Pay-Per-Performance Agency Model

Alex Hormozi shares how he transformed a traditional agency retainer model into a performance-based pricing model for lead generation services. The model combines an upfront setup fee with ongoing pay-per-performance pricing.

Key Components:

• Initial Setup Fee:

  • Charge $5,000 upfront (equivalent to typical 3-month retainer value)
  • One-time payment to cover initial setup costs
  • No recurring monthly fees

• Performance-Based Pricing:

  • Only charge when leads convert to in-person visits
  • Client covers ad spend
  • Payment per show-up based on pre-determined rate

• Pricing Research Insights:

  • Traditional retainer model: $1,500/month
  • Flat rate service: Customers willing to pay $300-4,100/month
  • Pay-per-show model: Customers willing to pay 4x more than flat rate

• Benefits:

  • Agency gets typical LTV upfront in cash
  • Clients see results within first 30 days
  • Easier to sell due to reduced risk for client
  • Cash flow positive from day one
  • Ongoing revenue from successful lead conversion

• Target Market:

  • Small business B2B
  • Local service businesses (example: chiropractors)
  • Lead generation focused businesses