In the world of digital lead generation, there are 4 standard models for payment that cover the vast majority of contracts between client and supplier (lead receiver and lead generator).

Here’s an overview of these 4 models, including the Pros and Cons of each – for both client and supplier.

1) Monthly Retainer Based on Fixed Fee

The classic digital marketing and advertising lead generation fee model. Client and supplier agree a monthly fee for the marketing services to be provided. The client paying for ad spend directly – eg to Facebook or Google. The supplier making their fee however many leads are generated.

Example:

Ad Spend = variable

Retainer Fee = £2000 per month ongoing (regardless of ad spend and number of leads generated)

Pros 

Lead Receiver (Client)

  • Fixed and predictable cost of investment in marketing services 

Lead Generator (Supplier)

  • Guaranteed, fixed income per month
  • Client pays ad spend

Cons 

Lead Receiver

  • No guarantee of number of leads
  • Possibly no incentive for supplier to put best efforts for maximum leads
  • Usually tied-in to a minimum number of months 

Lead Generator

  • No additional reward for excellent results

2) Monthly Retainer Based on % of Ad Spend

A variation on the fixed fee monthly retainer, with the total ad spend for the month being worked out in advance. This to be paid directly by the client. Supplier receives their fee as a % of this agreed ad spend. (Most commonly in the range 15% – 30%).

Example:

Month 1 Ad Spend = £10,000 per month

Month 1 Retainer Fee = 20% = £2000 per month (regardless of number of leads generated)

Month 2 Ad Spend = £8000 per month

Month 2 Retainer Fee = 20% = £1600 per month (regardless of number of leads generated)

Pros 

Lead Receiver

  • Fixed and predictable cost of investment in marketing services
  • Management fee reduces when ad spend reduces 

Lead Generator

  • Guaranteed income per month
  • Client pays ad spend

Cons 

Lead Receiver

  • No guarantee of number of leads
  • Possibly no incentive for supplier to put best efforts for maximum leads
  • Usually tied-in to a minimum number of months 

Lead Generator

  • Possible variable income with changing monthly ad spend amounts

3) Commission Fee Per Lead (Outside Ad Spend)

A more performance-based model, with the client paying the ad spend directly as with the retainer models. However, the supplier’s fee is based on a pre-determined fee per lead generated. Commission payment made in advance for a set number of leads.

Example:

Ad Spend = variable (paid by client)

Commission Fee = £10 per lead = £2000 for 200 leads

Pros 

Lead Receiver

  • Fixed and predictable cost of investment in marketing services
  • Pre-determined number of leads
  • Supplier incentivised to provide leads ongoing or lose out in future 

Lead Generator

  • Can increase income based on delivering more leads
  • In best interests to keep improving skills for higher income
  • Client pays ad spend

Cons 

Lead Receiver

  • Ad spend may be higher than would like 

Lead Generator

  • No guaranteed monthly income as client may decide to cancel or reduce the number of leads ordered 

4) Pay Per Lead

An entirely performance-based model for lead generation. The client and supplier agree a pre-determined amount to pay per lead. The supplier covers the cost of the ad spend within this amount. Payment made in advance for a set number of leads.

Example:

Ad Spend = variable (paid by supplier)

Fee Per Lead = £80 = £8000 for 100 leads

Pros 

Lead Receiver

  • Fixed and predictable cost of investment in marketing services
  • Pre-determined number of leads
  • No surprises from higher than anticipated ad spend

Lead Generator

  • Can increase income based on delivering more leads
  • In best interests to keep improving skills for higher income
  • Could potentially make more per lead than the commission-based fee

Cons 

Lead Receiver

  • Higher up-front payment to supplier

Lead Generator

  • Risk of not making much on top of the ad spend so potential low net income
  • No guaranteed monthly income as client may decide to cancel or reduce the number of leads ordered

Summary

Of the 4 different payment models outlined above, it’s clear that each has their own merits based on different situations. For myself as a supplier of leads, it might look like a predictable income based on one of the fixed fee or % of ad spend retainer models would provide the ideal method of being paid.

However, I’m much more interested in delivering a high quality service, where results are the key to rewards – ensuring I remain at the top of my game and thus can retain you as a client for as long as possible. Which is why my preferred payment models are actually 3 or 4 – enabling a true ‘win win’ situation, where you receive a large number of leads and I receive multiple payments ongoing. (Rather than a simple monthly fee, with no particular incentive for me to deliver a larger number of high quality leads).

Lead Generation Service

If you’re interested in exploring the possibility of me generating leads for you using any of the payment models outlined above – get in touch for a quick chat to see if we’d be a good fit for working together.