retainer or commission: how to pay a marketing agency.

Agencies charge in three ways: a fixed monthly retainer, a commission on the sales they help produce, or a mix of the two. A retainer puts the risk on you, commission puts more of it on the agency, and a hybrid splits it. The right choice depends on your cash flow, how well your leads turn into sales, and whether you can trace a sale back to its source.

the three models

Retainer. You pay a fixed fee every month for an agreed scope of work. The fee does not change with results. This is the most common of the agency pricing models, and the simplest to budget.

Commission. You pay little or nothing upfront and the agency earns a share of the sales that come from its work. This is what most people mean by a performance based marketing agency. A pay per lead deal is a close cousin: you pay a set price for each lead that meets an agreed standard, instead of a share of the sale.

Hybrid. You pay a smaller fixed fee and a commission on top. The agency covers part of its cost from the fee and part from results.

who carries the risk

With a retainer, you do. If the work produces few leads, you still pay the full fee, and your only protection is the right to leave.

With commission, the agency carries the cost of the work until sales arrive. If nothing sells, it earns little. That is the appeal, and it is also why the terms around it matter so much.

A hybrid sits between: you carry the fixed fee, and the agency carries the rest.

what each model rewards

Every fee model pushes an agency toward something. Knowing which way helps you spot the drift.

• Retainer can reward activity. The fee arrives whether or not the work lands, so reports full of posts, emails and impressions can stand in for sales. Ask to be judged on leads and sales, not volume of output.
• Commission can reward the easy win. An agency paid on results may chase cheap volume, favour leads it knows will close, or lose interest in harder segments you actually want.

Neither is dishonest by nature. Both need a contract that measures the right thing.

why commission deals need longer terms

An agency working for commission spends real time and money before it earns anything. It needs a longer minimum term to recover that cost, otherwise one slow quarter would leave it out of pocket and you free to walk away with the work done.

It also needs a commission window. If a lead is delivered in month two and buys in month nine, the agreement should say whether the agency is still paid for it, and for how long. Without a stated window, both sides will argue about it later.

Expect the longer term. A commission deal that asks for no minimum term is either not carrying much risk or has hidden it elsewhere.

the precondition: define a lead and track the sale

No commission deal works without two things in writing.

First, a definition of a qualified lead: who counts, what they must have said or done, and who decides. Without it, the agency and you will argue over which leads count. Our guide to what is a qualified lead covers how to write one.

Second, tracking from lead to sale. You need to record where each customer came from and which sale belongs to which lead. If you cannot do that today, fix it before you sign. Commission on sales you cannot trace is a dispute waiting to happen.

how to choose

	Retainer	Hybrid	Commission
Upfront cost	Highest	Lower	Lowest
Who carries risk	You	Shared	Mostly the agency
Minimum term	Short	Medium	Longest
Needs sale tracking	Helpful	Needed	Essential
Risk to watch	Activity over results	Disputes over which sales count	Chasing easy volume

Four questions settle most cases:

1. Cash flow or margin? If cash is tight, a lower fixed fee helps now. If margin matters more, a retainer is usually cheaper once leads convert well.
2. How well do your leads convert? If you close a high share of good leads, commission costs you more over time. If you close few, commission protects you.
3. How long is your sales cycle? A long cycle stretches the commission window and delays the agency’s pay. Expect a longer term, or a retainer.
4. Can you track source to sale? If not, start with a retainer and build the tracking first.

what to ask in any contract

Whatever the model, ask for a lead target you can measure, a clear way out if the agency misses it, and a written definition of what counts as a lead. A fee model is only as good as the contract around it.

At Brellix, the work is identical under all three models. A lower fixed fee means a longer minimum term and a commission on sales from the leads we deliver. You can compare the three in our plans, and see how each lead is screened and handed over on the lead generation service page.