A paid search engagement has three separate numbers: what you pay the platform, what you pay the agency, and what the agency's fee structure encourages them to do. Most comparisons look only at the second. The third is what determines whether the advice you get over the next year is in your interest.
The four common structures
A flat monthly fee, a percentage of spend, a percentage with a floor and ceiling, and performance based pricing tied to leads or revenue. Flat fees are the most neutral. Percentage of spend rewards growing the budget. Performance pricing aligns interests where attribution is clean and transfers risk the agency cannot manage where it is not.
Why percentage of spend is the default
It scales with account complexity, which is a real argument, and it is simple to quote. It also means every recommendation to increase budget increases the agency's income, which the agency knows and the client rarely raises. A floor and ceiling fixes most of it, and asking for the figure in absolute terms makes the comparison possible.
What the fee should buy weekly
Search terms review and exclusions, budget and objective adjustments, creative and landing page testing, and a check that tracking is still reporting correctly. Ask any candidate what changed on a comparable account last month and to see a change log. On an automated account the work moves up a level, to what the automation is told to optimise toward.
Comparing quotes properly
Convert every quote to the absolute fee at your intended spend, then ask how many hours of what seniority sit behind it and what is reviewed weekly. Two quotes that looked similar frequently differ by a factor in actual work, and that difference is visible in fifteen minutes of questions.
Questions people ask about ppc pricing
What is a typical management fee?
It varies too widely by market and account complexity to state responsibly. Compare absolute fees at your own spend rather than percentages, which is the only comparison that means anything.
Should the fee include ad spend?
They should be stated separately and the spend should go to the platform from your own account wherever possible, so you can see exactly what was bought.
Is performance pricing better?
Where attribution is clean and the agency controls enough of the funnel, it aligns interests. Where traffic quality varies or sales follow up is yours, it mostly transfers risk the agency cannot manage and prices that in.