SEO Pricing Model - Thoughts?

directmarketingadvice · Mar 27, 2010

If you were looking for an SEO, what would be your response to someone who wanted to charge a fee plus royalties.

With the royalties being 10% of what it would cost you to buy the traffic via PPC.

e.g. Say

(a) it would cost you 80p per click to be in position #4 in the PPC rankings

(b) The SEO increases your SEO traffic from 1,000 per month to 20,000 per month

In that case, the monthly royalty would be

(20,000 - 1,000) x 80p x 10% = £1,520

(It would vary per month based on actual organic traffic)

Would you think this sort of deal was fair?

Or would you think "It doesn't matter who you hire to do SEO - as long as the person is competent - so I'll hire someone who doesn't charge a royalty"?

I'd like to know people's opinions.

Cheers,

Steve

Kev Jaques · Mar 27, 2010

Part of what you need to do there Steve is to educate them.
It's important to tell them what the important metrics are so they can see the return. It will put the fees into a more realistic expectation for efforts given.
It also depends on if they can handle the influx, no point in getting them lots more if they cannot handle it, plus of course it depends on their budget (and if they are a tinkerer

).

I would expect some kind of conversion changes in order to improve based on more traffic coming in, so perhaps you could look at combining that kind of thing as added value. You would then be in a better position to control the fees appropriately, after all there is more percentage click throughs via organic.
I would say it also depends on product/service too, if it's automated electronic downloads then it's easy money. However, if it's making something which takes weeks then they're not going to be in a position to meet demand (unless they expand? another whole level of pain).
I think there is a void there though and it looks like you want to bridge that gap, I would say it was fair but possibly look to provide added value and possibly have different percentage levels for say 3 different packages so it offers a choice to them.

webmojo · Mar 27, 2010

I think you should look at a percentage of sales as the metric rather then click through's. Then you would need to take complete control of the site and optimise for conversions (the dark art's) factoring in orders by other mediums.

Annoying Donkey · Mar 27, 2010

SteveGibson said:
With the royalties being 10% of what it would cost you to buy the traffic via PPC.

Cost of PPC is variable depending on quality score and you can't predict that in advance, at least not accurately. Or are you suggesting the figures offered by google keyword tool? In that case, it could end up costing more for SEO than PPC.

directmarketingadvice · Mar 27, 2010

WeblinkPlus said:
Cost of PPC is variable depending on quality score and you can't predict that in advance, at least not accurately. Or are you suggesting the figures offered by google keyword tool? In that case, it could end up costing more for SEO than PPC.

No, I'm talking about the real amount.

i.e. What the market says is the value of this traffic.

Steve

Mar 27, 2010

SteveGibson said:
If you were looking for an SEO, what would be your response to someone who wanted to charge a fee plus royalties.

With the royalties being 10% of what it would cost you to buy the traffic via PPC.

e.g. Say

(a) it would cost you 80p per click to be in position #4 in the PPC rankings

(b) The SEO increases your SEO traffic from 1,000 per month to 20,000 per month

In that case, the monthly royalty would be

(20,000 - 1,000) x 80p x 10% = £1,520

(It would vary per month based on actual organic traffic)

Would you think this sort of deal was fair?

Or would you think "It doesn't matter who you hire to do SEO - as long as the person is competent - so I'll hire someone who doesn't charge a royalty"?

I'd like to know people's opinions.

Cheers,

Steve

Thats one basis for charging but there are to many variables for a one fit all senario.

size of site,product,market,profitability.

Hence not likely to be profitable for a niche site for an SEO.

I have in the past worked on a price per visitor basis ( just like PPC ) but only on a site where I was pretty sure I could increase the traffic by a significant amount.

Earl

directmarketingadvice · Mar 27, 2010

sirearl said:
Thats one basis for charging but there are to many variables for a one fit all senario.

size of site,product,market,profitability.

Hence not likely to be profitable for a niche site for an SEO.

I have in the past worked on a price per visitor basis ( just like PPC ) but only on a site where I was pretty sure I could increase the traffic by a significant amount.

Isn't that what an SEO should be looking for? A site where the traffic can be increased significantly?

Steve

KM-Tiger · Mar 27, 2010

Smacks of Govt Targets, where meeting the target actually distorts the true objective, and produces unwanted side effects.

Getting traffic is OK, but unless it is the right sort of traffic that produces conversions/profit, then it does not have a value to the business that is worth paying extra for.

Perhaps there are businesses where there is a direct correlation between traffic and profit, and the model you propose would work, but I can think of quite a few where that is not the case, and the business would be paying for extra traffic with zero ROI.

Mar 27, 2010

SteveGibson said:
Isn't that what an SEO should be looking for? A site where the traffic can be increased significantly?

Steve

well yes but not always.

A small increase in traffic volume allied to other changes to a site can make a niche site selling the right products very profitable.

In which case I would always work on a percentage of the net profit.

Earl

Connexions · Mar 27, 2010

SteveGibson said:
(b) The SEO increases your SEO traffic from 1,000 per month to 20,000 per month

Cheers,

Steve

Relevant traffic is going to have to figure in there somewhere.

directmarketingadvice · Mar 27, 2010

Let me just clarify something...

The thread starts with the words "If you were looking for an SEO".

i.e. There's a built in assumption that the business owner wants SEO in the first place. This isn't an SEO cold-calling businesses that can't handle extra traffic.

There's also an assumption that their business has the potential to handle enough extra sales to justify the cost of hiring a good SEO.

And, finally, when someone hires an SEO, presumably they discuss keywords before the SEO work is done? So you can assume the traffic is relevant.

(Or, at least as relevant as the traffic generated by a flat fee SEO that doesn't first run an extensive PPC campaign to check conversion rates of different keywords)

Steve

Mar 27, 2010

KM-Tiger said:
Smacks of Govt Targets, where meeting the target actually distorts the true objective, and produces unwanted side effects.

Getting traffic is OK, but unless it is the right sort of traffic that produces conversions/profit, then it does not have a value to the business that is worth paying extra for.

Perhaps there are businesses where there is a direct correlation between traffic and profit, and the model you propose would work, but I can think of quite a few where that is not the case, and the business would be paying for extra traffic with zero ROI.

valid points my experience is that for high volume sites there is a correlation between traffic and profit.

On low volume sites its simply not in an SEO's interest to get untargeted traffic as I suspect most SEO's want to see a business profitable in order that they get paid.

Earl

Mystro · Mar 27, 2010

For me it would be one or the other, why would i pay you twice, once for the work and once for hitting the target, a good Seo should deliver those goals set as should a good PPC manager.

Although understand the concept i would be happy to pay a percentage of my profits over and beyond my current traffic limit, saying that it is a very hard thing to prove and trust would play a very important part, and why pay a royalty when i could just increase my adwords spend would that not also equate to the same deal somewhere down the line.

directmarketingadvice · Mar 27, 2010

Mystro said:
For me it would be one or the other, why would i pay you twice, once for the work and once for hitting the target, a good Seo should deliver those goals set as should a good PPC manager.

That's the question.

Is the answer "SEO is a technical function and, as a technical function, I'll just hire the cheapest competent person"?

Or, if you're willing to pay more to one SEO than another, how do you decide how much more?

why pay a royalty when i could just increase my adwords spend would that not also equate to the same deal somewhere down the line.

If 10,000 visitors were costing you 80p each, then doing it with PPC would cost £8,000.

If the SEO offered to get you 10,000 visitors from the same keywords, but you didn't have to pay for the clicks, why wouldn't you pay £800 for that?

(One tenth of the cost.)

The point is quantifying the value of the visitors generated by SEO - i.e. the value of the SEO to the business.

Not based on the number of hours the SEO spends on the work. Not based on sales (which isn't the SEO's job), but by what your competitors are willing to pay for this traffic.

(And at such a deep discount that it should be the sale of the century.)

Steve

Mystro · Mar 27, 2010

SteveGibson said:
That's the question.

Is the answer "SEO is a technical function and, as a technical function, I'll just hire the cheapest competent person"?

Or, if you're willing to pay more to one SEO than another, how do you decide how much more?

If 10,000 visitors were costing you 80p each, then doing it with PPC would cost £8,000.

If the SEO offered to get you 10,000 visitors from the same keywords, but you didn't have to pay for the clicks, why wouldn't you pay £800 for that?

(One tenth of the cost.)

The point is quantifying the value of the visitors generated by SEO - i.e. the value of the SEO to the business.

Not based on the number of hours the SEO spends on the work. Not based on sales (which isn't the SEO's job), but by what your competitors are willing to pay for this traffic.

(And at such a deep discount that it should be the sale of the century.)

Steve

I would pay for that and i cant imagine anyone not paying for that,

But then comes the same chicken and egg argument, an Seo may promise you that, A PPC Manger can deliver that, one youll pay upfront for and hope thay can deliver, the other youll pay as you go the more you pay the more youll get..

For most business will still depend on the ROI either way and if you look at any sale if you can offer a discount then a sale should be made

Mar 27, 2010

Mystro said:
Although understand the concept i would be happy to pay a percentage of my profits over and beyond my current traffic limit, saying that it is a very hard thing to prove and trust would play a very important part, and why pay a royalty when i could just increase my adwords spend would that not also equate to the same deal somewhere down the line.

well not quite as if you are going for "car leasing" it would cost you around £2 per click.

so 150k clicks per month equals £300k.

I suspect most SEO's would be happy with a tad less.

Being involved in the car lease business I strain to see how many of the companies using PPC make a profit.?

Maybe Steve can explain how they can.?

Earl

Mar 27, 2010

SteveGibson said:
Is the answer "SEO is a technical function and, as a technical function, I'll just hire the cheapest competent person"?

Thats fine if your business is providing enough cash to pay them.

I doubt that there is anything like a cheap competent SEO.

But there may be some gems out there who don't realise what they have or how to utilise it.

Earl

InternetMarketingPlatinum · Mar 27, 2010

Maybe look at the equivalent cost of what they would get for their money elsewhere? i.e. a newspaper advert.

Mystro · Mar 27, 2010

ComputerCoders said:
Maybe look at the equivalent cost of what they would get for their money elsewhere? i.e. a newspaper advert.

Well im no expert in PPC and my PPC for car leasing and 1 or 2 other keywords are nowhere near £2 , my clicks work out at around 22p Granted im not always showing but that suits me i get around 10 enquirys for £20 per day budget which is around 100 clicks

Mar 27, 2010

Mystro said:
Well im no expert in PPC and my PPC for car leasing and 1 or 2 other keywords are nowhere near £2 , my clicks work out at around 22p Granted im not always showing but that suits me i get around 10 enquirys for £20 per day budget which is around 100 clicks

Oh I just looked at adwords estimator,no expert on PPC.

But think it is a complete rip off on googles part judging by the prices for some terms.

Thats a very good enquiry rate.

so how do those 10 enquires convert.?

Earl

Mystro · Mar 27, 2010

sirearl said:
Oh I just looked at adwords estimator,no expert on PPC.

But think it is a complete rip off on googles part judging by the prices for some terms.

Thats a very good enquiry rate.

so how do those 10 enquires convert.?

Earl

Like any other in our market, i tend to call myself the quote ***** i quote a lot, what i do know my monthly bill is around £650ish per month running adwords from 11:00am till my £20 per day runs out

From all the enquirys i tend to get i convert about 5% overall this dont include declined customers and customers who decide not to proceed with their order, as if that were the case and they all went through my conversion would be around 10%..

I need to know exactly what i am converting though as some of the leads are from adwords some are organic now, as i am now page 1 for contract hire and that has helped loads.

I could do much better as i am not a sales person and new to the industry, i am just working on a new website and some new communications package which should also help.

Once my Business gets a year old ill get in touch with Mr Gibson to see if he can improve and help with my conversions

Mar 27, 2010

Mystro said:
Like any other in our market, i tend to call myself the quote ***** i quote a lot, what i do know my monthly bill is around £650ish per month running adwords from 11:00am till my £20 per day runs out

From all the enquirys i tend to get i convert about 5% overall this dont include declined customers and customers who decide not to proceed with their order, as if that were the case and they all went through my conversion would be around 10%..

I need to know exactly what i am converting though as some of the leads are from adwords some are organic now, as i am now page 1 for contract hire and that has helped loads.

I could do much better as i am not a sales person and new to the industry, i am just working on a new website and some new communications package which should also help.

Once my Business gets a year old ill get in touch with Mr Gibson to see if he can improve and help with my conversions

Cheeky bugger getting above moi for contract hire.:|

well done.

your conversion sounds in the ball park.

Earl

Mystro · Mar 27, 2010

sirearl said:
Cheeky bugger getting above moi for contract hire.:|

well done.

your conversion sounds in the ball park.

Earl

As we know, we can all get there, its staying there thats the trick ...:|

directmarketingadvice · Mar 28, 2010

sirearl said:
well not quite as if you are going for "car leasing" it would cost you around £2 per click.

so 150k clicks per month equals £300k.

I suspect most SEO's would be happy with a tad less.

Being involved in the car lease business I strain to see how many of the companies using PPC make a profit.?

If you're seing a company there month after month, then (unless they're a big company that can afford to lose a fortune each month) you can be pretty sure that they are making a profit.

It may be that the Adwords keyword tool result is totally inaccurate. (It often is - and usually on the high side)

Steve

directmarketingadvice · Mar 28, 2010

sirearl said:
Thats fine if your business is providing enough cash to pay them.

I doubt that there is anything like a cheap competent SEO.

It depends how you see the SEO industry.

Is it mainly made up of competent people who get consistent results - and is, therefore, a buyer's market where you can shop around for price?

Or is it a minefield where you should latch onto anyone you're sure can get you the rankings? i.e. A sellers market where you should expect to pay a high price.

Steve

directmarketingadvice · Mar 28, 2010

sirearl said:
Oh I just looked at adwords estimator,no expert on PPC.

But think it is a complete rip off on googles part judging by the prices for some terms.

The prices paid are determined by aution - i.e. they're set by the market, not by Google.*

If the market's willing to pay £x per click, then that's a reflection of what people are making from those visitors.

Steve

* Except in the case of markets with few ads, where Google sets minimums in order to block irrelevant ads from showing.

Mar 28, 2010

SteveGibson said:
It depends how you see the SEO industry.

Is it mainly made up of competent people who get consistent results - and is, therefore, a buyer's market where you can shop around for price?

Or is it a minefield where you should latch onto anyone you're sure can get you the rankings? i.e. A sellers market where you should expect to pay a high price.

Steve

I think SEO is probably a minefield judging by the unsatisfied comments one gets on the forums and elsewhere.

As I have said many times The judge of an SEO's ability is google et al allied to recommendations.

Hence when I see a new SEO appear on the forums,my cry is always show us your results which will then give me and others a fair idea as to whether they know there onions.

As for high prices I don't think that always follows as it may depend on the SEO's sense of fair play.

I.E If the business is not going to earn a lot of money or the work involved is easy then one may charge to suit.

Obviously I am only talking about my own method of working,but I suspect there are quite a few other SEO's that do work that way, inspite of all thats written about us still.

Have a heart and real blood.

Its not all about money for many as the chase can give quite a buzz.

Earl

franchiseshop · Mar 28, 2010

I've been looking into a company that offers a service like this - Pay Per Results, so basically you pay for each additional website visitor you gain. What I did not like about it was you got tied into 1 year minimum contracts with offers of reducing the cost per visitor if you signed up to a longer contract of 2 or 3 years. There is also a fairly substantial initial fee.

What concerns me about this is the visitor tracking as they basically set an average amount of visitors you get per month based on average results from your google analytics account, you agree to the number and they charge you for each visitor above the agreed amount. So any SEO work you do yourself or gain naturally though content, natural organic links and site age you will end up paying to them at the set cost per visitor.

The service sounds good but it needs to implement proper tracking and only charge for those key phrases they have targeted instead of per visitor.

It all sounds a bit over complicated too, Pay Per Results is much better if you simply say "no1 ranking = £1000 x 10 key-phrases targeted" They gain 4 no1 positions and hand over 4k."

Mar 28, 2010

franchiseshop said:
It all sounds a bit over complicated too, Pay Per Results is much better if you simply say "no1 ranking = £1000 x 10 key-phrases targeted" They gain 4 no1 positions and hand over 4k."

so you will hand over 4k for "widgets" and 4k for "mortgages".?

I think you should consider the power that SEO has to build a business many times greater than the original site may have been capable of.?

Earl

franchiseshop · Mar 28, 2010

sirearl said:
so you will hand over 4k for "widgets" and 4k for "mortgages".?

Earl

No

I'll hand over 4k for "Franchise" and "Franchises" - hell, i've give you 10k ;-)

Mar 28, 2010

franchiseshop said:
No

I'll hand over 4k for "Franchise" and "Franchises" - hell, i've give you 10k ;-)

try 200k or half the profits and I might twitch.

I mean what do you think it would be worth to have 10,000 visitors a day.?

Earl

I, Brian · Mar 29, 2010

SteveGibson said:
If you were looking for an SEO, what would be your response to someone who wanted to charge a fee plus royalties.

With the royalties being 10% of what it would cost you to buy the traffic via PPC.

e.g. Say

(a) it would cost you 80p per click to be in position #4 in the PPC rankings

(b) The SEO increases your SEO traffic from 1,000 per month to 20,000 per month

In that case, the monthly royalty would be

(20,000 - 1,000) x 80p x 10% = £1,520

(It would vary per month based on actual organic traffic)

Would you think this sort of deal was fair?

Or would you think "It doesn't matter who you hire to do SEO - as long as the person is competent - so I'll hire someone who doesn't charge a royalty"?

I'd like to know people's opinions.

Cheers,

Steve

All sorts of minefields here!

1. Traffic isn't the issue - it's targeted traffic. Traffic is easy to get, it's converting traffic that's all important.

2. It can be difficult to get analytics set up fully with a client (there's a brand I'm sub-contracted on - it's taken them over a year just to decide they should install an analytics program!!)

3. How much of traffic and sales increases be pinned down on SEO actions only, especially when other communications channels are active? (ie, conversions via phone)?

4. If the client dabbles in tweaking their pages without telling you, or sets up a Facebook profile and Twitter account with a few dozen followers, they *will* argue this has contributed to sales increases and not the SEO's actions

5. If client gains sales for keywords not originally targeted, then someone's going to argue cutting these out from royalties to the SEO, despite that authority and longtail issues from the campaign are probably impacting

6. The proposed system actually makes SEO more expensive - the big lure of SEO is that natural positioning can be far more cost-effective than PPC. The royalty system would make SEO far more costly and potentially non-profitable for the resources used to achieve such traffic figures (ie, mortgages, loans, insurance).

7. Different companies charge at different levels for SEO anyway - a basic breakdown may be:

Bottom feeders - $10,000 junk directly links for $50!
Middle ground - SME focussed solutions that price pretty fairly on leveraging strong assets
Corporate level - All fees increased by X just because client has deep pockets, regardless of actual cost of campaign

Ali-v-8 · Mar 29, 2010

I can see all sorts of problems if this is an existing project.
If its a new website then you can agree a percentage of what it makes.
With an existing you would definitely have to work out a flat line to gain traffic above. Then work out a percentage of that figure. Usually the will work out an average every month on previous years takings.

webmojo · Mar 29, 2010

My view is that it's not about traffic, it's about tangible growth in profit. Profit is the only true metric of how successful SEO and web marketing is.

Mystro · Mar 29, 2010

webmojo said:
My view is that it's not about traffic, it's about tangible growth in profit. Profit is the only true metric of how successful SEO and web marketing is.

In this case it would be all to do with traffic as you would have no other way of measuring it,

JElder · Mar 29, 2010

webmojo said:
My view is that it's not about traffic, it's about tangible growth in profit. Profit is the only true metric of how successful SEO and web marketing is.

And the other issue is that the SEO company has no control over other costs. The client could be paying over the odds for their raw materials, staff, office space, etc. Profits (net and gross) would be lower than exactly the same SEO campaign run for a more efficient client.

That's not even getting in to creative accounting!

Mar 29, 2010

Blimey I been doing it for many years.

It is just not that complicted.

Either a percentage of the net profits or

A price per visitor above the existing level of traffic for an existing site.

so if a site starts off with 50k a month and is increased to 150k by the SEO then 100k x the agreed rate per visitor.

yes sure a few extra visitors may come via sources other than the SEO's work.

But my experience is that most people are so happy with the results they could not give a toss as the cost of visitors is so much lower than any other source ,and if any did I doubt I would be working with them.

Earl

Mystro · Mar 29, 2010

sirearl said:
Blimey I been doing it for many years.

It is just not that complicted.

Either a percentage of the net profits or

A price per visitor above the existing level of traffic for an existing site.

so if a site starts off with 50k a month and is increased to 150k by the SEO then 100k x the agreed rate per visitor.

yes sure a few extra visitors may come via sources other than the SEO's work.

But my experience is that most people are so happy with the results they could not give a toss as the cost of visitors is so much lower than any other source ,and if any did I doubt I would be working with them.

Earl

Agreed in principle, but many sites are different and some convert higher than others, the only way i can see this working is by a % of profits. it keeps it simple that way

As if i were to increase a sites traffic and then take a % of CPC this could so easily be manipulated, buying traffic these days is so cheap its very easy to do.

Then imagine all the arguments about where the traffic come from and why am i not converting Etc, Etc, profit share is the only real way I can see

directmarketingadvice · Mar 29, 2010

sirearl said:
Blimey I been doing it for many years.

I wouldn't have thought so either.

To me the proposition is:

"Your competitors are paying £x per visitor for this traffic. I'll get it for you for £x/10. Want it?"

And the answer is either:

(A) Yes I'd like the traffic at 1/10th of what my competitors are paying.

or

(B) No, I can get it more cheaply from another SEO.

(Remember, this is for people already looking for SEO.)

Of course, the details have to be ironed out so the business owner would be protected.

But, as a proposition, I would have thought it just comes down to whether or not you believe option (B) exists.

(Which would take us back to the "buyer's market v minefield" question I asked earlier.)

Judging by the answers on this thread, most people are either leaning towards (B) or they're simply unwilling to do profit share deals.

Steve

Mar 29, 2010

Mystro said:
Agreed in principle, but many sites are different and some convert higher than others, the only way i can see this working is by a % of profits. it keeps it simple that way

As if i were to increase a sites traffic and then take a % of CPC this could so easily be manipulated, buying traffic these days is so cheap its very easy to do.

Then imagine all the arguments about where the traffic come from and why am i not converting Etc, Etc, profit share is the only real way I can see

I agree a pecentage of net profits is possibly the fairest solution.

But one may have a tad difficulty coming to that agreement with companies that are in the multi million pound profit area.

Earl

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