Keeping PPC Management Fees Affordable: Choose Your Billing Structure
When choosing a PPC agency, price is often a deciding factor. After all, you want to ensure you get the most bang for your buck. But how do you know if you're getting a good deal? And how can you be sure you're not overpaying for services?
If you’re uncertain of industry click-through-rates, and costs-per-click, checkout WordStream’s Google Ads Industry Benchmark Report. Statista also publishes average industry cost-per-click statistics. To calculate the true cost-per-click, you need to factor in agency fees.
In this article, we'll explore the different billing structures used by PPC agencies and explain how to choose the one that's right for you. We'll also discuss tips on keeping your PPC costs affordable without compromising on quality or results.
If you want to learn how Digital Authority Partners can increase your PPC effectiveness, watch this video!
What Is a PPC Agency?
A pay-per-click agency, or PPC agency, is a company that specializes in developing, implementing, and managing pay-per-click advertising campaigns. Pay-per-click advertising is online marketing in which advertisers only pay when their ad is clicked. PPC agencies typically have a team of experienced online marketers who are well-versed in the latest pay-per-click trends and best practices.
In addition to managing pay-per-click campaigns, PPC agencies also provide other digital marketing services such as search engine optimization (SEO) and web design. As a result, they can be an invaluable partner for businesses looking to improve their online visibility and generate more leads and sales.
How Much Should I Expect To Spend On A PPC Agency?
There is no one-size-fits-all answer to this question. The amount you'll spend on a PPC agency depends on factors such as the size of your business, your budget, and your marketing goals. However, most businesses can expect to spend between $500 and $15,000 per month on PPC management services.
You don't want to choose a PPC company solely based on price. Focus on finding an agency that can provide a good return on investment (ROI). The best way to do this is to request case studies or testimonials from past and current clients. This will give you a better idea of the results that the agency has been able to achieve for other businesses.
The Top PPC Agency Pricing Models
Now, let's take a look at the different pricing models used by these companies. Your pricing model should be based on your specific needs and budget.
1. Flat Fee Pricing
Flat fee pricing is the most common billing structure used by PPC agencies. With this pricing model, you pay a fixed monthly fee for the services provided by the agency. This fee is based on factors such as the size of your business and the scope of your campaign.
One of the main benefits of flat fee pricing is that it's simple and easy to understand. You'll know exactly how much you'll be spending on your PPC campaign each month, making budgeting and forecasting easier.
Another advantage of this pricing model is that it gives you more predictability and stability. This can be helpful if you have a limited marketing budget or if you're concerned about the ROI of your campaign.
However, there are some drawbacks to flat fee pricing. One downside is that it can sometimes be more expensive in the long run. This is because you'll be paying the same monthly fee even if your sales tend to be seasonal or fluctuate.
2. Percentage of Ad Spend Pricing
With a percentage of ad spend pricing model, you pay the PPC agency a percentage of your total ad spend. This billing structure is also known as "management fee." The management fee is typically between 10-20% of your total ad spend.
This pricing model aligns the agency's interests with the advertiser's. It's also flexible, meaning that as your ad spend increases, so do the fees you pay to the agency. This can be helpful if your business is growing or if you're running a large-scale campaign.
However, the percentage of ad spend pricing can also be a disadvantage, especially if you aren't able to pay the minimum agency fee typically required.
3. Combination of Percentage of Ad Spend and Flat Fee
This pricing model combines the two models we've already discussed. With this billing structure, you pay the PPC agency a percentage of your ad spend, up to a certain limit. Beyond that limit, you pay a flat monthly fee.
This pricing model gives you more predictability and stability than a percentage. If you have a large budget or a really complicated campaign, a combination model can give you the best of both worlds.
4. Performance Based
Performance-based pricing is a newer billing model that's becoming increasingly popular. With this pricing, you only pay the PPC agency if they can hit certain performance milestones. For example, you may agree to pay the agency a certain amount for every lead generated or every sale made.
This type of pricing gives you more control over your budget. You only have to pay the agency if they deliver results, which can help you save money if the campaign isn't performing well.
How To Calculate PPC Return on Investment
To calculate PPC ROI, determine the revenue generated from PPC channels. Next, calculate your costs. Minimally, you’ll want to calculate what you’ve spent on ads plus any management fees including content, ad production, and development costs. More complex calculations may include the cost of goods sold. Once you have those figures, calculate ROI with the following formula: (revenue - cost)/cost x 100 = ROI. Anything above 100 is profit.
Picking the right pricing model for your PPC agency is an important decision based on your specific needs and budget. If you're unsure which model is right, we recommend talking to a few different agencies to get their recommendations.
Digital Authority Partners is a full-service digital marketing agency that offers various services, including PPC management. We have a team of experienced professionals who can help you create and manage a successful campaign. Contact us today to learn more about our services or to request a free consultation.
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