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A consulting agreement with a retainer is an agreement between a consultant and a client that requires an upfront payment in exchange for consulting services. This reserves the consultant for a minimum number of hours and ensures their availability. Consultants may charge a retainer to cover upfront costs and ensure payment for initial efforts. The decision to charge a retainer depends on the type of work and consultant preference. Retainer agreements typically include a minimum deposit or preordered number of required hours. To create a free consulting agreement, follow specific steps outlined in the video tutorial.