There are many different agency fee models. The major ones are listed below (In no particular order). But what is the right agency fee model for you? Be it for a media agency, creative agency, a digital agency or more. The TrinityP3 Agency Fee Decision Tree will help you find the right model.
1. Retained Resource Plan (Top-down Methodology – Not tied to a pre-agreed ‘scope of work’).
2. Retained Resource Plan (Bottom-up Methodology – Tied to an agreed ‘scope of work’ with clearly defined deliverables).
3. Hybrid Agreements – Part retainer for key services, with all other services acquired on a production estimate basis.
4. Value-Based Remuneration – Focuses on value of outputs or outcomes rather than inputs (head hours).
5. Estimated Project Agreements – All services acquired based on being estimated and approved on a project by project basis.
6. Fixed Price Model (Creative) – Agency paid a fixed price and agreed project fee.
7. Commission or Service Fee Based Agreements – Pay commission or service fee based on certain types of expenditure or costs.
8. Disclosed Agreements (Media) –– Agency costs and profit are transparent to the marketer.
9. Non-Disclosed Agreement (Media) – Agency costs and profit are not transparent to the marketer.
10. Production Mark-ups or Service Fees – Production fee paid in lieu of head hours..
11. Performance Based Models – Remunerate the agency based on pre-agreed performance metrics.
Through our extensive consulting work we have identified the various agency fee models above. While this is not a complete list, as there are numerous hybrid variation, we believe this covers the vast majority of mainstream fee types for media and all other agencies.
We trust you will find this informative and helpful in shaping your views on agency fees.