You’ve begun the evaluation process, meeting with prospective agencies and discussing their services. Undoubtedly one of the key factors you’ll be considering is cost. How much will we be paying and how are those fees calculated?
Unfortunately, what you’ll find is there is no single approach when it comes to agency pricing. And there’s a reason behind that. An agency must consider a multitude of factors, each unique to them - team construction, brand recognition, key competitors, overhead and ultimately their bottom line.
Despite this variability, there are some general pricing models you’ll want to understand before moving forward.
For our purposes, we’ll bucket each model under one of the following categories -
Let’s jump into it…
The easiest to understand but rarely seen. Agencies charge a set hourly rate for their work and submit an invoice, usually at the end of the month. Typically this is paired with time-tracking software (e.g. Harvest or Timely) which is updated & shared across teams.
Think of this as hourly pricing with guardrails, either on the scope or number of hours. You’ll see this model used quite often across other industries - web development, writing, design, etc. It’s not as common in the affiliate world simply because of the dynamism required to scale an affiliate program. For that reason, this approach only works if all other aspects of program management are covered by an existing resource. In those instances, layering on a fixed-rate project can help fill in any gaps.
Likely the most common model - an agency charges a flat rate, usually on a recurring monthly basis. The services are outlined in an SOW and assigned a cost. The contract will span 6-12-18 months and include a range of services wider than the previously discussed models. These services are typically performed by a full team - each individual fulfilling a specific role.
It’s exactly like it sounds…fees are calculated based on performance, often defined as the monthly revenue or ad-spend driven through the affiliate channel. The agency will take a percentage of that volume. For example, a brand sees $100K in monthly revenue and pays their agency 10%. They would have $10K in agency fees that month.
With this model, performance goes up, the agency charges more. Often times you’ll see a minimum monthly fee included with performance-based pricing as it ensures the agency makes enough to cover their basic expenses.
So what pricing model does Jamdesk adhere to? Well, we don’t have a one-size fits all approach to pricing since each client has a unique set of needs BUT more often than not we offer one of the following…
Our bread and butter (jam). We set a flat monthly rate that covers our basic expenditures. Think of this as - what is needed to keep the lights on? We then layer on a smaller performance incentive that ensures we’re motivated to drive the results a brand is looking for.
Over the years, it’s become more and more common for brands to bring affiliate programs in-house, which is a completely reasonable strategy. Yet sometimes the internal team, heck maybe even another agency, needs support in a super specific area. A good example here is recruitment. In that scenario, we will offer a project-based contract that has a designated # of hours and resources with expertise in onboarding new partners that fit a specific criteria. There’s a clear understanding of what the project is, who is working on it, and what defines “success”.
I want to close simply by stating the obvious - there is no “right” pricing model. Ultimately, the best approach is the one that creates the incentivizes and value needed to accomplish your goals. As long as there’s a clear understanding of services and alignment on key objectives, we feel that any of the above could lead to a successful partnership.