Compensation - Percentage of gross revenue?

[here to learn]

Hello all, I'm a rookie to this and need some help as far as determining what compensation should be for managing a ppc account. Can you tell me what the top end of the "going rate" is as far as the "percentage of gross revenue" is concerned?

Thank you

[10minutes]

Hello HTL,

I think you'll find that there will be many ways of billing a client for managing PPC.

Many companies have flat rate monthly billing regardless the campaign budget but I've found those companies can get away with such standard prices because of the volume of clients they manage.

Other companies will charge a percentage based on monthly budget allocated for each PPC account (Adwords, YSM, Adcenter or other).

I have one client that has PPC managed by another company and she pays them $700 a month. Out of that they take $350.00 for service fee's which means she only really has a PPC budget each month of $350. That is 50% of her budget.

The choice is ultimately yours of course. Try to figure out how much time you'll be spending on the account and base your pay scale around that. Larger budgets tend to take more time, many keywords, many ad variations, landing pages and so on so make sure you are paid what your worth.

John Jones

- 10 minutes of SEO, SEM & Internet Marketing

[here to learn]

thank you sir, you're response is apprciated.

[Kim@ASM]

The three most popular ways are:

- percentage of ad spend (I think 15% is the most popular)
- monthly flat fee (depending on the size of the account)
- hourly rate

[here to learn]

thank you kim. the info i've gotten on this board as well as from asking friends leads me to the 15%. i appreciate your response.

[Perfmark]

While the percentage of ad spend is a common business model, and 15% a standard rate, I would caution you against the model in the sense that it is not focused on delivering results. Since the agency or the consultant is paid its fee no matter what the results are, they will not be motivated enough to deliver what you're looking for, and in this business, like in many others, the 80/20 rule often applies. I.e. 80% of your conversions may come from 20% of your keywords only. I suggest therefore a performance based model whereby you set a target price for conversions (or actions) and get the agency to be paid if it delivers those conversions. This is the model that our agency offers.