Is a design retainer refundable?

Only if the agreement says so. Because a retainer is normally an advance against work not yet done, the unearned balance is commonly refundable while a separately stated non-refundable design fee is not — but the document controls, so it should say which it is.

Should the retainer cover furniture deposits too?

It is cleaner if it does not. A retainer that quietly funds purchase orders leaves you unable to say how much of the client's money is time and how much is goods — which is the exact question that gets asked when a project stops.

DefinitionUpdated July 31, 20262 min read

Design retainer: what it is, and what it is not a deposit for

A retainer is an advance against design fees, applied to future invoices. Why it must be kept separate from merchandise deposits, and what an agreement should say about refundability.

By Idan Mann, founder of NYA

The short answer

A retainer is money paid up front against future design fees, drawn down as invoices are issued. It secures the designer's time and is separate from a merchandise deposit, which is the client's money held to buy specific goods. Conflating the two is an accounting problem, not a paperwork preference.

Two very different payments arrive at the start of a project and both get called a deposit. One buys your availability; the other buys a sofa. Keeping them distinct in the agreement and in the books is what stops a cancelled project from turning into an argument about whose money was spent on what.

The three payments people call a deposit

Payment	What it is for	How it is consumed
Retainer	Advance against design fees	Drawn down as fee invoices are issued
Non-refundable design fee	Securing the engagement itself	Earned on signature; not credited against later work unless stated
Merchandise deposit	Buying specific goods	Spent on purchase orders for that client's items

Merchandise deposits are the client's money until the goods are theirs. Many firms hold them in a separate account for exactly that reason. Whether you are required to, and how it is treated for tax, depends on your jurisdiction and your entity — that is a question for your accountant, and this page is not a substitute for one.

What the agreement should state

The amount, and whether it is refundable, in plain words rather than by implication.
What it is credited against — the first invoices, the final invoice, or nothing.
When it must be replenished, if the balance runs down mid-project.
What happens on termination, including whether unbilled time is invoiced against it.

Common questions

Is a design retainer refundable?: Only if the agreement says so. Because a retainer is normally an advance against work not yet done, the unearned balance is commonly refundable while a separately stated non-refundable design fee is not — but the document controls, so it should say which it is.
Should the retainer cover furniture deposits too?: It is cleaner if it does not. A retainer that quietly funds purchase orders leaves you unable to say how much of the client's money is time and how much is goods — which is the exact question that gets asked when a project stops.

Keep reading

Design retainer: what it is, and what it is not a deposit for

A retainer is an advance against design fees, applied to future invoices. Why it must be kept separate from merchandise deposits, and what an agreement should say about refundability.

By Idan Mann, founder of NYA

The short answer

The three payments people call a deposit

Payment	What it is for	How it is consumed
Retainer	Advance against design fees	Drawn down as fee invoices are issued
Non-refundable design fee	Securing the engagement itself	Earned on signature; not credited against later work unless stated
Merchandise deposit	Buying specific goods	Spent on purchase orders for that client's items

What the agreement should state

The amount, and whether it is refundable, in plain words rather than by implication.

What it is credited against — the first invoices, the final invoice, or nothing.

When it must be replenished, if the balance runs down mid-project.

What happens on termination, including whether unbilled time is invoiced against it.

Common questions

Is a design retainer refundable?: Only if the agreement says so. Because a retainer is normally an advance against work not yet done, the unearned balance is commonly refundable while a separately stated non-refundable design fee is not — but the document controls, so it should say which it is.
Should the retainer cover furniture deposits too?: It is cleaner if it does not. A retainer that quietly funds purchase orders leaves you unable to say how much of the client's money is time and how much is goods — which is the exact question that gets asked when a project stops.