For six years now, I’ve been the founder, CEO, and president of a search engine optimization company, and I’ve maintained one additional role, that I soon hope to relinquish.
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:
It’s that last piece that I’m going to address, today.
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.
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:
*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.
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 .
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.
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
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