Guide
The five ways agencies charge for Google Ads
Five fee structures, one question for each: when this agency earns more money, what did they actually do to earn it?
By Martin Genesse — Founder, Director of StrategyReviewed by Nathanaël Morin[CONTENT NEEDED — date]12 min read
Google Ads agencies typically charge one of five ways: a percentage of ad spend, a flat monthly retainer, performance-based fees, hourly billing, or a hybrid. Each model rewards a different behaviour. Percent-of-spend pricing pays the agency more as your budget grows, whether or not results improve.
- Percentage of ad spend. Fee scales with your budget.
- Flat monthly retainer. Fee stays fixed regardless of spend.
- Performance-based fees. Fee scales with a counted result.
- Hourly billing. Fee scales with time logged.
- Hybrid. Fee combines two or more of the above.
A fee model is a forecast. Whatever the calculation rewards is what your account will slowly get more of.
1. Percentage of ad spend
You pay the agency a fixed percentage of whatever you spend on Google each month. The math is simple, which is why this model is common. So is the incentive it creates. Every recommendation to raise your budget also raises the agency's invoice. Spend less, and the agency earns less, even if cutting waste was the right call. The model rewards budget growth, not efficiency.
2. Flat monthly retainer
You pay the same fixed fee every month, whether your ad budget moves up or down. The agency's revenue is decoupled from your spend, so the only way to make the fee worth paying is to make the account perform. The trade-off is honest too: in a slow month, the fee does not shrink. Full disclosure, this is the model our own agency charges, which is exactly why this page argues it in the open rather than pretending to be neutral.
3. Performance-based fees
You pay per counted result: a fee per lead, per sale, or a percentage of tracked revenue. On paper this is perfect alignment. In practice it rewards whatever gets counted, and "lead" is a word with flexible definitions. The model can drift toward cheap, high-volume inquiries that inflate the count without filling your pipeline. How to spot that drift is its own guide: red flags & garbage spend.
4. Hourly billing
You pay for time, usually against logged hours or a monthly cap. It works for one-off projects and audits with a clear finish line. As an ongoing management model, it rewards time spent rather than outcomes reached. A problem solved quickly earns the agency less than the same problem solved slowly.
5. Hybrid models
You pay a combination, most often a base retainer plus a percentage of spend or a performance bonus. A hybrid inherits the incentives of its parts, so read the dominant component. If most of the fee still scales with your budget, you have a percent-of-spend model wearing a retainer's clothes.
None of these models is dishonest by design. They simply pay for different behaviours, and over a year the account follows the money. The table below puts all five side by side: how the fee is calculated, what it rewards, where it fits, and where it quietly breaks.
Incentives Side By Side
What each fee model pays your agency to do
Google Ads agencies typically charge one of five ways: a percentage of ad spend, a flat monthly retainer, performance fees, hourly billing, or a hybrid. Only the flat retainer decouples the agency's revenue from your ad budget. The other four tie the fee to your budget, your lead count, or the clock. Here is the contrast, row by row.
| The question to askdecision criterion | Spend-linked models% of spend · performance · hourly · hybrid | Flat retainerimg media's own model · no contract |
|---|---|---|
| How is the fee calculated? | A cut of your budget, a price per lead, billed hours, or a mix. In every case the fee moves with something other than your results. | One fixed monthly amount, agreed in advance. It does not change when your budget does. |
| What is the agency rewarded for? | Growing whatever the fee is tied to. Under percent of spend, "increase your budget" always raises the invoice, so that advice can never be fully neutral. | Staying worth renewing. With no contract, the fee has to re-earn its seat every single month.the wedge · revenue decoupled from your budget |
| Who does it suit? | Percent of spend can fit very large accounts where workload scales with budget. Performance fees fit offers where one lead's value is simple to define. | Businesses that want a predictable cost line and an agency judged on results, not on how big the budget grew.best fit · predictable cost, aligned advice |
| What is the hidden risk? | Budget creep, because raising spend pays the agency. Performance deals can chase lead volume over quality. Hourly rewards slow work. | In a slow month you pay the same fee. A retainer only earns its keep when results outpace it, so check that gap in the reporting.honest caveat · we name our own model's risk |
| How hard is it to leave? | Check the paperwork. Annual terms are common, and you can stay committed long after the results case has collapsed. | With no contract, you can leave any month. One client has renewed by choice for more than ten years; no clause held them.proof · 10+ year client review on this page |
| What does it typically cost? | [CONTENT NEEDED: typical Canadian and Quebec percent-of-spend bands and performance-fee ranges, confirmed by the operator.] Ranges vary widely by market. | [CONTENT NEEDED: operator-confirmed retainer starting range.] Until then, judge any quote by what it includes and what it rewards, not the sticker. |
The one line to carry into every agency call: only a flat retainer decouples the agency's revenue from your ad budget. That is the model IMG Media (a current Google Partner) runs on, which is why this page argues it openly. See how flat-retainer Google Ads management works.
The Incentive Problem
Under percent-of-spend, a bigger budget pays the agency, not you
When the fee is a cut of your ad spend, every dollar you add to the budget adds to the agency's invoice, whether your return improves or not. So when the advice is "scale the account", you cannot know if it serves your results or the fee. This is not about bad actors. It is the structure of the model, and even an honest agency on it has to argue against its own paycheque to tell you to spend less.
- "Raise your budget" always raises the agency's revenue, so the advice is never fully neutral
- Cutting wasted spend cuts the agency's own fee, the one fix the model punishes
- Flat or falling ROAS can still mean a growing invoice, because the fee tracks spend, not results
The Solve
A fee that re-earns its seat every month
With a flat retainer and no long-term contract, the incentive flips. The fee never grows with your budget, so the only profitable lever left is efficiency: better results from the same spend. Full disclosure: this is the model IMG Media runs on, which is why this page argues for it openly instead of pretending neutrality. You can check the math against any agency you shortlist.
IMG Media has supported us for more than 10 years. Impeccable service, great integrity, always listening and always ready to act.
The incentive math, in order
- The fee is fixed, so raising your budget earns the agency nothing extra
- The only way the fee pays off is squeezing more results from the same spend
- No contract means the retainer must re-earn its seat with monthly performance
- The retainer buys MaxV™: Search, PMax and Demand Gen with tROAS bidding, GA4/GTM/Enhanced Conversions tracking, and landing pages for paid traffic inside the method
Proof · Ten Years With No Contract Holding Them
IMG Media has supported us for more than 10 years. Impeccable service, great integrity, always listening and always ready to act. We highly recommend them.
Proof · Named Clients
The retainer is the cost. These are the returns.
-
Hitchweb · auto parts eCommerce
+25%
Revenue growth year over year. The fee stayed flat while the top line moved.
-
Beautysense · beauty eCommerce
+300%
ROAS improvement of over 300%. More return per ad dollar, not more ad dollars.
-
Comairco · HVAC
−39%
Drop in cost per qualified lead. Qualified, not raw, so the savings count.
-
Entreprises MST
3×
Qualified leads, tripled. Efficiency is the only lever a flat fee pays for.
All results earned under a flat-retainer, no-contract model. Figures operator-verified and approved for public naming. Judge any pricing model by the gap between the fee and numbers like these. [CONTENT NEEDED — client logo files for Hitchweb, Beautysense, Comairco, Entreprises MST]
Before You Sign Anything
The pricing questions buyers ask before they shortlist
Is a percentage of ad spend ever the right choice?
Rarely in your favour. It can feel fair at a small, fixed budget, where the percentage works out to a modest fee. But the structural problem never goes away: every dollar you add to your budget raises the agency's invoice, whether or not your results improve. If you do choose it, cap the budget in writing and judge every "increase your spend" recommendation against that incentive.
What should a monthly retainer actually include?
At minimum: full campaign management across the channels you buy, conversion tracking you can verify, and reporting tied to revenue rather than hours. A retainer that buys vague "management" is just hourly billing in disguise. For reference, IMG Media's flat retainer buys the MaxV™ method: Search, Performance Max and Demand Gen campaigns, tROAS bidding, GA4, GTM and Enhanced Conversions tracking, plus landing pages for paid traffic. [CONTENT NEEDED: one operator-confirmed sentence on the retainer's starting range.]
Are setup fees normal?
Common, and not automatically a red flag. Real onboarding work exists: tracking installation, account restructuring, landing page builds. Ask exactly what the fee buys and whether that work stays in your account if you leave. The pattern to question is a setup fee stacked on top of a percent-of-spend fee and an annual lock-in.
Should management fees come out of my ad budget?
No. Your ad budget should reach Google in full, and you should pay Google directly. When the fee is blended into one "marketing budget" number, you can no longer see how much money actually entered the auction. Ask for the two figures separately, every month, on every invoice.
Why do so many agencies push annual contracts?
Because the contract secures the revenue, not the performance. There are honest reasons to want runway (campaigns need time to ramp), but runway does not require a lock-in; a short notice period covers it. An agency confident in its work can let the results renew the file each month, which is exactly how a no-contract retainer forces it to operate.
Do performance-only deals work?
They sound perfectly aligned, but they rarely survive contact with reality. The agency controls only part of the outcome; your offer, your pricing and your sales follow-up stay with you. So pure pay-on-results deals push agencies toward easy-to-claim metrics, or toward only accepting accounts that would win anyway. Most quietly become hybrids. A cleaner test of alignment is the people and the model behind the fee, which you can check at about IMG Media.
Checklist
Six pricing questions to ask before you sign
Bring these to every pitch and ask for the answers in writing. An agency that hesitates on any one of them has already told you something the proposal left out.
By Martin Genesse, Founder & Strategy DirectorReviewed by Nathanaël Morin, Partner, Director of Technology[CONTENT NEEDED: publication date]12 min read
You now know what each fee model rewards. These six questions turn that knowledge into a vetting tool you can use in any pitch meeting, with any agency, including us:
- What exactly is the fee, in dollars, each month?
- Does the fee rise when my ad budget rises?
- What work is included, and what gets billed as extra?
- Who owns the ad account and the data inside it?
- What is the notice period if I want to leave?
- How will performance be reported, and what counts as a lead?
An agency confident in its work will answer all six in writing before you sign. Vague answers are not a communication gap. They are the terms.
Questions 1 and 2: the fee and the incentive behind it
A real answer to question one is a dollar figure, not a formula you have to calculate from your own budget. Question two is the incentive test this whole article has been building toward. If the fee climbs with your spend, you are looking at percent-of-spend mechanics, whatever the proposal calls them. Run the doubling test from earlier: ask what the fee would be at twice your current budget, in writing.
Questions 3 to 5: scope, ownership, and the exit
Question three protects you from a retainer that sounds complete but bills tracking fixes and landing-page work as extras. Compare the inclusions list against what good management actually includes before you judge any price as high or low.
Questions four and five decide how much leverage you keep after signing. You should own the ad account, hold admin access to the data, and be able to leave on short notice. The clauses to look for, and the ones to refuse, are covered in what to demand in your agency contract. Note that a genuine no-contract arrangement makes question five trivial. There is no notice period to negotiate because there is no lock-in to escape.
Question 6: reporting honesty
Ask what the monthly report will count as a result. If "leads" includes every click-to-call and form spam, the numbers will look great while the pipeline stays empty. The warning signs, and how to inspect an account yourself, are in audit your account for garbage spend.
Pricing is one chapter of the decision, not the whole of it. For the full process, from shortlist to first ninety days, work through the complete agency selection guide.
Next: who wrote this guide, and why we argue openly for the model we run on ourselves.
Written by the People Who Price This Way
Martin Genesse
Founder · Director of Strategy, IMG Media
Martin leads strategy at IMG Media, a current Google Partner agency focused exclusively on Google Ads (Search, Performance Max, Demand Gen) and creator of the MaxV™ methodology. He runs the agency on the same flat-retainer, no-contract model this article describes, so the incentive math here is lived practice, not theory. One client relationship under that model has now run more than 10 years. [CONTENT NEEDED: one-line professional bio with years in Google Ads and notable account scope]
Next Step
Get a straight answer on pricing
Ask what a flat retainer covers, or talk through your numbers with a Google Ads strategist. We work on a flat retainer with no contract, so the conversation costs nothing and commits you to nothing.
Get a straight answer on pricingFlat retainer · no contract · no pressure to sign anything