The Hidden Risks of Pay-Per-Lead and Commission Lead Gen Models

Photo by Muhammad Daudy on Unsplash

So, you’ve decided to invest in lead generation. Wise move. You have to dig your well before you’re thirsty.

Lead generation is highly technical, resource-intensive work. Outsourcing is often the smartest play – but only if you pick the right partner and the right pricing model.

If you’ve shopped around, you’ve seen the three usual suspects:

• Pay per lead or per meeting – you pay for every name or calendar slot delivered.
  

• Commission on closed deals – you only pay if revenue lands in your bank.
  

• Retainer / fixed monthly fee – you pay for the ongoing work, regardless of “X meetings this month.”

  
  

On paper, they all sound reasonable. But in practice, only one of these models truly makes sense if you want sustainable growth, strong brand reputation, and leads worth your time. Spoiler: it’s the retainer.

Let’s break down why.

The Problem With Per-Lead Pricing

At first glance, “only pay for results” feels like a no-brainer. Why risk cash on something that might not pan out? The catch is, you don’t want any results. You want the right results.

When an agency gets paid per lead or per meeting, the incentive is simple: pump out as many emails as possible. We’re talking thousands of emails to generate one meeting. 

Anyone who half-replies “Maybe” suddenly counts as a lead. Are they a decision-maker with a need and a budget? Doesn’t matter. Your calendar fills up with people who couldn’t buy from you even if they wanted to. Many won’t even show up. Your sales team wastes hours on dead-end conversations instead of focusing on genuine opportunities.

To keep numbers up, agencies often fall back on spray-and-pray tactics. Translation: spam. And that doesn’t just waste time, it damages your reputation. Once you’re the brand flooding inboxes with spammy messages, it’s hard to recover.

At Matchstick, we hear way too many stories of businesses scarred by poor lead gen attempts, and this is often the reason why. Months wasted on chasing numbers that never turn into actual revenue. Cheap upfront but far more costly in the long run.

Photo by Pau Casals on Unsplash

Why Commission on Closed Deals Doesn’t Work Either

The other tempting option is commission. Only pay when deals close! Sounds great, right? Except it’s unsustainable and completely unfair to the other party. 

The most overlooked reason is that lead generation is not sales. Whether a deal closes depends on dozens of factors outside the agency’s control: your pricing, your sales process, your product fit, and your negotiation skills. 

To do lead gen well, agencies invest significant effort upfront: research, strategy, messaging, testing, follow-up systems. They’re putting in the work long before you see any pipeline. Asking them to take all that risk, for maybe some revenue months later, is basically asking them to gamble their business on yours. You’ll either get desperate shortcuts or they’ll walk away. 

Commission might sound client-friendly, but in practice it kills partnerships. If you want quality and sustainable results, lead gen needs to be paid for as its own discipline – a complex, technical, and highly skilled craft.

Why Retainers Work Best

That leaves us with the humble retainer. A fixed monthly fee. Yes, it is an upfront investment (as all good things require). It’s also the most effective way to go about building a strong pipeline of perfect-fit opportunities. 

The most obvious reason why it works is that it funds real work. Deep research, tailored strategy, and campaigns that actually reflect your brand – that all takes time and money. A retainer makes that possible. 

For example, as part of our outreach at Matchstick we send beautiful, custom-designed handwritten cards, personalised to each prospect. We also use advanced research tools to spot buying signals, to ensure we’re reaching out to people who are most likely to be ready to talk, not just anyone with an email address. A little bit of extra effort and investment upfront makes our outreach far more effective in the long-run.

With a fair retainer, the focus shifts from cheap wins to consistency and good-fit leads – the kind that actually have a need and a budget, are aligned with your values, and could become long-term partners. 

Retainers might not sound as “risk-free” as pay-per-lead, but in reality they’re the only setup where your incentives and your agency’s actually align.

The Bottom Line

Pay-per-lead and commission-based lead gen models might look attractive on the surface, but both create warped incentives that backfire on your time, your team, and your brand. 

A retainer, on the other hand, is about alignment. It says “we care about quality and consistent growth, not vanity metrics and cheap fixes.”

Lead generation is hard, technical, deeply human work. It deserves to be done right and paid for fairly. When it is, you get what you were looking for all along: a consistent pipeline of perfect-fit opportunities.