How do you price PPC campaign management?

[clickagent75]

What are the methods of pricing PPC campaign management for consultants and agencies that handle them for their clients?

Do you price per number of ads/keywords? Hourly rate? Percentage of conversions?

Any insight would be very helpful.

Thx!

[AussieWebmaster]

Most agencies price as a percentage of spend or a flat rate per month based on keyword numbers etc.

[clickagent75]

What's an industry avg percentage of ad spend? 10-15%?

Or is it pretty much all over the map depending on the market?

[adamap]

10%-15% is what I've come across most.

[clickagent75]

Working for 15% of ad spend would mean that clients would have to spend a minimum of $1000 to be worthwhile.

I've come across percentage, flat hourly rate as well as pay for performance. It was suggested in another forum that if the client's goal is to drive traffic to the site that they charge a penny or two per click.

What do you think about pay for performance models? And what would you use as a metric? Volume of traffic, CTR, conversion...?

I'm trying to come up with a fair but lucrative pricing model.

[David Wallace]

We used to charge by percentage but now find it more favorable to charge an hourly rate based on as Franks says, the amount of keywords and size of campaign.

[AussieWebmaster]

Funny how people have so many different ways to work this. I know people that work from a CPA after they develop a baseline cost but there you need someone that is willing to keep the budget open if the price is right.

Where there are limits you can work hourly or percentage with bonus incentives

[stelios]

Some big media agencies charge 3-5% (this is for the UK)

I think 15% is fair!

[AussieWebmaster]

Originally Posted by stelios

Some big media agencies charge 3-5% (this is for the UK)

I think 15% is fair!

some agencies have grandfathered commission deals with Google

[Angela Charles]

Originally Posted by clickagent75

Working for 15% of ad spend would mean that clients would have to spend a minimum of $1000 to be worthwhile.

We've found that if the client isn't willing to spend a minimum of $1000, it's really not worth our involvement -- They won't pay enough either as a percentage or by the hour to cover our time investment.

[AussieWebmaster]

Realistically all ppc advertisers should be buying as much as is available of profitable keywords.... obviously initially many do not have the budget but they should be told that it is a 'zero sum' game - put all of your profits into making more profits

[stelios]

Originally Posted by AussieWebmaster

some agencies have grandfathered commission deals with Google

Not so much the google commission is low and google will most likely stop it in the next year!

[Toure]

Not so much the google commission is low and google will most likely stop it in the next year!

Google have confirmed BPF will end next year.

[abbottsys]

Originally Posted by clickagent75

What are the methods of pricing PPC campaign management for consultants and agencies that handle them for their clients?

Do you price per number of ads/keywords? Hourly rate? Percentage of conversions?

Any insight would be very helpful.

Thx!

Simple. I charge $150/hour for my time.

[StockholmConsulting]

We should face it....PPC is a lousy business for agencies. Most clients do not benefit from spending even $300 on PPC consulting.

If we charge 15 percent on a campaign costs $3000 we would get $450.

If the client has a $10 cost of conversion our $450 ads $1.5 per conversion. He is then paying 15 percent more per sale. That is a big difference.

However, not many campaigns get 300 sales per month.

They money is not there anymore.

In addition, the $450 is not much money for managing a monthly campaign. You spend at least 20 hours on a 300 conversion campaign per month. You salary is then $22.5 before taxes.

I predict the PPC consulting industry will be replaced by Affiliate hunters in the near future if not already.

Finally, for the poor client paying you $150 per hour for managing his/her campaign should sue you for fraud. No PPC consultant is worth that much (unless very very big campaigns). Just spending one hour per day on the campaign will cost him/her over $3000 per month.

[cogbox]

Originally Posted by StockholmConsulting

Most clients do not benefit from spending even $300 on PPC consulting.

If this is true they should work with other people. If it is true for your clients, you should be in a different business.

Originally Posted by StockholmConsulting

If the client has a $10 cost of conversion our $450 ads $1.5 per conversion. He is then paying 15 percent more per sale. That is a big difference.

Any good agency/consultant should be able to improve their campaign performance by more than 15%. I'm sure you already know this, but the point is that your efforts should result in either a) higher volume of leads at equal or lower costs per lead, or b) equal lead volume at lower costs per lead. I would not work on a project where the additional value my work creates does not more than compensate the client for my time.

Originally Posted by StockholmConsulting

Finally, for the poor client paying you $150 per hour for managing his/her campaign should sue you for fraud.

I'm not sure why I'm even commenting on this, but $150 an hour is not an unreasonable hourly rate depending upon the nature of his work, his qualifications, and the clients and campaigns involved. If he provides a good value to his clients, I'm sure he'll continue to find plenty of work at that rate.

[jin]

at my current job as an agency we charge 15%.

at my old job at an ecommerce company, we paid the ppc consultants based on conversion - it was a very complicated pricing model depending on the value of the conversion. they got paid very very well. after a while we had to adjust it a bit b/c we were paying too much, but overall we were both happy w/the results.

[alternateimage]

So 15% seems to be the norm. It is with us also.

What about a set up fee or a minimum per month?

[J Clark]

We typically charge 10-12% with a minimum ad spend of $3500. We build in, typically, a $500 campaign setup, $350-$500 mo. campaign management (dependent on the # of keywords) and $250 for reporting if they choose.

Regarding the comments about there not being money in PPC anymore...I would argue that, as with most agency offering there are always ad-ons to increase your profit.

An example for PPC would be landing pages. It will not only help the campaign perform at a much higher level (making you look better) but you can build in more of a 'cushion' in pricing the landing page dev.

Another 'add-on' is different levels of campaign tracking - Google Analytics (a free program so any charge is a profit minus set up time of course), HBX, Web Trends or whatever software you use.

[Moka]

Hi Guys,

I've been working in an agency for a while & just recently branched out myself. I'm also having a few issues in working out what to charge & what would be fair all round.

My thoughts are that i like to charge based on the number of hours I would expect to work, be this set-up charges, ad-hoc work, training or retainers. My actual hourly rate varies between £55 for longer term retainers up to £80 for ad hoc work.
We all know that set-up is often intensive and time consuming, so this is where i would also charge a lump sum ranging from £1500 - £2400 (i do usually take on larger accounts for this but if I have enough time & the client is friendly I would consider much smaller campaigns at much lower set-up costs).

My reason for opting to measure my time in hours is that it allows me to plan my time & resources effectively between clients, thereby ensuring that I can give them 100% focus and that I do the best possible job for them. I am also beginning to start up my own agency and will eventually hire staff, so this kind of payment model really helps.

Can anyone tell me what they think? I do have a lot of experience on high profile campaigns & have managed an agency SEM team, but this doesn't stop me from worrying that I am charging too much! The problem being that every time i go below these charges, due to doubts, I then think that I am not really covering all costs effectively and I have done both myself & my clients a dis-service.