement and assess the mutual benefits of switching before presenting the suggestion to your client. For example, it’s helpful to present a proposed total fee and explain how you calculated it. If the client agrees to the fixed-fee billing model, prepare a new or revised contract to document the change. You can quickly adapt your billing method in Xero for a smooth transition mid-contract.

How do I ensure profitability with fixed-fee pricing?

Start by defining the scope clearly and reference data from previous similar projects to guide you towards a realistic estimate. Consider more than just hours-spent and include a buffer so unforeseen costs don’t result in lost profit. Continue to track time and expenses internally to compare the forecasted costs with actual cost once the project is complete. You can continue to refine your fixed-fee pricing strategy over time.

What if a project goes over scope?

If a fixed-fee legal or consulting project goes beyond the agreed scope, speak to your client as soon as possible — ideally before the work exceeds the limitations of the budget. Review the original terms of the contract, determine what falls outside the scope, and propose an alternative.

When managing client retainers, be sure to track hours and expenses internally and see how they compare to your initial estimates. If the scope of work is approaching the limit, speak to your client. Offer solutions like scaling back the scope of work or increasing the retainer fee. If these situations arise, you can use them as valuable learning opportunities to inform cost calculations for future projects.