The math is broken.
The incentives are worse.
And if you’re a brand still paying a traditional agency fee—you’re probably bleeding margin without even realizing it.
We’ve worked with dozens of operators across Amazon, Shopify, and Walmart. Many arrive after being burned by a “top-rated” agency. The story is always the same:
Big promises, bloated retainers, no visibility, and no profit.
This is systemic, by design. And in this piece, we’re going to show you why, and what you can do about it.
The Reality of Running a Modern Brand
Here’s what the average eCommerce business owner is actually working with:
- Net margins in the 8–12% range—on a good day
- Fulfillment, fees, ad costs, chargebacks, tariffs, and discounts eating away every bit of upside
- And competition across marketplaces so fierce that one wrong keyword can tank your ACoS and your month
Now layer in an agency that charges a flat $3,500 a month plus 10% of topline revenue or 15% of ad spend. The second they start pushing spend, they’re profitable. You? Not necessarily.
The Standard Fee Model: A Raw Deal for Operators
Let’s break down what you’re usually getting in a fee-based setup:
- Flat Retainers: $3K to $6K/month just to have the agency show up. Whether they drive growth or just launch the same 5 auto campaigns they use on every account—doesn’t matter.
- Percent of Sales: Common in Amazon agencies: 4–15% of gross sales, often with a “minimum guarantee.” If your SKU sells $500K this quarter, expect to write a check for $25K–$50K, even if that growth came from pricing changes you pushed.
- Percent of Ad Spend: Let’s say they take 15%. If they recommend doubling your ad budget, and it flops, they still win. You just paid them a raise for losing money.
A Tale of Two Brands
Let’s run two real-world examples using average numbers we see all the time:
Case A: $5M Brand
- Revenue: $5,000,000
- Net margin: 10% → $500,000
- Agency fee: 15% of sales + $3.5K/mo = $750,000+
> Result: The owner loses $250K by working with the agency.
Case B: $10M Brand
- Revenue: $10,000,000
- Net margin: 8% → $800,000
- Agency fee: 10% of sales = $1,000,000
> Result: You’re upside down. The agency made more than you.
This isn’t hypothetical. We’ve run these audits. We’ve helped owners who were profitable before hiring an agency go into the red after handing over the keys.
Incentives: Aligned for Them, Not for You
The biggest problem isn’t the cost. It’s the fact that these models reward the wrong things.
- Spend more, they win: Agencies pushing ad budgets and “growth” without concern for contribution margin
- One-size playbooks: 100+ clients means no time for nuance, just rinse-and-repeat tactics
- No skin in the game: If things tank, they still get paid
- Held hostage: Many require your listings to run under their accounts—when the relationship ends, so does your data
We’ve even seen agencies refuse to give back access to ad campaigns or inventory performance reports. They treat your account like their property.
The Hidden Costs Nobody Talks About
Let’s say you’re breaking even on paper. You’re still losing in other ways:
- Lost time: Constant back-and-forth with low-context account managers
- Missed opportunities: No one’s watching your customer LTV, bundling strategy, or pack size performance
- Burned trust: Internal teams grow resentful and confused when the agency changes direction every quarter
And let’s be honest: the best people don’t work in fee-based shops. They’re working in leaner, more aligned environments—or building something of their own.
So What’s the Alternative?
We built RivrHub because we knew there was a better way:
A partnership model where we win only if the brand wins—at the contribution margin level.
What that means:
- We tie upside to actual performance: Not gross sales, not media spend—real margin added back to your business
- You keep full ownership of all accounts: Ad data, listings, backend—everything stays with you
- No one-size-fits-all playbooks: We only work with brands we can help, and that means fewer clients, deeper focus
- Proactive operators, not account managers: Daily attention, not monthly “QBRs” with recycled slides
If your agency can’t tell you how their fee ties directly to your margin, they’re not a partner. They’re a tax.
Audit Your Agency in 5 Seconds:
Answer these questions.
- Are you paying them more as spend increases, even if ROI drops?
- Is your agency managing more than 50 brands at a time?
- Do they own any part of your data or storefronts?
- Have they proposed strategic changes in the last 60 days?
- Are you making more net profit than before they came on?
- Are you substantially larger than when they came on?
If you said “no” more than once, it’s time for a serious talk.
eCommerce has evolved. The platforms have evolved. Your margins have shrunk. But the agencies? Most are still running the same pricing model they did in 2016.
We’re not here to be another vendor. We’re here to be your performance partner: your upside is our upside.