Everything You Need To Know About B2C PPC Agency Pricing

Nowadays, every business needs to focus significantly on digital marketing strategies. One of the tools you should be using is PPC (pay-per-click) advertising. It is an incredibly cost-effective technique to get your products and services to appear top of search rankings without months of search engine optimization. Forbes compares PPC to hiring and Uber, whereas SEO is like owning a car.

However, if you’ve decided that a PPC agency is your best route to the top, you need to understand and assess their different PPC pricing models. If you go into these negotiations blind and without a clear strategy, you could see PPC agency costs spiral, with your business seeing the little reward.

Are you looking for your next PPC agency partner? Listen to our colleague, Jason, to learn about our approach & process for your next PPC campaign.

By the end of this article, you'll know the different PPC pricing packages available to you, what they mean, and if they are within your budget. Additionally, we’ll discuss the variables that impact how much you can expect to spend on PPC and the elements that will affect your budget – let’s get started.

What Factors Influence PPC Management Pricing?

There is no one-size-fits-all approach to PPC costs. Usually, they are specific to your business and the contract you have agreed with an agency.

The two most important factors are your monthly ads budget and the amount of management your account requires – the more campaigns you run, the more extended optimization takes. But other elements do come into play.

     Your Monthly Ads Budget

A common pricing model that PPC agencies offer is a percentage of ad spend. For example, if you fund your account with $10,000 per month and your agency charges a 20% rate, you’ll pay them $2,000 per month for their account management. In theory, the higher the budget, the more person-hours it takes to optimize your account. Therefore, the greater the budget, the higher fee the agency charges. Usually, they’ll operate a tiered system, such as $10,000 - $15,000 at 20%. $15,000 - $25,000 at 22.5%, and so on.

     The Number Of Campaigns You Have

Optimizing an account with a broad spectrum of campaigns takes longer than expected. For example, if you're a multi-sports store that targets kids and adults, you're likely to have a vast selection of campaigns focusing on different sports and demographics. Alternatively, If you're a specialist candle store, you may only have a handful of campaigns targeting different designs or scents.

Often, agencies quote PPC management pricing based on a per-hour charge. The more campaigns and ad groups you have, the more hours they’ll spend managing your account.

     The Keywords You Target

While not directly a PPC agency cost, you will need to factor this into your budget. Traditionally, there are two keywords: long-tail and short-tail, both providing different benefits and costs.

Short-tail: the most frequently searched terms are short-tail, the ones that have the potential to drive a lot of traffic to your website. However, as they are so popular, they are harder to appear for and cost substantially more.

Long-tail: these terms are searched for less frequently, meaning they drive less traffic. However, it would be best to consider that they tend to be precise searches, suggesting users are engaged and know what they're looking for, giving you a higher chance of a conversion. They also cost less than short-tail keywords.

PPC Pricing Models

     Fixed-Fee

As its name suggests, fixed-fee pricing is a specified amount you pay to your agency for PPC account management. Usually, this is a monthly charge for the agency to carry out agreed optimization work. 

This rate is a good pricing model for those businesses operating on a tight and inflexible budget. However, you may find your agency is less motivated to make your account perform to its best with this option.

     Percentage Of Ad Spend

As explained above, your ad budget determines the percentage of ad spending. The table below gives an example of how a tiered system might look.

     Milestone-Based

This model is a great pricing model for those businesses with specific milestones in mind, such as a certain amount of revenue generated, reducing cost per click, or the number of conversions. Often, milestone-based pricing will consist of a flat fee and a specified bulk amount paid to the agency when achieving the milestones. 

If you are looking for a pricing model to keep your agency motivated to hit specific goals, a milestone-based contract will work best for you.

     Percentage Of Revenue Generated

As a B2C business, you may operate an eCommerce store. If you do sell online, a pricing option that is likely available to you is the percentage of revenue generated. Often, an agency's responsibility is to make more money for a business, and with an online store, this is easily trackable. There's no better way to keep your PPC agency motivated and focused on smashing your sales goals than to pay a commission on their revenue. 

This model gives you peace of mind that you’ll never overspend on PPC if they underperform. Additionally, if you agree on a percentage that you know will never negatively impact your business, it's a win-win for you and your agency.

In Summary

The benefits of PPC advertising are unquestionable, but PPC agency costs can vary drastically depending on your budget, account, and goals. Therefore, before you begin sounding out potential agencies, you should take the time to consider what it is you want to achieve with PPC, the budget you can dedicate to it, and how quickly you want to achieve your goals. 

If you operate with a strict budget that must be consistent every month, you limit yourself. However, one thing is certain – getting a PPC expert to manage your digital ads campaigns will be much more beneficial and rewarding than attempting to do it yourself.