Figuring Out How PPC Agency Rates Work

PPC agencies help businesses ace their paid advertising campaigns. They create well-designed PPC strategies that produce quick and consistent results.

And when it comes to paid ads’ needs and resources, every business has its own goals and challenges. You must understand how PPC agency rates work and the many pricing options available.

Knowing the rates can help you make a good decision when hiring a PPC firm for your paid ad campaigns.

Common PPC Agency Rates

There are many PPC firms to suit every business’s paid ad needs. Some offer local PPC, while some work with international customers. There are some PPC agencies that only offer paid ad services, while others provide comprehensive PPC and SEO services.

The services covered by an agency affect their rates and pricing. However, this is just one of the factors that influence pricing.

Around 40% of businesses revealed that their PPC budgets are lower than they prefer. This shows that not every business can afford to invest big money in PPC advertising. Having a variety of PPC pricing choices helps you make an intelligent decision based on your budget.

According to Digital Authority Partners, there are several forms of PPC pricing, each with its pros and cons. Make sure to learn about the pricing model an agency uses and its advantages and disadvantages before hiring.

Hourly Rate Pricing

Charging by the hour is the simplest pricing model. This is paying the agency for hours they consumed while working on your paid ad campaigns. This is the number of hours monthly or quarterly, or you may designate a specific number of hours each week, such as 4 hours each day or 20 hours each week.

Good Points

There are several reasons why hourly rate pricing works for business owners and PPC experts. For business owners like you, hourly pricing is more straightforward to track and budget. You can use project management tools to track hours worked, such as TimeCamp, Hubstaff, and Harvest.

An agency can also use these tools to update your campaigns regularly. If you find that an agency’s work is not producing desired results, you can always change course and avoid wasting time and resources.

Things to Watch Out For

Some PPC agencies that use this pricing model may not be as proactive. They may work until you’re out of budget or work by the hour without producing the desired results. You may end up paying for more than what you get from the campaign.

If the agency also offers SEO services, ad design, landing page creation, conversion rate optimization, and other services related to PPC, they will be spending a lot of hours on these tasks before they start with your paid ad campaign.

And if this is your first PPC campaign, launching and testing can take a lot of time. In short, an hourly pricing model is best suited for ongoing campaigns and paying only for the PPC ads creation and management.

Percentage of Ad Spend Pricing

The percentage of ad spend pricing model depends on the ad spend and the budget you set. This pricing model is more common compared to an hourly charging model.

In this model, the agency fee increases as your ad spend budget increases. Most PPC agencies that use this model have tiered pricing scales to make their rates easier to understand.

The amount of work an agency does also increases per tier level. Usually, the scope of the client and the company matches a specific level. The percentage of ad spend ranges from 10% to 20% of the ad budget.

Good Points

This ad model is transparent and thus offers PPC agency accountability. You can also see how the growth of your campaigns will scale your ad spend. The expenses are transparent so that you can prepare your ad budget ahead of time.

Things to Watch Out For

Some PPC agencies that use this model may solely focus on growing your PPC budget rather than concentrate on your ROI. Also, avoid agencies that will own your account, which is possible in this pricing scenario. This can affect your access to your account information.

A variation of this pricing model is the percentage of ad spend + management fee, where an agency may ask for an additional management fee on top of charging based on ad spend. This allows an agency to properly focus on your campaign ROI rather than rely only on your ad spend.

Flat Rate Pricing

Some PPC firms charge a flat rate for their services. After reviewing your scope of work and considering the costs related to working on your campaigns, an agency will come up with a predetermined fee.

This is a straightforward paid ad model and is preferred by many business owners. As long as all the agency’s services are included in the scope of work, it should produce good results.

Good Points

PPC agencies that charge a flat fee often focus on improving the value of their services and client retention. They are more motivated to use tools and ad automation technologies to improve the quality of their services.

Things to Watch Out For

PPC agencies that use this pricing model may ask for an account setup fee and a long-term, months-long contract. This allows the agency to evolve your paid ad campaigns further.

Performance-Based Pricing

In a performance-based model, an agency will charge for every lead generated. You’re paying directly for the results, and thus, PPC firms will do all they can to perform better and get you more leads.

The main KPI for this model is monthly lead volume. This is the specific number of people ready to try your product or your services in a month.

Good Points

This pricing model encourages a PPC agency to stick to its goals and produce the best results. Deciding whether to increase your firm’s monthly fees or not will be easier as there are already set terms. There’s no need to re-negotiate.

Things to Watch Out For

You’re paying for the number of leads you get, not the quality. An agency may employ all kinds of strategies to give you leads, but it does not mean that all these are qualified leads.

Although this pricing model may seem straightforward, you may throw money out the window because of useless leads.

Final Words

There are four standard PPC pricing models: hourly, flat-rate pricing, percentage of ad spend, and performance-based pricing. Each model has its pros and cons, so consider each pricing model beforehand.

Remember, your campaign’s success depends on your goals and your set values.  Choose a PPC agency wisely to avoid costly issues in the future.

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