No matter what company you operate, a pay-per-click (PPC) agency can improve your marketing results. However, to choose the best digital marketing team, you need to understand the different billing methods they offer. Of course, budget and payment terms matter when hiring experts. When you understand these four common agency pricing models, you will be better equipped to make the right decision for your bottom line.

#1 – Fixed Price or Project Price

The agency charges its client a single upfront fee for the entire project with this payment structure. No matter how many hours it takes to complete the project, the client will only be charged one price. First, understand that a PPC project usually recurs monthly or within another specified period. You will not get positive or ongoing results if you set up a campaign, let it run for a few weeks, and then turn it off. Therefore, the fixed price or project price billing method is an ongoing charge you will pay to the digital marketing firm.

It is like working on a retainer but with a set number of hours worked or project elements completed within that time. The contract will clearly define what those are. This can be a great option for clients with a limited budget who need to know exactly how much they will be paying for an entire project. It also eliminates any potential disputes over hours worked or extra fees charged. However, you need to understand your target ROI with every campaign to ensure you get your money’s worth. 

#2 – Price Per Milestone Performance

With results as the primary focus, a performance-based pricing model can make sense for some agency/client relationships. Instead of charging for time or a set list of tasks completed, the marketing team gets paid when they reach certain milestones along the way. In other words, they get paid when they deliver results to you.

One of the most common ways of implementing this pricing model for a PPC agency is to charge based on the number of leads generated. To make this effective, however, a precise definition of what makes an acceptable lead must be made. Unscrupulous agencies could deliver junk leads with the numbers but provide no benefit to your company.

Another way to use performance as a price determiner is to target other metrics besides leads. You must decide on your specific PPC goals before you begin. There are many different options to choose from when it comes to pay-per-click advertising. Some of these include click-through rates, conversion rates, or lead-generated revenue. These models tend to benefit your company more than they do the PPC agency, so they are not always the most commonly offered. Not every paid search campaign will deliver as you would like it to. Still, the team that works on them should be compensated for their honest and skilled efforts.

#3 – Hourly Plan Pricing 

An hourly rate for a PPC agency is the most flexible way to be billed. You know exactly what you are paying for, and there is no room for error or guesswork. This makes it easy to budget for your campaigns. However, there are very real disadvantages to an hourly billing method. How much work is done in an hour? It can be difficult to say, and the answer to the question may change over time or depend on what part of the pay-per-click campaign the team is working on. Also, this billing method opens the door to bad agencies taking advantage of clients.

The importance of hiring an exceptional PPC agency makes understanding different pricing strategies an integral part of your business budgetary decisions. According to DigitalAuthority.me, it can help you decide what company to hire. However, results frequently matter more than billing terms. 

Hourly rates also give you the flexibility to choose how much or how little you want to spend on your campaigns. If you have a limited budget, you can simply scale back your hours. And if you want to ramp up your efforts, you can do so without breaking the bank. This should not be a problem if you hire the right PPC agency with an excellent track record.

#4 – Ad Spend Percentage Payment

The final PPC pricing model works on a percentage basis determined by how much is spent on the ads. Most agencies charge between 10 and 20 percent, although they may also have a sliding scale based on the total monthly payments for the active campaigns. Across the board, ad prices are increasing and will probably trend in that direction for the foreseeable future.

This is a very easy pricing plan to understand, and your company has the power to control your budget very easily. If you do not have as much funding for your paid search advertising for one month, simply decrease the total ad spend, and the PPC agency fee will decrease along with it. This makes it highly effective for companies with a widely diverse marketing budget. You can get results for an incredibly small amount as long as the agency you choose knows what they are doing.

Final Thoughts

Now that you understand the four main PPC agency pricing models, you are better equipped to decide on what type of contract to sign with your chosen marketing team. Of course, not every service provider offers all these options. Discuss the specifics with your point of contact before agreeing to anything. In the end, only you can make the right determination about which price model will fit your budget. Ask questions, get information, and only go with a PPC advertising agency that offers honest and transparent answers from the start. Explore all the options and make the best choice for your firm.