Agencies price ad management in six main ways: a percentage of ad spend, a flat monthly retainer, a fee tiered by spend band, hourly or project fees, a share of performance or revenue, or a hybrid of these. Among PPC providers, flat fees are the most common and pure percentage billing is the minority. The right model depends on how much you spend, how stable that spend is and how many channels are involved, and the terms around the fee often matter more than the rate itself.
What are the main agency pricing models?
There are six common models, and each one ties the agency’s income to something different: your budget, its time, an agreed scope or your results.
Percentage of ad spend
A share of monthly spend. Usually suits seasonal or changing budgets.
- Rewards
- Bigger budgets
- Watch for
- Fee rises with spend, not results
Flat monthly retainer
A fixed amount for a defined scope. Usually suits steady spend and clear work.
- Rewards
- Efficient work within scope
- Watch for
- Thinner work as spend grows
Tiered by spend band
Flat at low spend, a falling rate above. Usually suits spend that is growing.
- Rewards
- Growth, at a lower share
- Watch for
- Jumps at band edges
Hourly or project
Time logged or a fixed deliverable. Usually suits audits, setups and one-off builds.
- Rewards
- Hours or finished projects
- Watch for
- Open-ended hours
Performance or revenue share
A share of agreed results. Usually suits clean, agreed outcome data.
- Rewards
- The agreed number
- Watch for
- Disputes over what counts
Hybrid
A base fee plus one of the above. Usually suits ongoing work that may scale.
- Rewards
- Cover plus upside
- Watch for
- Two charges running at once
How percentage of ad spend works, and what it rewards
A percentage-of-spend fee is a fixed share of what you spend on the ad platforms each month, so the fee moves up and down with your budget.
At 15%: $20,000 of spend = $3,000, and $40,000 of spend = $6,000
Rates vary with budget size, platform count and how much creative and reporting is included, so one market average says little. As one reference point, Credo lists 15% of spend above $10,000 in monthly ad spend as part of the most common PPC pricing it sees.
The case for this model is proportion: a larger account takes more work to run, and in a quiet month the fee falls on its own. The weakness is the incentive: the agency earns more when you spend more, whether or not the extra spend pays.
Worth knowing: at low spend the problem flips. Ten or fifteen percent of a small budget rarely covers the hours an account needs, which is why percentage pricing almost always comes with a minimum fee.
Flat fee vs percentage of ad spend: which is better?
A flat fee is usually better when your spend is steady and the work is clearly defined; a percentage is better when spend swings and the effort genuinely rises with it.
A flat fee
- Is neutral on budget: the agency gains nothing from recommending more spend
- Makes budget advice easier to take at face value
- Is easy to plan around
- Can thin out, or need renegotiating, if spend doubles
A percentage of spend
- Grows with the size of the account
- Falls on its own in a quiet month
- Rises with spend, whether or not the extra spend pays
- Needs a minimum fee to work at low spend
With a flat fee, ask what scope the fee covers and what triggers a review. Entry points are lower than many expect: in Credo’s PPC rate data, 51.62% of respondents have a retainer minimum under $2,000 a month, and only 11.36% set a minimum above $5,000.
How tiered, hourly, performance and hybrid fees work
These four models adjust the basic trade-off: tiers soften the percentage incentive, hourly and project fees price the work itself, and performance and hybrid fees tie part of the pay to results.
Tiered by spend band
A tiered fee charges a flat amount at lower spend and a rate that falls as spend rises. Credo describes this as the most common PPC setup it sees: a flat monthly fee up to a certain spend level, then a percentage above it.
Ask whether a new rate applies to all your spend or only to the part above the threshold, because that decides how big the jump is at each band edge.
One example: our own media buying is priced on ad-spend tiers: a flat fee at lower spend, and a rate that steps down at every tier above it. At $10,000 of monthly ad spend, the calculator on that page shows a $1,200 management fee. Ad spend is separate from the fee and never marked up, and clients can pay the platforms directly or have us handle the billing, with the platform invoices visible either way.
Hourly and project fees
Hourly and project fees price the work rather than the budget. Credo reports that 85% of PPC firms charge between $50 and $200 per hour.
They suit work with a clear end: an account audit, tracking setup or a campaign rebuild. For ongoing management they make the monthly bill hard to predict and reward hours rather than outcomes.
Performance or revenue share
A performance fee pays the agency a share of agreed results, such as qualified leads, sales or revenue. It sounds like the best possible alignment, but it depends on definitions: which sales count, over what window, net of refunds or not, and whether a lead that never answers the phone still counts.
It also depends on things the agency does not control, like price, stock and how fast your team follows up. Agencies price that risk in, so the share is often higher than a plain fee would be.
Worth knowing: in the ANA’s study of agency compensation, use of performance incentives had fallen to 41%, and most marketers said they did not know whether performance pay was improving their agency’s work.
If you use one, set the number you judge by in advance, from your own orders or CRM, and write it into the agreement.
Every pricing model pays the agency for something. Find out what before you compare the numbers.
Hybrid fees
A hybrid combines a base fee for the fixed work with a variable part for scale or results. The common setup Credo describes, a flat fee up to a spend level and a percentage above it, is itself a hybrid.
A $1,500 base plus 15% of spend above $10,000, at $15,000 of monthly spend: $1,500 + (15% × $5,000) = $2,250 a month.
Ask for a cap or clear step-downs so the variable part stays predictable.
Which pricing model suits your situation?
Match the model to three things: how much you spend, how stable that spend is, and how many channels the agency runs.
| Your situation | Model that usually fits | Why |
|---|---|---|
| Small or early spend | Flat fee or a minimum; a setup project first | A percentage of a small budget does not cover the work |
| Steady spend on one or two channels | Flat retainer with a written scope | The easiest to budget for |
| Seasonal or fast-changing spend | Percentage or tiered | The fee falls in quiet months; check the minimum |
| Growing spend | Tiered with step-downs | Each new dollar carries a smaller share |
| Several channels | One fee that covers them all, or known per-channel charges | Credo lists an additional per-channel fee of often $500 to $750 a month |
| Short sales cycle, clean outcome data | A performance element on top of a base fee | Results can be counted the same way by both sides |
When ads are one part of wider work, such as creative, conversion or email, ask how the media fee sits alongside the rest. On our services page, each service carries its own price and terms.
Hidden costs to ask about before you sign
The rate is one line of the price; the terms around it decide what you actually pay. Ask these questions in writing, and tick each one the agency answers clearly.
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Worth knowing: Google requires its third-party partners to disclose management fees in writing before the first purchase and on every invoice, and to report the exact amount charged by Google, exclusive of any fees. Ask for the same clarity across every platform.
See how a spend-tier fee works in practice
Our media buying page sets out the fee by monthly ad spend, with setup, minimum term and notice period written next to it. Ad spend is separate from the fee and never marked up.
How to compare two quotes fairly
Convert every quote into a total cost at the spend levels you expect, then set that cost next to what each one delivers.
- Pick three spend levels Cautious, expected and stretched. If you have not set them yet, our Ad Budget & Break-even Planner works them out from your margins.
- Price each quote at all three Work out each quote’s monthly fee at every level.
- Add what the quote leaves out Per-channel, creative and tool charges.
- Find the committed cost Multiply by the minimum term and add the setup fee.
- Set the deliverables beside it How often the account is optimised, how many new ads are tested, and who makes the decisions.
Quote A is a flat $2,000 a month. Quote B is 15% of spend.
| Monthly ad spend | Quote A (flat) | Quote B (15%) |
|---|---|---|
| $8,000 | $2,000 | $1,200 |
| $13,300 | $2,000 | $1,995 |
| $20,000 | $2,000 | $3,000 |
The two cross at about $13,300 a month, so the cheaper quote depends entirely on where you expect your spend to sit.
Flat fee vs percentage of spend
See which quote costs less at your budget.
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In short
- A percentage fee grows with your budget; a flat fee stays put while spend changes.
- Tiers and hybrids soften the percentage incentive as spend grows.
- Performance fees work only when both sides count results the same way, agreed in advance.
- Minimums, setup, creative, extra channels and notice periods decide the real price.
What business owners ask about agency fees
Is the management fee paid on top of the ad budget?
Usually, yes. The ad budget goes to the platforms and the management fee goes to the agency, so your total monthly cost is the two added together. Ask to see them on separate lines.
What happens to the fee if I pause my ads?
It depends on the contract. Percentage fees usually drop to the agreed minimum, while flat retainers often continue because some of the work does. Check for a pause clause before you sign.
Can I ask an agency to change its pricing model?
You can ask, and many agencies will discuss a cap, a step-down rate or a different term. Raise it before signing, when the pricing is still part of the conversation.
Should the ad accounts be in my name or the agency’s?
In your name. When the ad accounts, pixels and audiences belong to your business and the agency is given access, you keep the history and the data if you change agency.
Does a higher fee mean better management?
Not by itself. Compare what each fee buys every month, such as optimisation frequency, the number of new ads tested and who works on the account, rather than the price alone.
Want a second opinion on your own numbers?
In a strategy session we review your accounts, tracking and spend, and you leave with a written plan you keep either way. The session fee is credited in full toward any service that follows.