How PPC agencies can move from performance fees to advisory retainers

Key takeaways

• Advisory pricing moves you from selling hours to selling outcomes. You charge for strategic thinking and profit growth, not just managing ad spend and clicks.
• Value-based billing typically doubles your gross margin. Moving from a 15-20% performance fee to a 40-60% gross margin on advisory work transforms agency profitability.
• Consulting retainers create predictable, recurring revenue. This stabilises cash flow and funds investment in better talent and tools.
• The transition requires a change in client conversations. You must lead with business impact, not campaign metrics, to justify higher fees.
• Profit maximisation becomes your core service. Your focus shifts from increasing client ad spend to improving their overall return on investment.

What is a PPC agency advisory pricing model?

A PPC agency advisory pricing model is how you charge clients for strategic guidance, not just campaign execution. Instead of taking a percentage of their ad spend (a performance fee), you charge a fixed monthly retainer for your expertise. This model focuses on business outcomes like increasing profit, not just delivering more clicks or leads.

Think of it as the difference between a mechanic and a car designer. The mechanic (performance model) fixes what's broken for an hourly rate. The designer (advisory model) plans the entire vehicle for a project fee. Your role changes from campaign manager to commercial partner.

In this model, your fee is based on the value you create, not the budget you manage. A client might spend £50,000 a month on ads. A traditional agency takes 10-20% of that, earning £5,000-£10,000. An advisory agency might charge £15,000 a month to oversee the strategy, regardless of spend. Your income is no longer tied to their marketing budget.

Why do most PPC agencies get stuck on performance fees?

Most PPC agencies use performance fees because it's the industry standard and feels easier to sell. Clients understand "you spend money, we take a cut." The problem is this model caps your income, ties it to client budgets, and often leads to low-profit, high-stress work. You're rewarded for spending more of their money, not for making them more profitable.

Performance fees create a fundamental conflict of interest. Your incentive is to recommend higher ad spend. The client's incentive is to control costs. This tension makes every budget conversation difficult. It also means your revenue drops instantly if a client cuts their marketing budget, even if your strategic value remains high.

From a commercial standpoint, performance fees deliver terrible agency margins. A 15% fee on ad spend might sound okay. But after you pay your specialists, software costs, and overheads, your net profit is often in the single digits. This leaves little money to invest in growing your own agency. Advisory pricing, or value-based billing, flips this equation.

How does advisory pricing improve agency profit maximisation?

Advisory pricing improves profit maximisation by decoupling your revenue from client ad spend and linking it to the strategic value you deliver. This typically moves your agency's gross margin from 15-25% to 40-60% or higher. You earn more for doing higher-level work that has a bigger business impact.

Let's use real numbers. Agency A uses a 15% performance fee on a client's £30,000 monthly ad spend. They earn £4,500. Their team costs £2,500 to service the account. Their gross margin is 44% (£2,000 profit). Agency B charges an advisory retainer of £8,000 for the same client. Their strategic work requires a senior person costing £3,500. Their gross margin is 56% (£4,500 profit). Agency B earns more than double the gross profit.

This extra profit funds better talent, better tools, and agency growth. It also changes the nature of the work. You focus on profit levers beyond just PPC, like landing page conversion, customer lifetime value, and sales process alignment. This makes you indispensable. Specialist accountants for PPC agencies often see this shift as the single biggest factor in sustainable agency profitability.

What does a PPC consulting retainer actually include?

A PPC consulting retainer includes strategic oversight, performance analysis, and growth planning, not day-to-day campaign management. You provide the brain, not just the hands. Typical deliverables are monthly strategy sessions, quarterly business reviews, market analysis, testing roadmaps, and team training. Execution work is either included at a capped level or billed separately.

Your retainer agreement should clearly separate advisory services from implementation. For example, your £10,000 monthly retainer might include 10 hours of senior strategist time, a monthly deep-dive report, and a quarterly growth workshop. All actual campaign builds, ad copy writing, and bid adjustments are scoped as separate projects or handled by the client's internal team.

This structure protects your most valuable asset, your strategic thinking time. It also sets the right expectations. The client is buying your expertise to guide their overall direction. They are not buying an unlimited pool of execution hours. This is the core of a true consulting retainer model.

For a practical framework, take our Agency Profit Score to see how your current pricing model stacks up against industry benchmarks and identify where retainer value can be optimized against client profit goals.

How do you calculate your advisory retainer fee?

You calculate your advisory retainer fee based on the value you create for the client's business, not your costs or their ad spend. Start by estimating the profit increase your guidance will deliver. Then, charge a percentage of that value. A common range is 10-25% of the additional annual profit you expect to generate.

Here's a simple method. Work with the client to set a target. For example, "We believe our strategy can increase your net profit by £200,000 over the next 12 months." You then propose a retainer of £15,000 per month (£180,000 annually). This represents 9% of the extra profit. The client sees a direct link between your fee and their bottom line.

If the client can't quantify profit goals, use benchmark pricing. Research what other business advisors charge. For a mid-market client, £8,000-£20,000 per month is a common range for a true advisory engagement. Your fee should reflect your track record, the client's complexity, and the strategic scope. This is value-based billing in action.

How do you start the conversation about moving to advisory pricing?

You start the conversation by shifting focus from campaign metrics to business outcomes. Schedule a "business review" meeting, not a "PPC performance" meeting. Lead with questions about their profit goals, market challenges, and growth bottlenecks. Position yourself as a partner invested in their overall success, not just their Google Ads account.

Use data to bridge the gap. Show how your past work impacted their revenue or profit, not just leads. Say, "Our optimisation last quarter improved your lead-to-customer rate by 15%, which added roughly £50,000 in gross profit. Imagine if we applied that strategic thinking to your entire marketing funnel." This frames your value in commercial terms.

Propose the new model as an evolution. "To focus on driving this kind of impact, we're moving our key clients to an advisory partnership model. This gives you dedicated access to our senior strategy team to work on profit growth, while our execution team handles the day-to-day." Present it as an upgrade, not just a price change.

What are the biggest risks when transitioning pricing models?

The biggest risks are client pushback on price, scope confusion, and internal capability gaps. Clients used to performance fees may balk at a higher fixed fee. Your team might struggle to shift from doing to advising. Without clear boundaries, advisory work can bleed into unlimited execution requests.

To manage price pushback, build a compelling value story. Create a one-page document showing the return on investment. Compare your fee to the cost of hiring a full-time commercial director. Highlight the risk of not investing in strategy. For scope control, use a very detailed service agreement. Define what "advisory" includes and, crucially, what it does not include.

The internal gap is often the hardest. Your best campaign manager may not be your best strategist. You need people who understand business finance, not just Google Ads. Invest in training your team on commercial acumen or hire for this specific skill set. To benchmark your agency's strategic readiness for this transition, complete the Agency Profit Score and get insights across profitability, operations, and business model maturity.

What metrics should you track under an advisory model?

Under an advisory model, you should track client profit metrics, strategic initiative progress, and relationship health, not just click-through rate and cost per lead. Your dashboard shifts from advertising platforms to business outcomes. Primary metrics include client net profit, customer acquisition cost relative to lifetime value, and return on marketing investment.

Create a shared scorecard with your client. Track 3-5 key performance indicators that directly link to profit. For an e-commerce client, this might be average order value, conversion rate, and returning customer rate. For a B2B client, track sales qualified lead volume and deal close rate. Your monthly report discusses movement on these commercial metrics.

Internally, track your own agency metrics differently. Measure gross margin per client (your retainer fee minus the cost of your strategist's time). Track client retention rate and satisfaction scores. Monitor how much of your revenue comes from advisory retainers versus execution work. Aim for advisory retainers to become 60% or more of your revenue within 18-24 months.

How do you handle existing clients on performance fees?

You handle existing clients by introducing the advisory model as a new, premium service tier. Don't force a sudden switch. Instead, present it as an optional upgrade that offers greater strategic focus and business impact. Frame it around their growth goals, not your desire to change pricing.

Start with your best clients. Identify those with growth ambitions and a good relationship. Say, "We're launching a Strategic Advisory tier for clients who want to focus on profit maximisation. It includes quarterly business planning and dedicated senior strategist time. Would you be interested in exploring what this could do for your goals?" Make it an invitation, not a demand.

For clients who decline, maintain the existing model but be clear on its limits. You might say, "We'll continue with the performance fee model, which focuses on campaign management. For deeper strategic work, we'd need to scope that as a separate project." This gradually reshapes the relationship and opens the door for future change.

Can you mix advisory retainers with performance fees?

Yes, you can mix advisory retainers with performance fees, but it requires careful structure to avoid confusion. A common hybrid model is a lower fixed retainer for core strategy plus a smaller performance bonus tied to specific profit targets. This aligns incentives while providing you with stable base revenue.

For example, you might charge a £6,000 monthly advisory retainer. On top of that, you agree on a profit growth target. If you help increase the client's net profit by more than 20% year-on-year, you earn a 5% bonus on the extra profit. This keeps you invested in outcomes while ensuring you get paid for your thinking, regardless of result.

The key is to make the advisory retainer the foundation. The performance element should be a bonus, not the main fee. This protects your agency if a client's market has a bad year through no fault of your strategy. The retainer covers your expertise. The bonus rewards exceptional joint success.

Moving to a PPC agency advisory pricing model is one of the most powerful commercial decisions you can make. It transforms your agency from a cost centre vendor to a profit centre partner. You trade volatile, low-margin income for predictable, high-value revenue.

The journey requires courage to change client conversations and investment in your team's strategic skills. The reward is an agency that is more profitable, more valuable, and more fun to run. You spend less time grinding on ad platforms and more time solving business problems.

Getting your pricing right is a fundamental competitive advantage. If you want specialist support from accountants who understand the economics of PPC and performance marketing, start with the Agency Profit Score to assess your financial health and identify where advisory retainers could strengthen your margins.