● The short answer
Ad agencies usually charge a percentage of ad spend, a flat monthly retainer, a hybrid of both, or occasionally a performance fee. A fair fee is one you can see clearly, that matches the work involved, and is separate from the media you pay platforms. Ask about media markup, setup fees, contract length and who owns the ad accounts before you sign.
Key takeaways
- Agencies charge by percentage of spend, flat retainer, hybrid, performance or project fees.
- A fair fee is visible, matches the work, and is separate from media spend.
- Percentage-of-spend models can create an incentive to recommend larger budgets.
The common fee models
| Model | How it works | Pros | Watch out for |
|---|---|---|---|
| Percentage of spend | Fee is a share of your monthly ad budget | Scales with account size | Rewards spending more, not spending better |
| Flat retainer | Fixed monthly fee for defined work | Predictable; no incentive to inflate budgets | Scope creep, or too little effort on large accounts |
| Hybrid | Base fee plus a percentage above a spend level | Balances effort and scale | Complexity; read the tiers |
| Performance-based | Fee tied to leads, sales or targets | Aligns incentives on paper | Disputes over attribution and lead quality |
| Project or setup fee | One-time fee for builds and audits | Clear deliverable | Paying for a build you cannot take with you |
The how is where we come in.
What we walk through with you, for your business:
- What is fair?
- Hidden costs to ask about
Every business is different, so the plan is too. Tell us where you want to show up and we will show you what it takes.
Talk to usMore questions
Is a percentage of ad spend a bad model?
Not necessarily. It is common and it scales with the work on larger accounts. The risk is the incentive to raise spend rather than improve results. If you use this model, ask for a minimum fee floor and clear deliverables, and judge the agency on cost per lead or revenue, not on how much budget they recommend.
Should I pay a setup fee?
A setup fee can be fair when real work is involved: tracking, account structure, landing page fixes, creative. Make sure what you pay for is built in accounts you own, so it stays with you. Be wary of setup fees for templated work, or for builds that live in the agency's own accounts.
Sources
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