Ask what happens to their income if you cut ad spend in half. If the answer is nothing, the
fee is neutral. If their revenue falls, you are paying someone to grow your budget. Then ask
what is inside the fee and what you pay separately, because that gap is where most quotes
become incomparable.
The short version
- The test question: what happens to your income if I halve my ad spend?
- A flat fee stays neutral. Ours runs $800 to $2,400 a month by product count.
- Separate the fee from pass-through costs before comparing any two quotes.
- Ad spend is not the agency's money. It should never be presented as their performance.
- Ask who controls the budget and what they can raise without asking.
The comparison problem
I run Flapen with 50 operators managing about 70 brands. Sellers rarely get misled on
price. They get misled on what the price includes, which makes two quotes impossible to
compare side by side.
| Item | Usually in the fee | Usually paid by you |
|---|---|---|
| Strategy and account management | Yes | |
| Listing creation and optimization | Yes | |
| Campaign management | Yes | |
| Creative production | Varies sharply | Varies sharply |
| Sourcing and quality inspection | Varies | Varies |
| Your advertising budget | Never | Always |
| Amazon seller fees and FBA fees | Never | Always |
| Inventory and freight | Never | Always |
| Trademark filing | Rarely | Usually |
Two quotes can differ by a factor of three and be identical in real cost once creative and
sourcing move columns. Ask for a written scope showing both columns before you compare
anything.
The questions, in order
- What happens to your income if I halve my ad spend? The neutrality test.
- What is in the fee, and what do I pay separately? Get both columns.
- Is the fee tiered, and by what? Ours is by product count, not by spend or revenue.
- What can you increase without my approval? Budget authority, in writing.
- What happens if my ad spend grows five times? Does the fee move, and why would it?
Question five catches the structural difference that matters over years. A percentage-of-spend
arrangement grows with your budget indefinitely, for work that has not become proportionally
harder. A flat fee tiered by product count grows when your catalog grows, which is at least
tied to actual scope.
Why ad spend is not a performance metric
Worth stating plainly because proposals blur it constantly.
Your ad budget is your money, deployed on your behalf. It is not agency revenue, it is not
evidence of their contribution, and total spend managed is not a credential. An agency
describing itself by the ad spend it manages is describing the size of its clients.
The metric that tells you anything is cost of customer acquisition, and after that
contribution margin after ad spend. Ask for both by channel. If a proposal leads with spend
managed and does not mention either, that ordering is the answer.
Budget authority
Settle this in week one rather than during the first disagreement.
Agree a monthly budget ceiling, a band inside which the agency can move without asking, and
what triggers a conversation. Reasonable structures let the team shift allocation between
campaigns freely while requiring approval to raise the total.
The reason this matters more under some fee structures than others is obvious once stated. If
their income rises with your budget, budget authority is a commercial decision as well as an
operational one. Under a flat fee it is purely operational, which is one of the quieter
advantages of that structure.
What most agencies will not tell you
Percentage-of-ad-spend pricing is popular because it is easy to sell, not because it works.
It sounds performance-linked. It is linked to volume of your money moved, which is a
different thing entirely.
The conflict is invisible in a good quarter and decisive in a bad one. When a product is
failing, the correct advice is usually to cut spend and fix conversion first, because if your
conversion rate is low no amount of ad spend fixes it. Under a percentage model, giving that
advice costs the agency money every month it is followed.
The second thing: a low headline fee attached to a percentage of spend is almost always more
expensive over two years than a higher flat fee. Model it at the ad spend you expect
eighteen months out, not at today's number.
Related answers
- Fair Amazon agency pricing models
- Alternatives to pay-for-performance Amazon management
- Month-to-month vs annual Amazon contracts
- Amazon beginner budget: agency vs DIY tools
- Hiring an Amazon agency: the complete guide
Halve your spend and our invoice does not move. Pricing is published at Flapen.
