Should I pay a PPC agency a flat fee or a percentage of ad spend?
For most UK small businesses a flat monthly fee is the clearest choice, because your costs stay predictable and the agency gains nothing from pushing spend up. Percentage of spend, usually 10 to 20 per cent, suits larger accounts if the agency caps it. Performance fees only work when tracking is airtight.
Flat retainer: you pay the same fee whatever you spend on ads. It is easy to budget and keeps advice about spend honest.
Percentage of spend: the fee rises with your budget. At £5,000 a month in ads, 15 per cent is £750. Ask for the effective fee at your planned budget and whether a cap applies.
Hybrid: a lower base fee plus a percentage or bonus. Performance-based: the fee depends on leads or sales. Both need agreed definitions of a lead and conversion tracking you both trust, or the arguments start in month two.
Useful pages
This is one part of a bigger picture. How to choose a PPC agency in the UK covers costs, pricing models, ownership, contracts, tracking and red flags in one place.