Short answers first, then the evidence, each with its source.
Usually one of three things: the pages went stale and Google noticed, Google changed how it ranks pages, or people are getting their answer on Google without clicking through. Each has a different fix, and the first is the one you can act on this week.
Ask for the list of pages they deliberately did not touch, and the comparison against them. If there is no such list, their report cannot tell you, however good the work was.
The going rate for a retainer is about $1,500 a month for local work and about $2,900 on average, before you know whether any of it worked. The cost that matters is the one you can check.
You cannot tell from a traffic chart, and neither can your agency. The only way to know is to leave some pages alone and compare. If nobody kept a control group, the honest answer is that nobody knows.
Yes, and the difference is not the price. It is that an agency reports the work and we report the comparison: half your pages rewritten, half left alone on purpose, the gap published with its range whichever way it went, and the next quarter free if the rewritten half finished behind.
Refresh first. The pages being cited are the recently updated ones, not the recently published ones, and unedited new articles fade within months. Publishing at volume is also the one behaviour Google's spam policy is written against.