The short answer
Agencies charge in five main ways: monthly retainer, percentage of ad spend, fixed project fee, hourly rate, and performance-based fees. A fixed retainer with a written scope is usually the fairest for ongoing work, because the agency earns the same whether your ad budget goes up or down.
| Model | How it works | Watch for |
|---|---|---|
| Monthly retainer | Fixed fee for a defined scope each month | Scope that is vague or shrinks quietly |
| Percentage of ad spend | Fee is a share of what you spend on ads | An incentive to raise your budget |
| Project fee | One price for a defined deliverable | Extras billed outside the brief |
| Hourly | You pay for time used | No cap, and hard to forecast |
| Performance-based | Fee tied to leads or sales | Disputes over what counts, and low-quality leads |
Retainer
Best for ongoing SEO, content and account management. Insist on a scope listing what you get each month.
Percentage of spend
Common in paid media. It is simple, but the agency earns more when you spend more, whether or not results improve. A cap or tiered rate reduces the conflict.
Project fee
Right for websites, audits and tracking setups. Agree the brief, the rounds of revision and the handover before work starts.
Hourly
Useful for consulting or small fixes. Ask for an estimate and a ceiling.
Performance-based
Attractive in theory. In practice it needs airtight tracking and an agreed definition of a qualified lead, or it rewards volume over quality.
The takeaway
Whatever the model, the question to ask is what the agency is paid to want. Choose the structure where their incentive matches yours.
Common questions
Should ad spend be paid to the agency?
No. Pay the ad platform directly from your own account so you see every charge.
Is a setup fee normal?
Yes, for the first month of audit and tracking work. It should be stated up front.