I agree with you, but some of us has already moved in that direction
First of all, $150 per hour? You must be kidding
- we don't charge anything less than $400 these days and even at that rate we are very selective. In fact, I am starting to price more and more work on the value of it rather than the hours spend. We have also been moving more and more of our business into self-publishing and affiliate/revshare deals and these often pays much more than $400/hour.
But back to the pricing models ...
- Hourly rate
I think this is still what most SEO's do. Charges I see is anywhere from $25 to $800 an hour
- Project rate
This is usually calculated on a hourly rate basis - however, as mentioned above, both me and others are moving into charging projects per value instead of estimated hours. In any case you can find projects ranging from a few hundred bucks to several hundred thousands.
- Pay per rank
I personally don't like this model and never sell based on ranks alone. First of all because there is no secure objective way to meassure ranks and also because I don't feel the rank in itself shows enough value. The value is not in the rank but in the visitors and conversions that might bring. So let's meassure that instead!
- Pay per click (PPC/CPC)
Way before the PPC engines came around we where charging SEO work on external domains on a CPC basis. This still works great - especially working for the large media agencies as it is very familiar to them and easy to budget. In recent years some companies have also moved into a pay per click model for on-site optimization based on the increased number of organic visitors to the clients site. However, that is a little more tircky to manage for many reasons, that, I think, requires a different thread
- Pay per action (PPA/CPA) - lead, download or sale (well, actually anything meassurable)
This is actually "just" afilliate marketing at its best. We generate traffic - you pay us on the value. This model has turned out to be one of the best for us as we get more freedom from the clients to do what we KNOW is right to do and they care less about the details as long as we produce good steady results. And if we don't - they don't get charged. That works! Also, in my experience, clients almost never cancel these kinds of deals - why should they? As long as it works, they make money, and if it donsn't work they don't pay anything. It's a win-sin.
- Pay per equity (PPE/CPE)
I haven't seen many SEOs get around to this model yet but I think we will see more of it in 2006 going forward. Good organic SEOs are going to become so expensive that small and mid-sized companies will start to offer shares in their companies. I have already got a few offers like that in 2006. I have a lot of trust in this new model. This will, in effect, turn us, the SEOs, into a sort of "Organic VCs" - we invest strategic knowladge about how to integrate with the web, the search engines and generally gain better visibility. As I believe that what we do is key to many online companies success it is only natural to welcome us to the executive management and honor our valuable "investment" with a fair share of stocks. It is very hard to say what a fair percentage is in general. It really depends on the size, potential and track record of each individual company.