SEO Pricing Models: How Much Should You Charge?

As other founders do I’ve maintained one additional role, that I soon hope to relinquish.

Salesperson!

My reluctance in hiring a salesperson is that finding the right person for the job can be quite a challenge. “Selling” search engine optimization (SEO) is a very consultative venture and one that I’m loath to turn over to someone mostly motivated by a commission check.

Selling SEO requires that you know the space well, and that you’re able to balance the need to bring revenue into the company while ensuring that you’re bringing in business which won’t lead to future headaches, because:

  • Expectations weren’t set appropriately.
  • The prospect lacks an understanding of the process.
  • There aren’t enough resources on the client’s side (or not enough money to outsource) for generating content, addressing issues, and implementing recommendations.
  • The work isn’t properly scoped out so that we can gain a solid estimation as to the work that will be involved (so that the work doesn’t end up being unprofitable).

It’s that last piece that I’m going to address, today.

Scoping Out and Pricing an SEO Effort

In order to survive as a well-run business, we must make sure that we operate profitably. Just as I might look at the probability of generating a positive ROI for prospects that come seeking SEO services, so too must I focus on ensuring that my company also runs profitably.

To that end, I made a decision, years ago, to hire a head of operations who also happened to have a background in process improvement. It also doesn’t hurt that she’s a CPA. Her name is Kim Patterson, and she also happens to be my wife’s cousin (so you headhunters can just keep on looking).

Kim came to the company with no background in SEO. Over the years, she has learned the process and has put in place measurements of effectiveness, efficiency, and accountability that I believe had been sorely lacking in our industry.

Another major component of bringing Kim on was to make sure that we were charging a fair rate (one which was within Industry standards, one which helped us to reach our profitability goals and one which would be reasonable, based upon what value we bring to our clients).

I asked Kim what formula she uses to price our SEO initiatives. Her response:

First, you need to determine your profit goals (15 percent; 20 percent; 30 percent; more?). You calculate your fixed overhead costs (costs that you pay no matter what your sales are), variable costs (what costs go up as sales go up – and what the relationship is to the sale dollar; not all relationships are the same for each sector of your biz) and direct costs (what actual direct labor, direct services, etc) for the actual job and make sure when it all is put together you end up with your targeted profit.

The real tricky part here is determining the direct costs. SEO projects can’t be precisely scoped out for everything that you might do for the next 12 months. Part of SEO is analysis and recommendations, based upon what we see in the SERPs, analytics, competitive analysis, and industry changes/opportunities, among other things.

Pricing SEO is one of the great challenges, because most prospects still have a basic understanding of search engine optimization and the time/work involved in the efforts. The best that anyone can do is get a sense for how much time may be required to spend adequate time to address specific goals.

Rand Fishkin provided a tremendous value when, in 2007, he wrote a quality post on pricing SEO. Granted, this was written over four years ago.

Can you think of much that is cheaper today than it was four years ago? If supply and demand are the drivers for pricing, I would suggest that demand far exceeds (good) supply. There are many people who lay claim to being good at SEO, and a scarce few who truly do it well.

Today, I hope to peel back the onion just a bit, to help you to understand how search engine optimization is priced and how you, too, might want to consider your pricing models for SEO.

SEO Pricing Structure

Many firms still offer package rates for SEO. In fact, there’s one firm that is driving me absolutely crazy because they’re spamming a client of mine with emails. Here’s an example of one such email:

I just got the details from XXX management on our July SEO Special, and here they are…… “Summer Gold Rush” Special

Our National Gold Plan – Regularly Priced at $2750 per month will be greatly discounted for ONLY 30 new clients starting July 11

The 2011 Summer SPECIAL:

  • Only $1999/mo for the life of the account 
  • That’s a $751 monthly savings 
  • That’s approx 27% off each month for 30 lucky clients 
  • Equal to saving over $9,000 per year 
  • Clients can purchase multiple specials

*Starts as a 3-month agreement, then runs month-to-month

To me, an SEO effort isn’t a package of tactical deliverables. Unless you’re simply hiring a company to merely provide tactical work (keyword research, site structure analysis, competitive analysis, SEO audit, analytics review, usability consulting), SEO is something that is unique to every website, competitive environment, client goal(s), and assets (news, blog, product search, local, video, image, etc.) and is ongoing with review and “optimization” (there is a reason that “O” exists in “SEO”).

Just as you’d expect to scope out a website design and development project, so too must you scope out a search engine optimization effort.

  • Who’s going to write the content?
  • Who is responsible for PR efforts?
  • Who is handling social marketing?
  • Who’s doing link building?
  • Who’s restructuring the website, as necessary?

Today’s SEO is about bringing together many facets of your marketing, web design/development and PR/social efforts so that they work well together.

All of these things go to “scope” and each requires time (either the agency’s time or the company’s time). And, yes – time is money.

Setting Pricing Structure

When we go through the process of determining how much a search engine optimization effort might be, it goes directly to how much time we have to spend on the initiative.

Yes, we have some basic templates to follow, in terms of what is generally included in most SEO efforts, but then we need to dig deeper into the time that might be needed to address items which the prospect has mentioned are “goals” of the effort, and address any human resource allocation that we may need to provide because the prospect isn’t adequately staffed.

Cost of Talent

We’ve all seen the ads: “$400/Month for SEO.” How can one firm be charging $400 per month while another is proposing a monthly cost of $20,000 per month? What’s the difference?

In most cases, it comes down to people. In my past, I was the president of an SEO firm that had over 30 “employees” (contractors) offshore. We paid those folks $300-$400 per month for full-time employment.

I won’t speak for all offshore firms/contractors, but our experience with these contractors wasn’t very positive. A couple guys were good, but more often than not, the work would need to be redone by our staff in the U.S., or otherwise we sold the services so cheaply that the client’s expectations were low and so “it worked.”

It depends on your expectations.

If you think that the $400 a month guys are doing “the same thing” as the $20,000 a month guys, you’re probably going to be wrong. Chances are the $20,000 a month guys are hiring people that cost more than $400 a month. While the deliverables may seem the same (anyone can get their hands on the $20,000 a month company’s proposal, and find/replace with their company name and say “we do the same thing”), at the end of the day, you’re paying for the people/process/software/experience of the firm(s).

Cost of Software

There are plenty of great free SEO tools. Due to the length of this post, I can’t get into them all.

Then, there are plenty of great tools that cost significant amounts of money. The firms charging $20,000 per month may very well be using software for management of the efforts that cost $10,000 a month. It’s something to consider. Some of these pieces of software are slick, and I can see that larger companies would want this type of information/dashboard/reporting, because they need to work with a firm that is very polished and professional.

Amount of Talent Needed

Small effort? Perhaps we only need one person.

Small-ish effort, but the client has no webmaster, copywriter, PR folks, link builder, etc.? We may need to put a lot of resources into a project that would cost quite a bit of money and the ROI may simply not be there, for this small business.

If a project is properly scoped, you should be able to get a general sense as to how much time/work/effort may need to come from the client, and how much will need to come from the agency. Some efforts can become quite complex, with web designers, developers, copywriters, PR staff, social marketing, video optimization, SEO analysts, link builders, analytics specialists, usability consultants, etc.

If you need more resources, you’ll be paying more (whether it’s to your in-house team or to your agency).

ROI Estimation

As I mentioned above, many times, the effort needed for an SEO effort, and the time needed to realize results, can prevent many companies from affordably investing in search engine optimization. And, there are many times when companies are infatuated with “free” search engine traffic that they don’t realize that there are simply not that many searches for keywords that are relevant to their business.

If there are no fish in the pond, no amount of bait in the world is going to catch you a fish. Comprendé?

This is why one of my favorite tools is SEMRush. You can check out the estimated value of the organic traffic for your competitors, and compare that with where your website is currently, and get a sense as to whether there will be value available to you in your efforts.

If you see that all of your identified competitors are getting $200 a month “worth” of organic search traffic each month, it’s going to be hard to justify spending any amount of money on organic search. You might be best off to invest in a pay-per-click effort. At least with paid search, you’re guaranteed to pay only when you actually get a click.

Amortization of Efforts

The real value of SEO efforts are, generally, not realized in the first month(s) of the effort. Folks ask me all the time, “how soon until we see results?” The honest answer is “hard to say, but our guess is ____.”

We don’t own the search engines, so we can’t make guarantees. But, if a search engine optimization firm has dug into the competitive landscape and done a fair amount of research, they should be able to determine whether an opportunity to have a profitable SEO effort is possible, even if it may take some time. This is where you should be considering the lifetime value of the effort.

You didn’t get into business thinking that you’d start and be profitable, right away (at least, not most of you). In fact, when I started my company, I didn’t take a salary for over a year and I expected that there was a price to pay to be in business.

With search engine optimization, it’s kind of the same way. There will be a period of time (perhaps as small as a couple of months, and perhaps as long as many years) when money and time is going out, and there’s not an equal amount of value coming in. But, if you’ve done your homework, and know that the opportunity for great value is there, and you “plan your work and work your plan,” you can realize gains that can far exceed the value in “pay per click” models.

One such company in an extremely competitive industry for SEO was being charged $6,000 per month for SEO and was getting OK value for a couple of years, and now – five years later – realizes an approximate value of $319,000 “worth” of organic search traffic each month. Even if they were getting “no” value whatsoever for the first two years (invested $144,000 total) to one day realize a monthly value of $319,000 (each and every month), you’d say that this is a pretty good investment, right?

It doesn’t always come to these types of valuations. Just like the TV ads say, “results will vary.” For this particular client, they happen to be in a space which people search for these keywords veryoften.

For the local business owner, that’s one of the critical pieces in determining whether SEO is for you. What is the “search universe”? How many times are people searching for your keywords?

So, How Do You Price Your SEO Efforts?

Do you know if the efforts are profitable? How do you measure profitability?

I’d love to hear your thoughts, in the comments section below.

An article posted by Mark Jackson

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Story of a Startup: A Maid with income of $150,000/anum

I recently read a story of a startup on Neil’s QuickSprout blog, a maid who earn $150,000 per year. Lets read how he does!

Last month I ran into a Quick Sprout reader at the Entrepreneur Magazine conference in Miami. Every time I meet a Quick Sprout reader, the first thing I ask is:

What do you do?

Within seconds Juan got into his life story and explained how he kind is a maid, but makes $150,000 a year. And once I heard $150,000, I instantly thought how does a maid make that much money?

Naturally I started to dig deeper and I realized that he had an amazing life story that I have to share with all of you. So here goes…

Coming to America

Juan was born in Colombia and when he was young he dreamed of being an automotive engineer. But he couldn’t find too many colleges in Colombia that specialized in automotive engineering so he decided to look for colleges in other countries.

He found a lot of good schools in the U.S. so he applied to them. Within months he got accepted to a school in Texas and relocated.

During his first year he learned everything about cars. And by the second year, he was able to take apart and put back together a car. According to one of his professors, he was on track to being a great engineer.

But he ran into one big problem…

During his second year at the university he found out from the school that they lost his immigration paper work. They searched hard to find it and they tried to resolve the issue with the government, but they were unable to do so.

Because Juan wanted to stay in the U.S., this meant that he had to stay as an illegal immigrant.

A tough life

Although Juan had a girlfriend who was a citizen, and they were already planning on getting married, he didn’t want to rush things. He couldn’t get a normal job due to his illegal status, so he had to take side jobs to make a living.

He quickly saw how many immigrants were standing outside of local hardware stores. He noticed how competitive it was and felt that he could do better because he had a special skill… he was good with cars.

At that point it hit him that he should help people fix their cars. So instead of standing outside of Home Depot, he stood outside of AutoZone.

When someone walked out with car parts, he offered to fix their car for them right then and there in the parking lot. He did it for $10 to $20. For example, if you walked out of AutoZone with a pair of break pads, he would offer to replace them for you for $10.

The fight for survival

Juan wasn’t making a ton of money, but he was able to pull in anywhere from $20 to $100 a day. He wasn’t making stable income so it was impossible for him to provide for his girlfriend if they ever decided to get married. So he started to look for new ideas to make steady money.

One of his friends recommended that he start cleaning houses as you can make up to $100 a day for being a maid. He instantly latched onto the idea and started his own maid service.

He started out by cleaning his friends homes and because he was doing a good job they naturally referred him to more people. He got so busy that his girlfriend decided to join him and together they started to clean homes for a living.

Within months they got up to $3000 in monthly income and because Juan felt financially stable his girlfriend and him decided to get married.

The thirst for knowledge

Making $3000 a month isn’t bad, but it wasn’t enough for Juan. He wanted to continue learning and further his education so that he could do better in life. But there was one issue… he didn’t have enough money to go back to college.

So instead of giving up on his quest for more knowledge he started to buy audio books about entrepreneurship, marketing, and website design. He also started to read blogs like Quick Sprout and Mixergy.

From his readings he learned that the best income is passive income. And that you ideally want to figure out a way to make money even when you are sleeping. This way your income isn’t directly tied to how many hours you are working each day.

The road to entrepreneurship

The business concept that Juan came up with was to start a cleaning service that connected people with maids in their area. Kind of like Molly Maid, but instead he would focus on the Dallas Texas region.

In the first 30 days of launching it, no one came to his website and he didn’t make a dime. He actually lost money because he had to pay for hosting and wasn’t cleaning as many homes due to the amount of time it took him to create a website.

He quickly realized that he wasn’t going to be successful unless he figured out how to separate himself from the competition.

He surveyed his customer base, and saw that there was a demand for an eco-riendly maid company. People were actually willing to pay a bit more if he used products that were better for the environment.

So he decided to change the name of his maid business to Gmaids (Green Maids). Gmaids would connect people with eco-friendly maids in the Dallas Texas region.

Within a week of launching his eco-friendly site the Daily Candy picked it up and he was bombarded with new customers. If you fast-forward to a year after its launch, he hit 6 figures in yearly income getting people to subscribe to a monthly maid-cleaning program.

Growing the business

Now that Juan started to make a healthy amount of passive income from his business, he focused on growing it. From traffic acquisition strategies like search engine optimization to optimizing Gmaids for conversions by fine tuning the copy, adding video testimonials and modifying design elements.

These days Juan is looking to grow Gmaids into a million dollar company by expanding into more cities. He doesn’t know if he’ll get there, but he’ll never stop trying.

Conclusion

If you don’t have money and things aren’t going your way, it doesn’t mean you can’t be a successful entrepreneur. Juan had a lot of things going against him and he did well… he had to learn English, he didn’t have much cash, and worst of all he was an illegal immigrant.

Keep on pushing forward like Juan did and never let anything stand in your way. Yes, things won’t always go the way you want, but if you keep on trying something has to work out to your benefit.

So what do you think of Juan’s story? Do you know of any other people who went from having nothing to becoming successful?

This blog was a post by Neil Patel

21 Things for those who Starting their own Business

Starting A Business

Presentation Transcript:

21 Things We’reLearning At Fab.com 10-12-11

  • 130 Days Ago Fab.com Didn’t Even Exist.
  • Now, We’ve Got 750,000 Members, 3M Visits/ Month, $100K sales days.
  • It’s Humbling.
  • It’s Exciting.
  • It’s Challenging. We never imagined we’d grow so fast.
  • Here are 21 Things We’re Learning As We Go:
  1. Do 1 Thing. Find 1 thing you can do really well and focus entirely on that one thing.
  2. Say No! Don’t do any thing else except for yourone thing. Say no to meetings, ideas, proposal, b.s., outside of your core 1 thing.
  3. It’s Always All About The Product. Our virtual products (website & apps) and physical products (design objects) must delight every day.
  4. Keep it Interesting. No one comes back to check out the same thing every day. Keep it fresh, exciting, and unpredictable.
  5. Make People Smile. We’re not in the design sales business, we’re in the design inspiration business. Inspire people and the sales will come.
  6. Service Matters More Than Sales. Sales go up and down. Service lasts forever.
  7. Do Whatever It Takes To Make Customers Happy. Get it right and they’ll tell their friends. Get it wrong and they’ll tell the entire world.
  8. Make Mistakes Take risks. Move fast. Learn faster.
  9. Recover Quickly.
  10. Apologize. Own your screw-ups.
  11. Strive to Have Your Customers LOVE Every Interaction With Your Company. Push your team to live this dream.
  12. Celebrate Your Challenges. Force the team to focus on why you suck, even while you’re growing.
  13. Don’t Focus Too Much OnThe Vision. Winning is all about execution.
  14. Be Transparent. The more people know, the better.
  15. Measure Everything.
  16. Grow Your People. Coach your team to scale with the opportunity.
  17. Fill Your Gaps. Bring in new talent to spur further growth.
  18. Hire Smarter. Hire people who are better at their jobs than you ever could be.
  19. Maintain Perspective Success is fleeting.
  20. Say Please & Thank You. People do things because they want to, not because they have to.
  21. Have Fun. Life’s too short to do it any other way.