A pay per lead agency earns money each time it delivers a lead. That sounds fair, but it means the agency is paid for volume, while you are paid for signed jobs. The gap between those two is where the risk sits, and your contract decides who carries it.
This guide compares the three common ways an agency charges, shows who carries the risk in each, and gives three questions that test whether the incentives line up. It does not rank agencies. If you are still deciding between an agency and running ads yourself, start with a lead generation agency or doing it yourself.
Three ways an agency can charge
- Retainer. A fixed fee each month for running your marketing, whether or not leads arrive.
- Pay per lead. A fee for each lead delivered, set by the agency’s own definition of a lead.
- Pay per job. A fee when a lead turns into signed work, or a share of the job value.
Some agencies mix them: a setup fee plus a per-lead rate. A few charge per homeowner, after checking each one. That is a form of pay per lead where the word “lead” is tied to checks the agency has done. We come back to it at the end.
Who carries the risk in each
| Model | You pay for | Who carries the risk of a poor lead |
|---|---|---|
| Retainer | Effort and time | You. The fee is the same if the leads are poor. |
| Pay per lead | Each lead delivered | Mostly you, unless the contract says what counts as a lead and how bad ones are replaced. |
| Pay per job | A signed job | The agency. But your quoting and follow-up also decide the result, so expect tight conditions. |
No model is free of risk. The question is who is left holding it when a lead is bad, and whether the contract says so in plain words.
How a pay per lead agency can profit when quality falls
Under pay per lead, an agency earns more by sending more leads. Quality only matters to its income if you cancel, or if poor leads cost it refunds.
Think through how an agency might behave. It can widen the targeting. It can run a form that is easy to fill in. It can count a missed call or a form with a half-filled number as a lead. Each of these raises volume and lowers quality, and each raises the agency’s income if the definition allows it.
This is an example only. An agency sends you 20 leads and you win 2 jobs. Another sends 10 and you win 3. The first looks busier. The second is better for you. If you only look at the invoice, you will not see that.
Always work out what a lead is worth to you, using your own numbers. What a lead is worth to your business has the worksheet.
Three questions that test the incentives
- “What exactly counts as a billable lead?” Ask for it in writing. Look for: a working phone number, a real person, the job type, inside your area. If a missed call or any form submission counts, the agency can make volume cheaply.
- “What happens when a lead is bad, and who decides?” You want a clear process: you report within a set time, and the lead is refunded or replaced. If the agency alone decides, it is marking its own homework.
- “Who else gets this lead?” A lead sold to several businesses is cheap to produce and hard to win. Our guide to types of leads explains the terms. Get the number in writing.
An agency that answers all three directly is worth talking to. One that avoids them is a poor sign.
Check a pay per lead invoice against your log
Under pay per lead, the invoice is where the definition meets reality. Once a month, put the agency’s list of billed leads next to your own call log and mark each one:
- Reached, or never answered after your set number of tries
- A real job you do, inside your area
- Asked for a quote, or says they never asked
- Quoted, and signed
Any lead that fails the contract’s own definition goes back with the reason and your call times. If the agency will not take any back, you have learned what the definition is worth.
Contract points to read twice
Three clauses matter most under this model: a minimum monthly spend or lead volume, the reporting window for bad leads, and whether the rate can change without your agreement. The full list of terms to read slowly is in how to choose a lead generation company.
In Australia, unfair contract term rules can cover a standard form contract with a small business. The ACCC says only a court can make the final call, and a term it finds unfair is void. Its examples include terms that let only one party end the contract or change its terms. Read the ACCC page on unfair contract terms for small businesses and check it for your own situation. This is not legal advice.
Where pay per homeowner fits
PreBuild Systems charges per homeowner, not per form fill. We ring every homeowner who enquires, check six things, and send each one to one business only. There is no retainer and no lock-in, and a homeowner who was not who we said is replaced. See how it works. The price is set by trade and job size and given in writing on a call, so we do not publish it here.
Whoever you choose, the three questions above still apply.
Common questions
How does a pay per lead agency make money?
It earns a fee each time it delivers a lead as the contract defines it. The definition matters more than the rate.
Is pay per lead cheaper than a retainer?
Not by default. Cheap leads that do not turn into jobs cost more per job than dearer ones that do. Compare cost per signed job.
What is a fair lead refund policy?
A set window to report, clear reasons a lead can be refused or replaced, and a decision process you can see.
Can I find a pay per lead agency in Australia that has no lock-in?
Some offer it. Ask. If a minimum term is there, find out what happens when leads are poor.