Frequently asked questions
How do digital marketing agencies typically structure their fees?
The most common structures are a flat monthly retainer for a defined scope, a percentage of ad spend for paid media management (typically 10 to 20 percent with a minimum fee), an hourly rate for strategy and consulting, and project fees for one-off work like website builds or campaign launches. Most agencies combine a base retainer with a percentage-of-spend model for accounts with significant ad budgets, ensuring the fee scales with the volume of work required.
Should media spend be included on the agency invoice or billed separately?
This depends on who controls the ad accounts. If the agency funds ad spend on behalf of the client and seeks reimbursement, include it as a separate pass-through line item on the invoice with supporting platform receipts. If the client funds their own ad accounts directly, the invoice covers management fees only. Mixing service fees and media spend without clear separation causes confusion during client budget reconciliation and should always be itemized distinctly.
What is a fair agency management fee for paid advertising?
A percentage-of-spend model ranges from 10 to 20 percent, with most agencies charging 12 to 15 percent for established accounts. A minimum monthly fee of $750 to $1,500 applies when spend is low. Flat-fee management is also common, ranging from $750 for small accounts to $3,000 or more for complex multi-channel campaigns. Newer accounts often require more setup work, so some agencies charge a higher rate or a one-time onboarding fee in addition to the monthly management fee.
How should agencies handle invoicing when a client pauses campaigns?
Define a pause policy in your contract. Many agencies charge a reduced retainer, typically 25 to 50 percent of the normal fee, during a pause to cover account maintenance, monitoring, and the cost of holding the client's spot in your capacity. If a client pauses for more than a defined period such as 60 days, some agencies treat it as a contract termination requiring a new onboarding when the client restarts. Whatever policy you choose, put it in writing before it becomes an issue.
Do digital marketing agencies charge sales tax on their services?
Tax obligations vary by jurisdiction and service type. In many US states, marketing services are not subject to sales tax, but digital advertising or software-as-a-service may be. In countries with VAT, digital services are generally taxable. If you operate across multiple states or countries, your obligations may vary by client location. Work with a tax advisor to understand when and where to apply tax, and note tax registration numbers and rates clearly on invoices to comply with local requirements.
How do I invoice a client who wants to end their agency contract early?
Your contract should specify a notice period, typically 30 to 60 days, and whether early termination carries a fee. Invoice for all services rendered up to the end of the notice period. If the client has prepaid for services not yet delivered, issue a credit or refund for the unused portion according to your contract terms. Document all work completed and hand over assets including ad accounts, creative files, and analytics access as part of the offboarding process, and only after final payment is confirmed.
Can I use this template for free?
Yes. Tidybill's free plan lets you create up to 5 invoices per month at no cost, with no credit card required. You can use the Digital Marketing Agency invoice template straight away after signing up.