Fixed fee or percentage of ad spend? What trades should pay for

First, separate the fee from the spend

Before comparing models, be clear on two numbers that are often blurred in a pitch. Ad spend is the money that goes to Google or Meta to show your adverts. The management fee is what the agency keeps for running the campaigns. Some agencies invoice both together; some have you pay the platform directly and bill only their fee.

Paying the platform directly is better for you on every model. You see exactly what was spent, you own the account and its history, and the agency's fee is visible rather than buried. Insist on it.

Model one: the fixed monthly fee

The agency charges the same amount each month regardless of how much you spend on ads. The fee might cover ads management alone, or a broader system including a website, local SEO and review tools.

The incentive is clean. The agency earns the same whether your spend is £500 or £5,000, so it has no reason to push your budget up. Its only route to more revenue from you is to keep you as a client, which means getting results. The weakness is at the extremes: a very large account takes more work than a fixed fee priced for small firms will cover, so fixed-fee agencies tend to serve small and medium trades and either cap spend or move large clients to a different arrangement.

Several firms in our overall ranking use this model, including some that publish the figure and some that publish only the principle.

There is a hybrid worth knowing about. Some agencies charge a fixed fee for the foundations, meaning the website, Google Business Profile and review tools, and then a separate, often smaller, fee for ads management on top. For a small trade this can be the best of both: the core system is predictable, and the ads cost is only incurred once the site is ready to receive traffic. Ask whether an agency offers this before assuming it is one model or the other.

Model two: a percentage of ad spend

The agency takes a cut of what you spend on advertising, commonly somewhere between 10% and 20%, often with a minimum monthly fee so that small accounts are still worth their time.

The argument for it is that effort scales with spend: a £10,000 account genuinely needs more attention than a £500 one, and the percentage reflects that. The argument against is the obvious one. Every pound of extra spend is extra revenue for the agency whether or not it brings you a job. The agency may be scrupulous about this, but the structure does not help it be.

For a tradesperson, the practical test is simple. Ask the agency to describe the last time it told a client to reduce spend. If the answer is fluent and specific, the incentive problem is being managed. If it is a pause, it is not.

Model three: pay per lead

The agency, or a lead platform, charges you for each enquiry delivered. There may be no management fee at all. This is the model behind most lead directories and some agency offers.

It sounds like the lowest risk because you only pay for results. In practice the risk moves rather than disappears. You pay for the lead whether it is a homeowner ready to book or a tyre-kicker who contacted five firms. The incentive for the provider is volume, and quality control is your problem. Leads are also frequently shared with competitors unless exclusivity is stated. Our case against lead directories sets out why many tradespeople sour on the model.

Worked examples at three budgets

The table below is a worked illustration. It assumes a fixed fee of £400 a month, a percentage model at 15% with a £300 minimum, and a per-lead price of £40. None of these are any specific agency's prices; they are plausible round numbers chosen to show how the models diverge.

Monthly ad spend	Fixed fee (£400)	15% of spend (min £300)	Pay per lead (£40, 25 leads)
£500	£400 fee, £900 total	£300 fee, £800 total	£1,000 for 25 leads, no separate spend
£1,500	£400 fee, £1,900 total	£300 fee, £1,800 total	£1,000 for 25 leads
£4,000	£400 fee, £4,400 total	£600 fee, £4,600 total	£1,000 for 25 leads

Which model for which trade

Look at the table again and notice what it does not show: how many jobs each option produced. Per-lead looks cheapest at every budget until you ask how many of the 25 leads were exclusive, in your area and convertible. The fixed fee looks expensive at £500 of spend and cheap at £4,000. The percentage model is competitive in the middle and starts to cost more as you grow.

A sole trader or small firm spending under about £1,500 a month on ads is usually best on a fixed fee, provided the fee is proportionate. The predictability matters more than squeezing the last £100 out of the comparison, and the absence of a spend incentive is worth paying for.

A firm spending £3,000 to £10,000 a month can consider a percentage model, because the agency's effort genuinely scales and the percentage may be lower than a fixed fee pitched at that size. Negotiate the percentage down as spend rises, and require the agency to recommend reductions in writing when results slip.

Pay per lead suits trades with high job values and spare capacity who can afford to chase poor leads to find good ones, and who have confirmed that leads are exclusive. It suits almost no one as the only channel.

Whatever the model, the questions in our agency interview guide on itemised costs and ownership apply. The Google Ads agencies in our ranking are noted with their pricing model where it is published.

Three clauses to ask for whichever model you choose

Ad spend paid by you directly to the platform, from an account in your name. The agency receives access, not ownership.

A monthly report that states fee, spend, enquiries and booked jobs on one page, so cost per job is visible without arithmetic.

A written statement of how the agency decides to recommend increasing or decreasing spend. On a percentage model this is essential; on a fixed fee it is good hygiene.

If an agency will not agree to the first of these, paying the platform directly from your own account, treat that as the end of the conversation. Everything else can be negotiated. That one cannot.

Frequently asked questions