Almost every founder we talk to has the same blind spot when they’re evaluating marketing agencies. They scrutinise the case studies, ask about the team, check references, negotiate the rate. And then they sign a retainer that pays the agency the same amount whether the company’s pipeline doubles or stays flat…
That structural detail (how the agency gets paid) is the single most predictive thing about whether the engagement will actually move your numbers. And it’s the thing almost nobody asks about with the seriousness it deserves.
So let’s talk about:
- why pricing model matters more than the case studies,
- what the standard models actually incentivise,
- what the alternative looks like for SaaS companies and lead-generation-driven businesses.
The retainer-only model has an incentive problem
The most common agency pricing model in marketing is the flat monthly retainer. The agency bills, say, €10,000 per month. They commit to a defined scope of work. The contract runs 6 or 12 months. Pricing is decoupled from outcomes.
This model has a specific structural problem: the agency’s incentive is to keep the retainer, not to grow your pipeline.
Those two incentives sound similar. They aren’t. Keeping the retainer means producing work that looks like value – reports, dashboards, decks, deliverables, meetings.
Growing your pipeline means:
- making decisions that produce revenue (which sometimes means doing less work)
- killing channels that don’t pay back
- recommending you change your positioning
- or telling you uncomfortable things about what’s broken in your funnel
When the agency’s income depends on retention rather than performance, the safe path is to do the visible work and avoid the uncomfortable conversations. The unsafe path — the one that drives pipeline — is structurally penalised.
You can see this in how most retainer engagements end. The reporting is comprehensive. The dashboards are colour-coded. The agency talks about activity, optimisations, and “ongoing initiatives.” The pipeline number doesn’t move much. The contract gets renewed because cancelling feels riskier than continuing. Everybody is busy. Nobody is accountable.
It’s a structural failure. Asking an agency to prioritise your pipeline over their retention, when their income is tied to retention, is asking them to act against their own incentive. Some agencies do it anyway because they have integrity. Most don’t, because the incentive is too strong.
The project-based model has the opposite problem
The alternative most founders try (after a frustrating retainer experience) is project-based pricing.
Defined deliverable. Defined scope. Defined cost. Done.
This solves the “ongoing busywork” problem. But it introduces a different one: project-based pricing optimises for the deliverable, not the outcome.
The agency’s incentive is to ship the project to spec, on time, on budget. Whether the project actually produces revenue is somebody else’s problem. The campaign got launched. The website got rebuilt. The case studies got produced. None of it has to compound or generate pipeline for the agency to get paid.
This is fine for one-off work where the deliverable is the entire point – designing a logo, building a landing page, producing a video. It’s a poor fit for any work where the outcome matters more than the artefact, which is most of marketing.
The result: a stack of projects, each delivered competently, none of them tied to a number that matters to the company. You spent the budget. You got the deliverables. Your pipeline is still flat.
The hybrid model that aligns
The model that aligns the agency’s incentive with the founder’s outcome is hybrid: a base retainer that covers cost-of-service + a performance component tied to a commercial number that both parties can measure.
The shape varies by engagement, but the principle is consistent:
- the base retainer is meaningful enough that the agency can deliver real work without losing money
- the performance component is meaningful enough that doubling the pipeline number doubles the agency’s income
When this is structured well, the agency’s incentive is identical to the founder’s. The agency wins when pipeline grows. The agency loses when pipeline doesn’t. Every tactical decision — which channels to fund, what content to produce, when to recommend a change — gets made through the lens of “does this move the number we both get paid on.”
The conversations change immediately:
- The agency starts arguing for things that move pipeline even when those things produce less visible work.
- They recommend killing channels that don’t pay back, even though that reduces their own scope.
- They push the founder on positioning, even when the founder doesn’t want to hear it.
- They tell the truth about what’s working and what isn’t, because their own income depends on the truth being acted on.
This is what shared accountability actually means. Not a sentence in a sales deck. A specific structural feature of the contract that aligns the agency’s economic interest with the founder’s commercial outcome.
Why most agencies won’t take it
The honest reason hybrid pricing is rare in the agency market is that most agencies won’t agree to it. The reason they won’t agree to it is more telling than anything in their case studies.
An agency that’s willing to put a meaningful share of its income behind your pipeline number is an agency that believes its work moves your pipeline number. An agency that won’t is, by definition, not willing to bet on its own work.
There are three common reasons agencies decline hybrid pricing (only one of them is defensible):
- The defensible reason:
- the engagement scope doesn’t include enough levers to actually influence pipeline. If the agency is only running paid ads on a channel that’s a small part of the buyer journey, tying their income to total pipeline isn’t fair, because they don’t control most of the inputs. This is a real constraint and the right answer is to expand the scope or change the metric.
- The undefensible reasons:
- “it’s not how we work” (translation: we don’t want to take risk),
- “our other clients don’t ask for this” (translation: nobody has pushed us hard enough to change).
Neither of these are reasons. Both are admissions.
When evaluating an agency, the question to ask isn’t whether they’ll do hybrid pricing in theory. It’s whether they’re willing to structure your specific engagement so that meaningful upside and downside ride on a commercial number you both believe is the right one. The answer to that question tells you more than any case study, reference, or pitch deck.
What to ask before you sign
If you’re evaluating an agency or making an internal hire, the questions that actually matter are not the standard ones:
- What share of your income will move with our pipeline number?
- If the answer is “none” or “small,” everything else they say about partnership and accountability is marketing copy.
- What metric do you propose we share accountability on?
- The right answer is a commercial outcome – pipeline generated in revenue, qualified opportunities, closed-won. The wrong answers are leads, MQLs, traffic, impressions, or anything that can be high while revenue is flat.
- What’s the downside structure?
- Upside is easy, anyone will accept upside. The serious version of shared accountability has downside too. If pipeline doesn’t move, what does the agency or hire actually lose?
- What’s the term of the commitment?
- Hybrid pricing works when both parties have enough runway for the system to compound – usually 12 months minimum. Anything shorter doesn’t allow the model to demonstrate.
- Who owns the commercial outcome internally?
- If your own team isn’t structured around shared accountability, asking the agency or hire to be accountable to a number that nobody internal owns is theatre. The model only works when both sides are structurally bought in.
The conclusion
The pricing model isn’t a procurement detail. It’s the most predictive feature of whether the engagement will actually produce what you’re paying for.
Most founders skip this conversation because it feels awkward, because the standard market practice is retainer-only, and because the incumbent agencies they’re evaluating won’t entertain it. The cost of skipping the conversation is paying for engagements that look productive and don’t move your number, sometimes for years.
The right move is to make pricing model an evaluation criterion as serious as any other. Walk away from agencies that won’t share accountability on a commercial number. Renegotiate internal compensation so that your senior marketers have meaningful skin in the game. Stop paying for the appearance of work and start paying for the outcome.
We run an agency. We use the hybrid model. The reason isn’t generosity — it’s that we don’t want to be paid for engagements that aren’t producing pipeline, because that’s how agencies become the kind of vendor founders eventually fire. The model keeps both sides honest. It also produces meaningfully better results, which is the part that matters.
Whether you work with us or someone else, the pricing-model question is the one to push hardest on. The answer tells you whether the partnership will be a real one or a structural performance.
FAQ
What’s the typical structure of a hybrid agency pricing model?
Base retainer covering cost-of-service (typically 60-70% of total expected fee), plus a performance component tied to a specific commercial metric like pipeline generated, qualified opportunities created, or closed-won revenue. The performance component is usually structured as a multiplier – hit the target, earn the standard total; exceed the target, earn more; miss the target, earn less than standard.
Why don’t more agencies offer performance-based pricing?
Most agencies have built their business around retainer revenue and don’t want to take performance risk. Some legitimately can’t influence enough of the funnel to be accountable for pipeline. Many simply prefer the safer model. Agencies that proactively offer hybrid pricing are signalling that they believe in their own work and are willing to bet on it.
What metric should an agency be accountable for?
A commercial outcome the agency can actually influence – pipeline created in revenue, qualified opportunities, sales-accepted leads, or closed-won deals from the channels the agency runs. Not vanity metrics like leads, MQLs, traffic, or impressions. The metric has to be one that, if it moves, the business actually grows.
How do I know if my current agency is structurally aligned with my outcomes?
Look at how their income changes when your pipeline changes. If your pipeline doubles next quarter, do they earn more? If it halves, do they earn less? If the answer to both is “no” or “barely,” the alignment is rhetorical, not structural. The honest test is what happens to their income when your numbers change.
Should I restructure my internal marketing team’s compensation the same way?
Yes, if you want their behaviour to align with your commercial outcome. Equity for senior hires. Commission or bonus tied to net new pipeline or closed revenue for everyone. The exact structure varies, but the principle is the same: a meaningful share of compensation should depend on the commercial number you actually care about, not on activity metrics or “marketing-sourced” definitions that can be inflated.
