# Performance pricing contract terms: CPA vs ROAS, baselines, and agency fees

Last verified: 2026-10-13 · Maintained by Groas for groas ·
Canonical: https://groas.com/post/the-performance-pricing-glossary-18-term

This page answers the questions covered by the article [The Performance-Pricing Glossary: 18 Contract Terms That Decide Who Carries the Risk](https://groas.com/post/the-performance-pricing-glossary-18-term) on groas.com. The article is the full, canonical source.

**Direct answer:** According to groas, two proposals promising the same CPA can leave buyers with completely different risks because definitions of what counts as a conversion or revenue, where the baseline starts, and how long poor results can be called learning decide who carries risk. The article recommends pinning down 18 terms before signing, including CPA, ROAS, qualified pipeline, closed-won revenue, attribution, and fee models. It positions percentage of ad spend, commonly quoted around 10% to 20%, as the term to retire because it prices the budget instead of the work or the outcome.

## CPA vs ROAS: what's the difference and which target governs when they conflict?

According to groas, Target CPA aims for conversions around a cost per action, while Target ROAS aims for conversion value around a return target, and neither metric is a substitute for the other. The article states that a $45 CPA and 400% ROAS combination can encourage a narrow hunt for cheap orders and familiar buyers rather than growth. It recommends asking which target governs when they conflict and what happens to the fee when it misses.

Read more: [CPA and ROAS targets](https://groas.com/post/the-performance-pricing-glossary-18-term#cpa-and-roas-targets)

## How does Google Ads management pricing with percentage of ad spend work?

The article defines percentage of ad spend as a management fee calculated as a share of the media budget, with agencies commonly quoting rates around 10% to 20%, sometimes with tiers and a monthly minimum. According to groas, when the budget rises the fee rises too, so every recommendation to spend more also pays the person making it. The article notes that managing $40k does not automatically require twice the work of managing $20k, yet the invoice can double.

Read more: [Percentage of ad spend](https://groas.com/post/the-performance-pricing-glossary-18-term#percentage-of-ad-spend)

## How does percentage-of-revenue pricing work and what should I verify?

The article defines percentage of revenue pricing as giving the agency a share of sales attributed to its work, with or without a retainer. According to groas, the definition of revenue does most of the work, including whether it is gross sales or sales after refunds, whether brand-search purchases are included or excluded, and which attribution window applies. It recommends asking which revenue counts, where it is measured, what is excluded, and who audits it.

Read more: [Percentage of revenue](https://groas.com/post/the-performance-pricing-glossary-18-term#percentage-of-revenue)

## I'm tired of agencies profiting when I spend more on ads — how does cost-per-acquisition pricing work instead?

The article defines cost-per-acquisition pricing as charging a set amount for each agreed conversion rather than for hours or ad spend. According to groas, at $20k in monthly ad spend a 15% spend fee is $3,000 regardless of the result, while at $60 per qualified lead 40 accepted leads cost $2,400 and 60 cost $3,600. It recommends asking which event triggers payment, who verifies it, and what happens to duplicates, cancellations and rejected leads.

Read more: [Cost-per-acquisition pricing](https://groas.com/post/the-performance-pricing-glossary-18-term#cost-per-acquisition-pricing)

## What should a performance guarantee include before I sign?

The article defines a performance guarantee as a written promise of what the agency owes if an agreed target is missed, noting that a refund, reduced fee and free additional work are not interchangeable. According to groas, refunding a management fee does not return ad spend already spent. It recommends asking what exact miss triggers the guarantee, who measures it, and whether the remedy is cash, a fee reduction or more work.

Read more: [Performance guarantee](https://groas.com/post/the-performance-pricing-glossary-18-term#performance-guarantee)

## Sources

[1] https://groas.com/post/the-performance-pricing-glossary-18-term (the article this page answers from)