Build a Performance / Outcome-Based Pricing Structure

You are an agency finance lead who has structured 30+ performance-based pricing agreements for paid media, SEO, and CRO services.

Agency: [AGENCY_NAME] | Service: [SERVICE_LINE]
Client: [CLIENT_TYPE]
KPI(s) we can attribute to: [KPI_LIST]
Baseline for those KPIs (last 90 days): [BASELINE]
What we believe we can lift them to: [TARGET_LIFT]
Client's $ value per unit of KPI: [VALUE_PER_UNIT]
Our cost to deliver: [COST_BASIS]
Minimum base fee we need to cover risk: [MIN_BASE]
Max exposure we're willing to take: [MAX_DOWNSIDE]

Design a hybrid pricing structure with a base retainer plus performance component. Define the KPI, baseline, target, payout curve, measurement window, attribution rules, and risk caps for both sides.

- Base fee must cover [MIN_BASE] no matter what.
- Bonus must be capped — no uncapped upside (it kills budgets).
- Attribution must be defined explicitly (last-click, first-touch, MTA, GA4 vs platform).
- Use only KPIs that are server-side or platform-verifiable.
- Include a "control conditions" clause: what voids the performance component (ad spend changes, scope changes, market events).

1. Structure summary (3 lines)
2. Base + variable breakdown
3. KPI definition + attribution method
4. Payout curve table: KPI Achievement | Bonus Payout
5. Measurement window + true-up cadence
6. Risk caps (agency floor, client ceiling)
7. Control conditions / voiding events
8. SOW language draft (~120 words)

• [AGENCY_NAME] — Your agency
• [SERVICE_LINE] — Service this applies to
• [CLIENT_TYPE] — Client industry/size
• [KPI_LIST] — KPIs you can attribute to
• [BASELINE] — Trailing 90-day KPI performance
• [TARGET_LIFT] — Realistic lift you believe in
• [VALUE_PER_UNIT] — Client $ value per KPI unit
• [COST_BASIS] — Your monthly cost to deliver
• [MIN_BASE] — Base fee that covers your downside
• [MAX_DOWNSIDE] — Max risk you'll accept

AGENCY_NAME: Halo Performance | SERVICE_LINE: Paid social | CLIENT_TYPE: DTC apparel, $20M revenue | KPI_LIST: Purchases attributed via Meta CAPI + Shopify | BASELINE: 1,800 purchases/mo at $42 CAC | TARGET_LIFT: 2,400 purchases/mo at $36 CAC within 90 days | VALUE_PER_UNIT: $85 AOV, 28% contribution margin | COST_BASIS: $9,500/mo | MIN_BASE: $8,000 | MAX_DOWNSIDE: $4,500/mo

Structure: $8,000 base + bonus up to $9,000/mo tied to incremental purchases above baseline.

Base: $8,000/mo covers delivery + downside.
KPI: Net incremental purchases vs 1,800 baseline, attributed via Meta CAPI + Shopify match.

| KPI Achievement | Bonus |
|---|---|
| 0-100 incremental | $0 |
| 101-300 incremental | $3,000 |
| 301-500 incremental | $6,000 |
| 501+ incremental | $9,000 (capped) |

Window: Monthly KPI; true-up at end of month, paid in next invoice.
Risk caps: Agency base floor $8,000; client max monthly total $17,000.
Voiding events: Ad spend changes >25% MoM, scope changes, site outages >24h, Shopify tracking breakage.

SOW language: "Client will pay a base fee of $8,000/mo. A performance bonus, capped at $9,000/mo, will be paid based on net incremental purchases above the 1,800 baseline, measured monthly via Meta CAPI and Shopify order data. Material changes to ad spend, scope, or tracking integrity will suspend the performance component for that month."

• Always cap the upside — uncapped bonuses break client budgets and end relationships.
• Write attribution into the SOW before signing — never leave it to be figured out later.
• Don't offer performance pricing in your first 30 days with a new client — gather baseline data first.