Percent-of-spend is a conflict of interest.

Percent-of-spend pricing has a problem that everyone in the industry knows and nobody puts in the contract.

When your agency is paid 20% of what you spend, every dollar you spend is twenty cents to them. Every dollar you save is twenty cents they don't get. They are paid to grow your budget. You are paying them to grow your business. Those are usually the same direction. Not always. And the moment they diverge, you find out who the fee is really for.

Where it diverges

It diverges on the search-term report. Pruning wasted queries shrinks spend. Shrinking spend shrinks the fee. Nobody skips pruning on purpose, but it's easy to get to it next week.

It diverges on the recommendation to scale. "We're seeing strong signals, we'd recommend increasing budget 30%." Sometimes true. Sometimes the signals are Google's recommendations tab, which exists to make Google money, forwarded by someone whose fee just went up 30%.

It diverges on Performance Max and Advantage+. Set it, let the algorithm spend, report the blended number. Less work, more spend, same fee. I wrote about what those campaigns quietly do to a strategy here and here.

And it diverges on the hardest conversation in the business: "This channel isn't working for you, spend less." I have said it to clients. It is easier to say when the sentence doesn't cut your own pay.

Why it survived this long

Percent-of-spend survived because it was roughly fair. Big accounts do take more work. Fifteen ad groups take longer to manage than three. The fee scaled with the labor, more or less, and the labor was real.

That last part is what broke. The labor that scaled with spend was production work: more keywords to mine, more ads to write, more reports to build. AI now does that part in minutes. A $50,000 account and a $10,000 account need about the same amount of senior judgment each month. They do not need five times the pasting, because nobody is pasting anymore.

So the fee still scales with your spend. The work no longer does. The percentage that used to buy labor now buys margin.

I still charge a percentage. Here's why it's different.

I'm not going to pretend I found a pure model. I charge 10–15% of spend, with a flat minimum for smaller accounts. A percentage is still the simplest thing to explain and the easiest thing to budget.

Two things make it different in practice.

First, the number is low enough that it's a fee for judgment, not a fee for headcount. There's no layer to fund. I'm not paid to keep four account managers busy, so I'm not tempted to keep your spend high to keep them busy.

Second, it's month to month, and the accounts are yours. If I tell you to cut a channel and your spend drops by half, my fee drops by half. That's a real cost to me, and it's why the advice is worth something. An agency with a 12-month contract and a spread to protect doesn't carry that cost.

The check you can run yourself

Open your Google Ads account. Go to the change history. Filter the last 90 days.

Count the changes that reduced spend or cut something: negative keywords added, ad groups paused, budgets lowered, campaigns ended. Then count the changes that added spend.

A well-run account has plenty of both. An account managed by the fee has one kind.

If you want a second opinion on your account from someone who isn't paid to grow it, I'll write you a free audit within 24 hours. No call required. Send your website and I'll email it back.