What's The Best Way To Price SEO?

[KPickenJr]

Hi - not sure if Im crossing any lines here but I don't want to pretend to anyone that I am a customer.....

How do you charge customers for SEO? For example, do you price it on visitors to the site that came from SE's... An hourly rate? etc etc

Not looking for any figures, just like to see how the other guyz do it

Thanks

KPj

[Shoko]

well, basically you can price it any way you want.
Some SEO companies price by the hour / Project
Some by Success Fee (based on visitors, ranking, etc)
and other creative pricing methods

I would like to see the industry start pricing by the value of the work we do to our customers!!!
problem is: most of the companies in this industry were established by programmers / it people who doesn't have a clue on pricing and / market value of their work to their customers.

for my opinion, the prices we take in this industry are far too low!
if an SEO expert can solve an indexing problem in a customer site in lets say 2 hours, then this expert charge his customers by for 2 hous + his profit... lets say: $150 per hour ! OK?
so he got $300 for these 2 hours job.

worth to the customer: $2,000,000 per year - from now and forever (or at list the next major change in Google ;-)

Hoe much should this SEO expert charge for the job ?!
not $300. that's for sure.

when you buy a Mercedes, do you pay only for the cost of building it?
Don't you pay also for R&D cost ?
Don't you pay also for the "value" it represent for the customer who buy this luxury car ?

what about SEO ?
what about your research hours?
what about the value YOU bring to your customer ?

something to think about....

[Mikkel deMib Svendsen]

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.

[Shoko]

anyone of us who went through the internet bubble blowup in 2000 - 2001, have seen this happen:
a company in cash problems give up it's outsourcing services before anything else. e.g.: cleaning (the cleaning company can clean up twice a week instead of everyday... and tells its employee to wash their coffee cup themselves... then comes a cut in the marketing spending... then SEM etc..)

SO, these days we are trying to get equity position in internet companies we do SEM and Internet marketing services for.

I think this is a good way to expand your business and spread your investments (/risks) in a market to small and un clear future...

BTW - Mikkel, fixed the links on your HP (google:define)

[JohnScott]

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.

In my opinion, this is the fairest to the customers.

[dannysullivan]

I thought we had another thread on this, went looking and didn't see. So carry on building out here -- great stuff already! There's also some related material in this thread, How To Start & When You Can Charge For SEO.

[Chris Boggs]

Here is one related thread:

Starting SEO Business - Any Advice?

As far as pricing, we have always gone with packages based on hourly rates. Depending on the work required, those packages may lean more towards linking than content development, which would allow for a more "spread-out" pricing based on a continual effort. If it leans more towards content development, then the up-front costs will be greater.

In either case, the pay-per-performance model is in my opinion a difficult one to justify, unless you are willing to wait the months sometimes required to reap the benefits of your labor. Also, such a plan would require a much longer contract period, in my opinion. We have had a few instances where people were dissatisfied after 4 or 6 months and left. Two to three months later, presto! Top rankings and they were no longer a client. How would this "residual results" possibility affect such a payment plan? You guessed it... I would require at least 18 months if not 2 years minimum. And, as I said before, this is if you as an SEO can afford to be paid Tuesday for that hamburger today.

[mcanerin]

I prefer the "figure out what will make the clients CFO head explode and then charge exactly $1 less than that" approach, but it's not always practical.

By the hour:

Pro: accountable, easy to understand
Con: very high differential between the skills necessary, so it's hard to set a value on an hour - you do different things every hour that require different skills and knowledge. I can save a website with one well chosen sentence, or work for a week with very little increase in ranks but with an eventual long term effect - how do you measure that fairly in hours?

By the job:

Pro: really easy to understand
Con: "Feature creep", and clients tend to have unrealistic expectations of the results

Percentage of Profits:

Pro: fair
Con: accounting can be a nightmare. Many scammers offer to share profits but then back out/question the formula when it comes time to pay. Only works well in some areas.

PPA/C/etc

Pro: measurable
Con: although fair, after a while clients often begin to question the amount of work being done. Also, there is usually a lot of work up front followed by fairly easy time later. The clients usually overlook the first and complain about the second

I usually give a project fee based on the estimated hours spent for a fixed initial period, then charge either a fixed maintainance fee or an as-needed hourly fee, depending on client needs. Thi allows me to deal with the fact that most SEO campaigns are "front loaded" on work (ie you work like crazy for a bit, then wait for results, then fix immediate issues and begin long term strategies at a more liesurly pace) which makes it so that the largest amount of time is almost always in the beginning, which can scare some clients off in a pure hourly strategy system.

My projects have ranged from a low of $500 to a high of $1.2M, with the average being in the 5-80K range. AS you can see, this is a very wide range, and it reflects the clients, my staffing needs, travel, additional services like website design, etc. Also, most of my clients have more than one website, and many have had SEO's working on them before (which can either make the job easier, or much, much harder).

In short...it depends... (sorry)

Ian

[St0n3y]

I turn potential clients away when they ask for any type of pay for performance deal, much for the same reasons that Chris mentioned but some others as well. Recently we were in a situation to help a friend out do was in a similar deal with a site he designed. We got on board, did a bunch of work and then the client switched back end systems effectively tossing out all the work we had already done.

[Shoko]

I Agree with Chris that pricing on Cost Per Performance is tricky.
Usually, we (SEO) do large part of the hard work at the beginning of a project.
…and this work can take your customer pretty far for a long time.
more then that, even if you worked with a customer for a year, and then stopped. Your customer will keep on enjoying the fruits of your work many months later.

so:
1. make sure you have a long term agreement - 3 to 5 years is great. 2 years is not so great. 1 year - DON'T DO IT !

2. make sure you have milestones that once you reach them, agreement is renewed automatically for another period, and so on.

3. if you are not working in a well organized affiliate program (like Casino's have), and / or if you are doing some of the work on customer's site, and specially if your customer's IT people are responsible on implementing the changes to the site...

Make sure there is a "penalty fee" for your customer, so if he didn't finish implementing the tech changes or he didn't do all the content / tags changes needed to his site in a limited time frame - he start paying you monthly for the work you do.

Otherwise - you will do all the hard work, and your customer won't have any incentive to do the work on his side (except for the extra traffic... bla bla bla...)

4. make sure you know how you count your fee: visits? uniques? downloads? sales?
make sure you know which report on which statistic / accounting system you refer to when checking your performance.
make sure you know what are the initial settings of this report.
make sure you have full access to this report.

I have been in a situation that a customer changed something in its WebTrends report, not realizing this will influence our reports as well.
it took us 3 months to understand why there is a slow down in visitors from SE...

5. Don't enter a deal, if you don't know what you dealing with.
the general rule is: You Don't Know What you are Dealing With.
on my opinion, you can not enter a PP Performance deal unless you already work with this customer for a substantial time or with another customer in the same business arena:

You don't know your customer business model (accept for what he tells you)
You don't know how much each visit / visitor / registration / download is really worth to him
You don't know his churn rates (if relevant)

so, suggest working for the first year on monthly fee, and in the end of the year - see if you can renew your agreement on PPP model.

6. make sure payments policy is clear. no charge backs, no holding back of payments because WeTrends didn't work for a couple of weeks this month, so you customer don't know how much to pay you, and he wants you to wait until his IT people will have the time to retrieve the lost 2 weeks of data...

7. make sure you work with a well established customer. not a brand new site with no money to invest and thus wants you to take some of the risk, since he can not afford it.
if he can not afford it himself,. he probably want have money to pay you when you will do good.
enter such a deal only if you customer is already a well established business, and YOU are convinced (YOU are CONVINCED, not just because your customer told you so) the reason he wants to do this kind of deal with you is to give you incentive to work harder and get better results for him, and not because of cash shortage or similar...

8. don't do it if you don't have too, unless you are talking about great money like casinos or viagra dealers offer... but that is a whole different SEO game, isn't it ?
[and its belong to a different thred]

9. Good Luck

The best way to price is research talent. Real SEO is a time consuming task and as most experts will tell you its a battle you'll never win. There are some good benefits but pricing of less that a gold package from anyone isn't cost effective.

Hammer44

Originally Posted by KPickenJr

Hi - not sure if Im crossing any lines here but I don't want to pretend to anyone that I am a customer.....

How do you charge customers for SEO? For example, do you price it on visitors to the site that came from SE's... An hourly rate? etc etc

Not looking for any figures, just like to see how the other guyz do it

Thanks

KPj

[akhil]

Dear xyz... u never rate any seo...

[strategicrankings]

Agree with Shoko AFA pricing with respect to value of work.

We recently redesigned & SEO'ed a long established site, in the mortgage industry, which already has a great number of backlinks. But the site was not ranking well due to wrong keyword target and bad/no on page optimization.

I admit, it didn't took us too long to put the site in the right direction with some highly competitive rankings.

So the value we have added to the owner's business, can it be calculated in terms of hours when we know that the new rankings will definitely positively strongly change this business sales situation?

The mercedes analogy is good example.

[mcanerin]

So the value we have added to the owner's business, can it be calculated in terms of hours when we know that the new rankings will definitely positively strongly change this business sales situation?

Exactly!

You know, your family doctor could spend a LOT of hours with you throughout a year, and those hours are very valuable and necessary, but even 1 hour of a brain or heart surgeons time could save your life now and make it a whole lot better in the future.

I could see charging by the hour where the value was time, the goals long term and the progress slow and steady.

But it doesn't make sense when the result is extreme and very quick:

Joke:

A fellow works at a steel mill for most of his life. One day, he's laid off because a new machine comes in to replace him.

2 months later, he gets a frantic call from his old boss. "Bill, I need your help, the machine is broken and we can't figure out what's wrong with it - the whole plant is at a standstill!"

So Bill goes over to the plant, walks around checking a few things and then finally pulls out a piece of chalk. He goes over and marks 3 parts - a switch, a gasket and a small servo. "Replace these parts and you'll be fine" he says.

The plant manager is ecstatic, and replaces the parts. Sure enough, the plant is operational again.

A week later, the plant manager gets Bills invoice. $50,050.05!

Agast, the manager phones up Bill and says "What is this! All you did was walk around and make 3 marks! Explain this invoice to me."

Bill replies "The .05 is the cost of the chalk. The $50 was my time for coming down here"

"And the remaining $50k?!"

"The $50k is the 40 years of experience it took for me to put the marks in the exact right spot and solve your million dollar problem."

Bill got paid.

Added: Personally, I think Bill UNDERCHARGED.

Ian

[sitecreations]

Well, I have a lot LOT! of trouble when my clients get my hourly bills (even though I attach results reports to them.) At best it's a grumpy phone call, and at worst, they simply don't pay without me begging.

I've given lots of thought to productizing my offerings. That is, instead of saying "$xxx/hour", I might say "You might like the LinkMaster program, which is $xxx per month"... with a built in hourly cap. Example ideas:

* Organic Bronze
* Organic Gold
* LinkMaster Bronze
....etc....

Anyone have thoughts about productizing SEO work to make it easier for people to understand and bill for?

[PerformanceSEO]

We recently were bid against a company who wanted to charge the client $250/mo. The client's ticket items range from $15,000 - $100,000 and they are spending $250,000 PER MONTH on PPC.

If the client sells just ONE item from their Organic rankings, they will have paid for about 5 years worth of SEO at $250/mo (based upon their profit).

I would just like to say to all the SEO companies out there that are pricing their SEO services at DANGEROUSLY low levels:

You are destroying the inherent value of SEO, which is something this industry has worked so hard at building up over the years.

Ask yourself:

1) What are top organic rankings worth to the client?
2) What are they currently spending on PPC?
3) What is the ROI they are currently getting from their PPC programs?
4) What is MY cost?

All of this will help you price your services correctly without over or under valuing yourself or the industry as a whole.

[seoplusdesign]

[*]Pay per equity (PPE/CPE)
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.

After seven years of sweating my shirt for others, I came to realize that staying in this SEO business is only worth it if you get a fair share of stocks. I already partially own a company and will definitely stay in that route. Come on guys, in the years to come, it is all about visibility, and you cannot afford to work for peanuts these days given the quality of knowledge you already possess. Yes, pay per equity is the way to go.

[Shoko]

Originally Posted by PerformanceSEO

I would just like to say to all the SEO companies out there that are pricing their SEO services at DANGEROUSLY low levels:
You are destroying the inherent value of SEO, which is something this industry has worked so hard at building up over the years.

PerformanceSEO - you are absolutely right !

about what Seoplusdesign wrote:

Originally Posted by seoplusdesign

Yes, pay per equity is the way to go.

well, it is defiantly ONE of the ways to go…and actually,

It doesn't matter which way you choose to price your work, as long as you do it right and price it in market value for your customer !!
not for you !

Since we work (actually: live) inside our industry, we tend to think everybody knows what we know. It happens to me time after time:
I come for a meeting with a client and start talking with him about code lines, link building, content changes… and suddenly, I look in my customer eyes and I see total confusion, misunderstanding... they are completely baffled!
Then I start all over again, using simpler terms.

My knowledge, YOUR knowledge is something this community share.
Outside our world people don't understand this. This is our expertise!
Don't give it away for a hand full of gold...
Give it for sack of gold ;-)
Make it worth the effort you put into learning all this stuff.

[Carlos Chacón]

Originally Posted by Shoko

.....
Outside our world people don't understand this. This is our expertise!
Don't give it away for a hand full of gold...
Give it for sack of gold ;-)
Make it worth the effort you put into learning all this stuff.

I’m agreeing with this.
SEO rates will depend basically of 2 main factors:
-Your client
-Your REAL experience on the Industry

Why?
Your client:
How deep is the SEO effort to work with? (Is this a new site? What kind of website: dynamic, static, with frames?)
What kind of Industry it does belong? (Hotels? Tourism? , Real Estate?)
What he/she really wants? (Does he/she understand that this a monthly sequence?, Is he patience?)

Your experience:
How long are you being in business? (SEO/SEM businees ONLY)
Can you prove your skills? (Your own page OR some clients projects)


Every single project will be different, I think we can set up some quote ($) range but without any specific rate.

[Mikkel deMib Svendsen]

I’m agreeing with this.
SEO rates will depend basically of 2 main factors:
-Your client
-Your REAL experience on the Industry

Don't forget the "BS-Factor" This is a big part of any sales of marketing services and products. You and I may be equally qualified for a job but I may be able to sell it at 10 times the price you quote - and maybe even actually GET the sale just because the client believes "you get what you pay for" ... Thats the BS-Factor and it rocks! hehe