What percent commission should I charge a marketing agency for doing their business development?
I am pitching to a social media marketing agency on me doing new business development for them and I am trying to determine how much to get paid and what % commission to charge. Has anyone had any experience with this type of arrangement?
Yvonne: Typical in-house costs run between 18% and 20% of Sales so as Michael, Rick, and Walter have indicated, ranges of 15% - 20% are common. Depending on the size of the agency, I have taken the tact of a retainer/draw against commission structure whereby I get paid a minimum monthly fee regardless of sales (to accommodate for the ramp time and to help normalize cash flow) with the monthly minimum being subtracted from the commissions earned (ie. I earn the greater of the commission or the monthly minimum but not both). I hope this helps with your thinking.
Rarely do I charge based on revenue generated, as there are too many variables which you cannot control.
I charge depending on the project and what I am to do. I also work on a one year contract, not month to month. Typical projects run $20k to $50k or more a year.
For the ones that want to pay based on commission, I reduce the monthly fee to $1,000 and go with 20% of all revenue generated.
Typically in the media, commissions are 15% of the revenue generated by a client on behalf of an agency. That's the amount the Agency is probably going to charge (maybe up to 20%-- whatever they can negotiate). So, if the client spends $100, the agency is keeping $15-20 as its profit. To be realistic about your compensation for bringing in a client, it helps you to know what is potentially available. So, if you tell them you want 20% of THEIR gross, that might fly. The danger here is thinking that you would get a percentage of the gross revenue (the $100) from the client, which as you can see won't work. If you can accept some percentage of the agencies actual revenue, and they agree to pay it to you, then you have something.