Solved: How Much Does a Marketing Agency Cost?

Hi there,

Thanks for reaching out!

I’m happy to give you some initial thoughts and guidance on this. It’s probably the most common question we get asked, and honestly, the answer is usually "how long is a piece of string?" But that’s not helpful to you. The reality is that pricing in this industry is a wild west, and what you pay is usually directly correlated to the risk you're willing to take and the expertise you need to actually move the needle.

I’ve popped some detailed thoughts below on how you should actually evaluate these costs, rather than just looking for a price list.

So, let's get into the nitty gritty. When you ask "how much does it cost," you're really asking two things: what is the agency fee, and what is the ad spend required to actually get results? If you pay an agency £500 a month but they burn £5,000 of your budget on the wrong audience because they don't know what they are doing, that agency actually cost you £5,500 for zero return.

I've detailed my thoughts on the different pricing structures we usually see, and what you should actually be looking for.

The Problem with "Cheap"

There are plenty of agencies or freelancers who will offer to run your ads for £300 or £500 a month. Tbh, whenever I see this, it worries me. To run a campaign properly—doing the deep research into your "nightmare" ICP (Ideal Customer Profile), writing the copy, designing the creatives, and optimising daily—takes time. If someone is charging £300, they have to stack 30 or 40 clients just to make a living. That means they spend about 15 minutes a week on your account.

In my experience, you can't really promise anything in paid ads as it's impossible to predict exactly how ads will perform. But I can promise that 15 minutes a week isn't enough to scale a business.

For example, we worked with a client in the Subscription Box niche. By dedicating proper time to strategy and structure, we achieved a 1000% Return On Ad Spend. You don't get those numbers by "setting and forgetting."

Understanding Pricing Models

You'll usually run into three main pricing structures. It's helpful to understand these so you know where the incentives lie.

1. Percentage of Ad Spend
This is the industry standard. Agencies charge usually between 10% and 20% of your total ad spend. The logic is that managing a £100k budget is harder than managing a £1k budget.
The downside: It can create a conflict of interest. If the agency tells you to spend more, are they doing it for your growth or their pay cheque? (We prefer to look at ROAS to keep this honest).

2. Fixed Retainer
This is a flat fee, usually tiered. E.g., £1,500/month for spends up to £5k. This is great for predictability. You know exactly what the bill is going to be.

3. Performance / Hybrid
Some agencies charge a lower base fee plus a bonus for every lead or sale. This sounds great on paper, but be careful. Agencies might incentivise "easy" leads that are low quality just to hit their numbers. We've seen this happen where lead volume goes up, but sales quality drops off a cliff.

It's Not Just About the Fee—It's About the Setup

Another thing to keep in mind is the "hidden" work. When we onboard a client, we don't just switch on ads. We look at the funnel. For B2B clients, we often have to tell them to delete the "Request a Demo" button. It sounds counterintuitive, right? But that button is often the highest friction point. We recommend offering value first—like a free audit or a strategy session—to earn the right to sell.

A cheaper agency won't do that. They'll just send traffic to a broken page, get zero results, and then blame the "algorithm."

For eCommerce, we often have to critique the store before we spend a penny. We look at performance metrics. Do you get lots of product page views but no adds to cart? That means your pricing or photos are off. No amount of ad spend fixes a bad product page.

Calculating Your Real ROI

Before you hire anyone, you need to know what you can afford to pay to acquire a customer. This is your CAC (Customer Acquisition Cost). To know your target CAC, you need to know your LTV (Lifetime Value).

The calculation is:
LTV = (Average Revenue Per Account * Gross Margin %) / Monthly Churn Rate

If your LTV is £10,000 (like in some of our B2B examples), you can afford to spend £3,000 to get a customer. Suddenly, paying an agency £2,000 a month to manage a campaign that brings in 5 customers a month (£50k value) is a no-brainer. But if you're selling a £10 item with no repeat business, the math changes drastically.

I've mocked up a calculator below so you can play with the numbers yourself. This helps answer "is it worth it?" better than I can.

What to Look For (Vetting Expertise)

When you are looking to hire, ignore the sales pitch. Look at the data. You want to see case studies in your niche.

For example, if you are in Software (SaaS), you need someone who understands that cost per click (CPC) isn't the metric that matters—it's cost per trial or demo. We've run campaigns for a SaaS client where we got 5082 trials at $7 each. That didn't happen by accident; it happened because we targeted the "nightmare" problems of their audience, not just their job titles.

If you are in eCommerce, you need someone who knows how to structure campaigns for scale. We helped a Cleaning Products company achieve a 633% return. This involved testing creatives, optimizing the store, and using a split-testing strategy within the campaigns.

Red Flags to Watch Out For:

• Guarantees: If they promise "Guaranteed 10x ROAS," run. Markets fluctuate. Honest experts promise process, not lottery numbers.
• No Case Studies: If they can't show you what they've done for others, they are practicing on you.
• Reluctance to Audit: We offer a free initial consultation where we review strategy and accounts. If an agency won't look at your data before quoting, they are just guessing.
• Requesting References too early: Tbh if someone asks us for references to call after they've already reviewed our case studies and gotten a free account review, it's an instant red flag. It signals deep mistrust.

The "Traffic" vs "Conversions" Trap

A big reason costs vary is the objective. Cheap agencies often optimise for "Traffic" or "Brand Awareness" because it's cheap to deliver. They can say "We got you 10,000 clicks!" But if those clicks are from bots or people who will never buy, it's worthless. You are actively paying the algorithm to find non-customers.

We usually recommend optimising for conversions (sales, leads). In developed countries, a signup or lead might cost £1.60-£15.00. In developing countries, maybe £0.33-£5.00. But the quality differs massively. We often advise clients to run separate campaigns for different regions to control this cost. A general "worldwide" campaign is a great way to waste budget on low-quality traffic.

Here is a breakdown of what we generally see in terms of costs per result (not agency fee, but ad spend) based on our data:

So, What Should You Do?

I’ve detailed my main recommendations for you below based on where you might be in your journey:

Ultimately, the cost of hiring an agency is an investment. If the agency knows what they are doing, they should be able to pay for themselves through the results they generate. But you have to do your homework. Look at the case studies. Ask the tough questions about their strategy.

If you're still scratching your head about whether your budget is viable or what specific platform you should be on, you might want to consider expert help to just look under the hood first.

We offer a free consultation where we can review your current situation and give you an honest assessment of what you should expect to pay to get the results you want. No sales pressure, just advice on whether we're a good fit or if you should look elsewhere.

Hope this helps!

Regards,

Team @ Lukas Holschuh