The model you choose affects total cost as much as the scope itself.
Hourly
When it fits: Clearly bounded small work, audits, troubleshooting, edge cases where scope can't be predicted upfront.
Typical structure: $60–$400+/hour depending on tier, billed weekly or monthly with detailed time tracking.
Pros: Pay only for what's done. Easy to start and stop.
Cons: No price cap. Incentive misalignment — slower is more profitable for the vendor. Hard to budget. Easy to lose track of accumulating cost.
Best for: Small jobs under $5K, ongoing low-volume work, true troubleshooting.
Fixed-price project
When it fits: Well-scoped projects with clear deliverables and acceptance criteria.
Typical structure: Defined scope, milestones, deliverables, and a fixed total price. Payment usually 25%×4 milestones or 30%/40%/30% by phase.
Pros: Predictable cost. Incentive alignment — vendor wants to finish efficiently. Easy to budget.
Cons: Locked-in scope. Change orders add cost. Bad scoping at the start cascades.
Best for: Defined projects between $5K and $250K.
Monthly retainer
When it fits: Ongoing programs — SEO, CRO, ads, dev support, email marketing — where work happens continuously.
Typical structure: Fixed monthly fee for a defined scope of hours or deliverables. Usually 3–6 month minimum.
Pros: Predictable cost. Continuity of relationship and learning. Easier to plan capacity.
Cons: Pay even in months with less work. Can become "just paying because we always have." Easy to over-commit early.
Best for: Ongoing programs after fit is established. Avoid 12+ month commitments without break clauses upfront.
Fractional
When it fits: When you need a senior leader's time and judgment but can't justify a full-time hire.
Typical structure: Fixed monthly fee for a defined time commitment (typically 1–3 days/week). Often 6–12 month engagements.
Pros: Senior-level strategy + accountability. Cheaper than a full hire. Built-in continuity.
Cons: Higher monthly cost than a specialist retainer. Limited dedicated hours. Right-fit search takes time.
Best for: Stores between $1M and $20M needing senior strategic leadership.
Performance-based
When it fits: Marketing or revenue-generating work where outcomes are measurable. Most common in paid ads (% of ad spend) and affiliate marketing (% of revenue).
Typical structure: Base fee + performance bonus, or pure % of ad spend / revenue.
Pros: Vendor incentive aligned with your revenue. Lower base cost in lean months.
Cons: Total cost can exceed flat-fee equivalents in good months. Performance metrics can be gamed. Hard to set fairly without baseline data.
Best for: Mature businesses with reliable measurement. Avoid for early-stage where baselines aren't clear.
