Most small operations know the total for the year and nothing about which work produced it. The difference between those two facts is usually an entire category of job.
The decision is usually made weeks before the conversation happens. What separates a clean parting from a lasting problem is entirely what was prepared beforehand.
Retention money usually gets spent on whichever lever is easiest to pull. The options differ enormously in how long the effect lasts and what it actually costs.
A big customer's contract is written to protect the big customer, which is normal. Most of it is negotiable, and knowing which parts to push on is the whole skill.
Pricing against a competitor copies their arithmetic without ever seeing it. The number that decides everything is how many hours a year can honestly be billed.
The protection is real, considerably narrower than most owners assume, and easier to lose than anybody expects. The rest of the decision is bookkeeping and habits.