Three pricing models cover almost every performance marketing contract signed in Mumbai this year. Each shifts risk differently between agency and client, and each has a spend range where it stops making sense. Here is what each one actually costs, in rupees, by tier.
Flat monthly retainers run ₹40,000 to ₹3,50,000+ depending on channel count and spend, and are the default below roughly ₹25,00,000 a month in media. Percentage-of-spend runs 5 to 25% of monthly ad budget, falling as spend rises, and suits larger, stable accounts. CPA or cost-per-lead pricing is rare and works only for lead-generation categories with clean, provable tracking; expect a floor retainer plus a per-outcome fee, not pure commission. All three exclude ad spend and attract 18% GST on the management fee.
Almost every contract in this market is a variant of one of three structures. They differ in who bears the risk when a campaign underperforms, and that, more than anything else, is what decides which one you should sign.
| Model | How it's billed | Who bears the risk | Best suited to |
|---|---|---|---|
| Flat retainer | Fixed monthly fee, independent of spend or results | Client bears performance risk; agency's downside is reputational | Most accounts, especially new or unproven ones |
| % of ad spend | A percentage of monthly media budget, billed alongside it | Shared; agency income scales with budget, not efficiency | Large, stable accounts where media grows over time |
| CPA / cost-per-lead | A fee per qualified lead, sale or acquisition, often with a floor | Agency bears the most risk; client pays only for outcomes | Lead-gen categories with clean tracking and a written lead definition |
A flat monthly fee for a defined scope of work, unrelated to how much you spend on media or what it returns. It is the most common structure in Mumbai because it is the easiest to plan around on both sides, and it is what most agencies default to unless you ask for something else.
A retainer is a poor fit when the scope is genuinely a one-off, such as a single campaign launch or a tracking audit, where a project fee is cleaner than an ongoing monthly commitment. It is also a weak fit when spend is large and growing fast, since a fee locked at signing stops reflecting the actual workload within a few months either way.
The agency's fee is a percentage of what you spend on media that month, billed alongside the ad spend itself. The percentage is not fixed across the market: it falls as spend rises, because managing a ₹50,00,000 monthly budget does not take ten times the effort of managing ₹5,00,000.
Below roughly ₹3,00,000 a month in spend, a percentage fee is usually too small to fund proper campaign management, so agencies quietly pad the percentage or the scope shrinks. The bigger problem at any size: a percentage of spend pays the agency more for spending more, not for spending well, so it should never be signed without an efficiency target attached, ideally a cost-per-acquisition ceiling.
A pure percentage-of-spend fee rewards a bigger budget, not a better one. Attach a CPA target or don't sign it.
The agency is paid a fee per qualified lead, appointment or sale, rather than for time or spend. It is the least common structure in this market, offered mostly for local services, clinics and lending categories where a lead can be defined precisely and tracked end to end. Pure commission with zero fixed fee is rare; most CPA arrangements pair a small floor retainer with the per-outcome fee, because an agency cannot fund campaign testing on results alone.
Long or considered sales cycles. B2B, real estate and high-ticket categories take weeks to months to close, too slow to price the marketing on the outcome alone.
Brand or awareness objectives. There is no clean conversion event to price against.
Tracking that isn't solid yet. CPA pricing on top of broken measurement invites disputes over what counts as a lead.
New, untested accounts. An agency pricing pure risk on an account with no historical data will price in a large safety margin, or quietly favour cheap, low-quality volume.
The three models converge and diverge differently as media budgets scale. This is how a typical Mumbai quote looks at each tier in 2026, agency fee only, excluding ad spend and GST.
| Monthly ad spend | Flat retainer fee | % of spend fee | CPA / cost-per-lead fee |
|---|---|---|---|
| Up to ₹2,00,000 | ₹40,000 – 70,000 | 15 – 25% (₹30,000 – 50,000) | ₹150 – 900 / lead, rarely offered |
| ₹2,00,000 – 8,00,000 | ₹75,000 – 1,50,000 | 12 – 18% (₹24,000 – 1,44,000) | ₹150 – 1,200 / lead + floor retainer |
| ₹8,00,000 – 25,00,000 | ₹1,50,000 – 3,00,000 | 8 – 15% (₹64,000 – 3,75,000) | ₹200 – 4,000 / lead, category-dependent |
| ₹25,00,000+ | ₹3,00,000+ | 5 – 10% (₹1,25,000+) | Uncommon; blended retainer + performance bonus instead |
Read the percentage column carefully: in rupee terms it can land close to or above a flat retainer at the same tier, especially once spend passes ₹10,00,000. The percentage only looks cheaper than a retainer when spend is small, which is exactly the range where the model tends to underfund the work. For scope detail at each retainer tier, see our guide to choosing a performance marketing agency in Mumbai.
GST at 18% applies to the agency's management fee under every model, retainer, percentage or CPA, since this is a service supply. Two things trip clients up:
Start from your spend size and category, not from what sounds cheapest on paper.
For the ten questions to ask before signing any of these, and the contract terms that are normal in this market, see how to choose a performance marketing agency in Mumbai.
A flat monthly retainer is the most common model at every spend tier below roughly ₹25,00,000 a month in media. Percentage-of-spend becomes more common above that, and pure CPA or cost-per-lead pricing is rare, offered mostly for lead-generation categories with clean, provable tracking.
Typically 15 to 25% of monthly media spend below ₹8,00,000, narrowing to 8 to 15% between ₹8,00,000 and ₹25,00,000, and 5 to 10% above that. The percentage falls as spend rises because campaign management effort does not scale one-to-one with budget.
Yes. Once an agency invoices a client for media spend, GST at 18% applies to that invoice value, even though the underlying platform billing to the agency may be structured differently. Businesses can claim input tax credit on the GST paid if they are GST-registered. Paying Google or Meta directly on your own account avoids this layer entirely.
CPA pricing is a poor fit for B2B and considered-purchase categories with long sales cycles, for brand or awareness campaigns with no direct conversion event, for accounts with unreliable tracking, and for early-stage accounts still being tested, because it pushes the agency to optimise for cheap, high-volume leads rather than qualified ones.
Ad spend itself, GST, platform and tool licence fees, paid stock or footage, professional photo and video shoots, influencer fees, and large one-off builds such as a new website or CRM integration are standard exclusions from a Mumbai retainer, and should be itemised separately in the proposal.
Yes, and it is common to start on a flat retainer while tracking and lead definitions are established, then move to a percentage or blended CPA structure once a full cycle of baseline data exists. Agree the switch trigger and the review date in writing at the start rather than negotiating it later.