- There are 3 common ways to bill a client for a white-label partner’s work: markup on a fixed quote, markup on actual cost and a separate management fee.
- The right choice depends on the type of project, how predictable the scope is and how much transparency the agency wants to offer the client.
- Whatever the model, the agreement with the partner should include at least a confidentiality clause and an assignment of rights over the code.
When people talk about white-label, almost everything revolves around the technical side: what the partner does, how the work is coordinated, what quality they deliver. The question that worries agency owners most gets left for last: how do I structure this with my client?
The answer determines the margin, the transparency with the client and whether the model holds up over time. If you’re still weighing the model itself, start with what white-label development is and how it protects your agency’s margin.
The question hardly anyone answers directly
A white-label setup has 3 parties: the agency, the partner and the end client. The client deals only with the agency and usually doesn’t know a third party is involved (further down you’ll see when they should). The agency bills the client for the full project, and the partner bills the agency for its share.
The question is how to structure that difference, the agency’s margin, in a sustainable way. There are 3 models that work in practice, and many agencies mix them depending on the project.
Model 1: markup on a fixed quote
The agency gets a fixed quote from the partner, say €6,000, and applies a markup percentage to set the client price. With a 40% markup, the client pays €8,400.
How it works in practice
It’s the simplest model to manage: the price comes straight from the partner’s quote plus the agreed percentage, with no need to estimate in-house hours or justify extra line items.
There’s no official benchmark, but in our experience markups in the industry tend to range from 25% to 50%: the more coordination, review and client communication the agency takes on, the more a higher markup is justified.
Careful: markup and margin aren’t the same thing. A 40% markup on €6,000 leaves €2,400, which is 28.6% of the final €8,400 price. If you’re aiming for a 40% margin on the sale, the price needs to be €10,000.
When it makes sense
When the partner’s work is clearly defined and the price is predictable, for example a website with a set number of pages and features. There are no surprises that force you to change the client’s price.
The main risk
If the scope grows during development, which happens a lot, the partner will ask for an additional quote and the agency will have to choose: pass it on to the client, negotiate with the partner or absorb part of it out of its margin. Without a clear protocol, the model ends up creating conflict.
Model 2: markup on actual cost
The percentage isn’t applied to the initial quote but to the partner’s actual final cost. The client’s price can shift from the estimate if the project drifts.
How it works in practice
The agency presents an estimate with a clear range, for example “between €7,000 and €9,000 depending on final scope”. At the end, the price is calculated from the partner’s actual cost plus the internally agreed markup.
When it makes sense
On projects with technical uncertainty and clients used to range-based estimates: integrations, migrations or builds with external dependencies, where the price depends on what comes up during the work.
The main risk
Exposing the partner’s actual cost. If the client asks how the price breaks down, the agency has to explain it without revealing what it pays, so the proposal should be organized by value items (“booking module”, “CRM integration”) rather than hours. The agency also needs the partner to report accumulated cost regularly.
Model 3: separate management fee
The agency bills 2 items: the technical development (which may or may not match the partner’s price) and an explicit management fee covering coordination, client communication, reviews and quality control.
How it works in practice
For example: “Platform development: €6,500. Project management and technical coordination: €2,000. Total: €8,500.” On the development line, the agency can pass through the partner’s exact price or add a small markup.
When it makes sense
It’s the most transparent model and the one that best shows the agency’s value: the client sees they’re paying for coordination and judgment, not just code. It’s a particularly good fit for B2B clients used to complex projects, who value having someone translate their needs into specifications and oversee execution.
The main risk
Pressure on the fee. Some clients try to drop it because they “only want to pay for development”. Have your answer ready: management is what ensures development arrives on time, at the expected quality and aligned with what the business actually needs.
Comparison table of the 3 models
| Model | How it’s calculated | Best for | Main risk |
|---|---|---|---|
| Markup on a fixed quote | Partner quote × (1 + markup %) | Projects with a defined scope | Conflict if the scope grows |
| Markup on actual cost | Partner’s final cost × (1 + markup %) | Projects with technical uncertainty | Exposing the partner’s actual cost |
| Separate management fee | Development cost + explicit management fee | B2B clients experienced with complex projects | Pressure to drop the fee |
What the partner agreement must include (the essentials)
Whatever model you choose, the agreement with the partner needs to cover 2 points that are often dismissed with a generic sentence. For everything else (deadlines, responsibilities, how to end the relationship), there’s a guide in how to structure a white-label agreement that works for both sides.
Confidentiality clause
The partner must not disclose the subcontracting arrangement to the end client or third parties: not in direct communications, not on professional profiles, not in a portfolio without the agency’s permission. The clause should be mutual, and many agencies add a non-solicitation commitment so the partner doesn’t work directly with their clients for a reasonable period.
Assignment of rights over the code
In Spain, the rights to a computer program belong to whoever creates it (or to their employer, if it’s developed by an employee as part of their job), unless a contract says otherwise. Without a written assignment, the agency can’t guarantee the client that they’ll be able to use, modify or take the code to another provider.
The usual approach is for the partner to assign the agency, exclusively and irrevocably, the exploitation rights to the software, worldwide and for the full legal term, with the right to assign them on to the end client. Spelling this out matters: if it isn’t specified, Spain’s Intellectual Property Law limits the assignment to 5 years and to the country where it’s made. Third-party components (libraries, plugins, themes) aren’t assigned, they’re used under their own licenses, so the partner should list them.
How to present the price without revealing your cost structure
Structure the quote by value delivered, not by resources consumed. The client doesn’t need to know how many hours the booking module took, but what it does and what it costs. Present features or deliverables (“payment gateway integration”, “order management dashboard”) with a price per block.
If the client asks how you arrived at that price, the answer is the value of the result: “It covers scoping, development, testing and deployment of a feature that will handle all your orders without disrupting your current system.” If you find these concepts hard to explain, how to present the technical side of a project to a non-technical client may help.
Frequently asked questions
Is the agency required to tell the client it works with a technology partner?
As a general rule, no, as long as the client contract doesn’t require it or restrict subcontracting and the agency is accountable for the result. There are 2 exceptions. If the partner accesses personal data (users, orders, forms), the GDPR requires the client to authorize sub-processors in writing, either specifically or generally, and in the latter case the client must be informed of any that are added. And in public sector contracts, subcontracting usually has to be disclosed. The confidentiality clause has to respect these obligations.
What happens if the client finds out there’s an outside partner?
If the relationship is solid and the work was delivered well, usually nothing. What damages the relationship isn’t that a partner exists, but the client feeling that something relevant was hidden or that the quality isn’t what was promised.
Do you need a formal contract with the partner, or is an email agreement enough?
For small one-off jobs, an email with the main terms may be enough. For ongoing relationships or significant projects, a formal contract is highly advisable, especially in case things fall apart: the partner doesn’t deliver, the quality isn’t what was agreed or the relationship breaks down mid-project. And the assignment of rights has to be in writing in any case.
At Baqueiro we work as a white-label partner for design and marketing agencies that need senior technical capacity for projects beyond what their team can take on. If you’d like to see how it would fit the way you bill, let’s talk.