What is an appropriate fee structure for a PPC management firm? Most of the ones that I talk to want a flat media fee of around 15%. I don’t think that’s a valid pricing structure. I’d prefer to pay a flat monthly fee with a usage charge based on clicks, does that make sense to anyone?

While that makes sense most companies will charge a percentage based on your ad spend in addition to a setup fee to do the intial research related to keyword and ad creation. Its pretty standard.

Yes, the standard is to charge a percentage of ad spend, probably because that was the pricing model used by offline advertising agencies for traditional media buys.

I personally believe that pricing structure makes no sense for two reasons. First, there is little correlation between what an advertiser chooses to spend and how much time it takes to create and manage their account. The smaller and stricter the budget, the more challenging and time-consuming it is to manage.

Second, I consider charging a percentage of ad spend to be a major conflict of interest. As an advertiser, do you really want to offer an incentive to increase spending?

I propose that the fairest and most productive payment model would be a percentage of increased PROFITS the consultant can produce.

As usage of Analytics becomes more sophisticated and accurate this may become a common method of pricing. It would be fairly rare now.