When it comes to working with agencies, one of the most important aspects to understand is their fees. Agency fees can come in different forms, including retainers, project fees, hourly rates, commission, and incentive-based models. In this post, we'll break down each type of fee and answer six of the most popular questions about agency fees.
A retainer fee is a recurring fee paid monthly or quarterly to an agency for their services over a set period. This fee is generally paid upfront and guarantees that the agency will hold your spot on their client roster. This fee model works best for long-term engagements where clients require ongoing support from an agency.
A project fee is a one-time charge for a specific project or set of deliverables. This type of model works best when there's a clear scope of work defined with specific timelines and deliverables.
An hourly rate is the amount an agency charges per hour of work. This model tends to be straightforward but can lead to surprises on final invoices if client expectations are not clearly communicated upfront.
Commission-based pricing occurs when the agency earns a percentage of the revenue they generate for you. This pricing model works best when you're looking for an agency to increase your sales or drive leads.
Incentive-based pricing refers to rewarding an agency based on performance metrics or targets set by the client in advance. This pricing model aligns both parties' interests and generally works well when there are clear goals in mind.
Most agencies are open to negotiating fees based on project scope and duration. However, it's essential not to focus solely on price; otherwise, you may trade quality for a lower cost.
