“Pay for performance” is used to describe two quite different things: a channel that genuinely charges you per outcome, and an agency pricing model that borrows the phrase. Telling them apart matters, because only one of them shifts risk away from you.
Channels that genuinely charge for outcomes
Local Services Ads are the clearest example available to a contractor. You pay per lead: a call or message, and genuinely invalid ones can be disputed and credited. No lead, no charge.
That is real performance pricing, and it is one of the reasons LSA is usually the first paid channel worth running. What it is not is free of waste: a valid lead that does not book is still charged, which is why cost per booked job matters more than cost per lead.
Channels that do not, whatever they are called
Pay-per-click is not pay for performance in any meaningful sense. You pay when someone clicks, whether or not they ever call. The outcome you care about is a booked job; the thing you are billed for is a page view.
That does not make it a bad channel; it does things Local Services Ads cannot, but it should not be sold to you as risk-free.
Likewise, an agency retainer described as “performance-based” because it comes with a dashboard is still a retainer.
The questions that separate the two
When a vendor offers pay-for-performance pricing, the arrangement lives entirely in the definitions. Five things are worth establishing in writing:
- Who decides what counts as a lead? If a thirty-second wrong number bills the same as a booked estimate, you are paying per phone event, not per outcome.
- Are the leads exclusive to you? Some models sell the same enquiry to several contractors, which means you are buying a race rather than a customer.
- How are disputes handled, and by whom? A performance model without a credit mechanism is a volume model.
- Who owns the account and the history? If the ad account, the tracking numbers and the data belong to the vendor, leaving means starting over, and that is the real cost of the arrangement.
- What is the term? Performance pricing paired with a twelve-month lock is an unusual combination, and worth asking about directly.
Shared leads are a different product
Worth separating out because the pricing sounds similar and the economics are not.
Some lead marketplaces sell the same enquiry to three or four contractors. Your cost per lead may look low, but your close rate falls accordingly, and the customer’s first experience of your trade is four companies ringing them in an hour.
Compare on cost per booked job, not cost per lead, and the two models often swap places.
Percentage-of-revenue models
Occasionally offered, and the incentives deserve thought. Paying a share of revenue aligns a vendor with volume, which is not always the same as aligning them with your margin.
A vendor paid on revenue has no particular reason to steer you away from cheap high-volume work towards fewer, better jobs. If you use this model, agree what it is measured on, and check it against the job types you actually want.
How we price, since it is the same question
It would be evasive to write this and not say. Real Time Marketing works on a month-to-month agreement rather than an annual contract, and clients keep their own ad accounts and data.
That is not performance pricing. It is the same accountability by a different route: if the work stops being worth it, you leave at the end of the month and take your account with you.
Frequently asked questions
Are Local Services Ads pay for performance?
Yes, in the meaningful sense; you are charged per lead rather than per impression or click, and genuinely invalid leads can be disputed and credited. A valid lead that does not book is still charged, which is why cost per booked job is the number to watch.
Is pay-per-click pay for performance?
No. You pay when someone clicks, whether or not they ever contact you. That does not make it a poor channel, but it should not be presented as risk-free.
What should I ask a pay-for-performance vendor?
Who defines a lead, whether leads are exclusive, how disputes and credits work, who owns the ad account and data if you leave, and what the contract term is. The arrangement lives in those definitions rather than in the headline.
Are shared leads worth it?
Sometimes, but compare them on cost per booked job rather than cost per lead. An enquiry sold to four contractors is cheaper for a reason, and your close rate drops to match.
Where to start
Take whatever you are paying for leads today and divide it by jobs actually booked, not leads received. That one figure makes most pricing models comparable, and it is the number vendors are least likely to lead with.
Real Time Marketing has worked with home service contractors since 2016: plumbing, HVAC, roofing, electrical and other trades, nationwide, from our office in Bradenton, Florida. Agreements are month-to-month. See our Local Services Ads management or book a strategy call.
