Free Contractor Tool
Retainage Calculator
See what is withheld from this pay application, what has accrued to date, and what will be held at completion — plus the number most contractors never run: how much of the job's profit is sitting in retention.
Built by SubcontractorHub — the software contractors use to quote, finance, and run every job.
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Calculate Retainage
Enter your contract terms and this pay period's completed work. If your contract steps the rate down at 50% completion, tick the box — the cash flow difference over a long job is large.
1. Contract & retainage terms
Typically 5–10%.
Used for the exposure check.
2. This pay application
Held this draw
$2,500.00
at 5%
You get paid
$47,500.00
of $50,000.00
Held to date
$27,500.00
at 60% complete
Held at completion
$37,500.00
7.5% of contract
Retainage equals 75% of your expected profit on this job
At a 10% margin you expect $50,000.00 on this contract, and $37,500.00 of it sits withheld until closeout. Retainage is close to pure profit, which is why several retained jobs at once can leave a profitable contractor short on payroll.
This models a straight percentage withheld per draw with an optional step-down at 50% completion. It does not model contract-value caps, line-item or stored-material exclusions, retainage bonds, escrow or interest-bearing retainage accounts, or state statutory limits, any of which may change the figure materially. All calculations are estimates based on historical information and should be verified by the user. This tool is provided as a free service for planning purposes only and is not a substitute for professional accounting, financial, or legal advice.
From Material Takeoffs to a Signed Proposal
SubcontractorHub is the platform contractors use to turn takeoffs like these into a branded proposal, financing the customer can accept on the spot, and a scheduled job — without re-entering the job anywhere. This tool is free to use; the platform is here if you want a closer look.
Retainage is slow money, and the delay is almost never about the work — it is about closeout paperwork, lien waivers, warranties, and as-builts that nobody assembled while the job was running. Contractors who capture that documentation against the job as it happens get released weeks earlier than those who reconstruct it afterwards. That is a project management problem before it is a collections problem, and financing options can bridge the gap in the meantime.
How Retainage Works
Withheld this draw = work completed this period × retainage rate
Applied to every draw, so it accumulates: on a $500,000 contract at 10%, $50,000 is outstanding by completion.
Retainage is almost pure profit
This is the point the calculator is really built to make. On a job carrying a 10% net margin, a 10% retainage rate means essentially the entire profit of that contract is withheld until closeout. You have financed your own profit for the length of the job while paying labour, materials, and burden in real time. Run three or four retained jobs simultaneously and a genuinely profitable contractor cannot make payroll — which is the mechanism behind a large share of construction insolvencies.
Negotiate the step-down, not the rate
Owners rarely drop the headline rate, but they will often agree to reduce it once performance is established — 10% until 50% complete, then 5% or zero after. Toggle the step-down above to see what that concession is worth; on a long contract it is usually more valuable than shaving a point off the opening rate. Also check whether your contract caps total retainage at a percentage of contract value, which is a different and often better structure than a flat per-draw rate.
Release is a paperwork race
Retainage typically releases at substantial completion, after punch list closure, and often 30 to 90 days past final acceptance — in practice frequently 60 to 120 days after the last day worked. The delay is closeout documentation, not the work. Assemble lien waivers, warranties, O&M manuals, and as-builts as the job runs rather than at the end, and track the statutory release deadline in your state, because many states allow interest on late release once proper written demand is made. For the wider mechanics, see the construction retainage guide.
Frequently Asked Questions
- What is retainage in construction?
- Retainage — also called retention or holdback — is a percentage of each progress payment that the owner or general contractor withholds until the project is substantially complete. It exists to give the paying party leverage to ensure the work is finished and defects corrected. The standard rate is 5% to 10%, and it is withheld from every draw, so it accumulates across the job and is typically released at substantial completion or after the punch list is closed.
- How do you calculate retainage?
- Multiply the value of work completed in the pay period by the retainage percentage. On a $50,000 draw at 10% retainage, $5,000 is withheld and you are paid $45,000. Across the job the withheld amounts accumulate: on a $500,000 contract at 10%, you will have $50,000 outstanding by completion. Some contracts reduce the rate to 5% at 50% completion, and some cap total retainage at 5% of the contract value regardless of the per-draw rate — read which structure yours uses, because the cash flow difference is substantial.
- What is a normal retainage percentage?
- 5% to 10% is standard, with 10% most common on private commercial work and 5% typical on public projects in states that cap it. Many states limit retainage on public contracts by statute, and a growing number cap private retainage too. Contracts increasingly include a step-down: 10% until the job is half complete, then 5% or zero on subsequent draws once performance is established. If your contract holds 10% flat to the end on a long project, that is worth negotiating before signing.
- When is retainage released?
- Usually at substantial completion, after the punch list is closed, and commonly 30 to 90 days after final acceptance. On public work, release is often tied to statutory deadlines. In practice retainage release is the single slowest payment in construction — it frequently runs 60 to 120 days past the last day worked, because it depends on closeout paperwork, lien waivers, warranties, and as-builts rather than on the work itself. Getting closeout documentation in early is the most effective way to accelerate it.
- Can a contractor charge interest on unpaid retainage?
- Often yes. Most states have prompt payment statutes that apply to retainage once it becomes due, and many allow statutory interest on late release, with rates commonly in the range of 1% to 2% per month. The right to interest generally depends on having made proper written demand and on the retainage actually being due under the contract. Because these statutes differ by state and by whether the project is public or private, confirm the specific rule with a construction attorney before relying on it.
- Does retainage apply to subcontractors?
- Usually, and it flows down. A general contractor holding 10% from its subcontractors while the owner holds 10% from the general is standard practice. Some states prohibit a general contractor from withholding a higher percentage from subs than the owner withholds from the general, which is worth knowing if your rate looks unusual. Subcontractor retainage is also commonly released only after the general receives its own release, which is why a sub's retainage can sit outstanding months after that sub finished work.
- How does retainage affect cash flow?
- It is one of the most damaging and least visible cash flow drains in construction, because the amount withheld is close to pure profit. On a job carrying a 10% net margin, a 10% retainage rate means roughly your entire profit on that contract is held until closeout — you have financed the job's profit for its full duration while still paying labour, materials, and burden in real time. That is why running several retained jobs at once can leave a profitable contractor unable to make payroll.
- Is retainage the same as a holdback?
- In common usage yes — retainage, retention, and holdback all describe the same mechanism, with the term varying by region and by contract form. Canadian contracts more often say holdback; US contracts typically say retainage or retention. What matters is not the word but three contract specifics: the percentage, whether it steps down at a completion milestone, and the conditions and timeline for release.
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See how SubcontractorHub keeps pay applications, change orders, photos, and closeout documentation on one job record — so retainage releases on schedule instead of whenever the paperwork finally gets assembled.
Book a DemoRetainage is governed by your contract and, on public work and increasingly on private work, by state statute. Permitted rates, caps, step-down requirements, release deadlines, and rights to interest on late release differ by state and by whether the project is public or private. This tool models a straight per-draw percentage with an optional step-down and does not account for contract-value caps, stored-material exclusions, retainage bonds, or escrow arrangements. All calculations are estimates based on historical information and should be verified by the user. This tool is provided as a free service for planning purposes only and is not a substitute for professional accounting, financial, or legal advice.