This form of agreement is where the agency and the marketer agree a price in advance for particular services, and the agency costs and profit are not transparent to the marketer.
- Fixed project fees are common but require clearly defining the requirements of the project up front.
- Where the project type is regularly undertaken, then historical data can be used to define the agency resources required and the appropriate cost.
- It is often tempting to set the fixed project fee based on the percentage of the budget, but without accurate historical data it could be well over or under compensating the agency.
- Also fixed project fees can have variable components outside the fixed fee such as production, which would be added as a mark up or an additional estimated resource fee.
- Easy to implement based on budget and historical costs
- Agency manages split with third parties and retained revenue
- Agency works within the fixed cost to deliver outcomes
- Lacks transparency
- Difficult to know if paying too much or too little