Would this work as a pricing structure?

[intelligentppc]

Still struggling with how to best 'sell' my Google Adwords (PPC) expertise. I'm taking on clients at a very fast rate at the moment but so far I've done a mixture of the following for them:

- Skype consultations (charged per hr)
- Adwords written report/healthcheck (one off fee)
- Monthly campaign management (charged on a % of spend)

A guy at a big agency recently told me that agencies are moving away from a % of spend model to monthly retainer fees based on hours put in. I don't really understand how this works and it surely leaves the risk of agencies twiddling their thumbs and charging for hours not really spent on the campaigns.

Someone else suggested that I offer the following:

- A guarantee that after 1 month, I would increase a client's conversions whilst simultaneously improving their ROI.
- If I'm successful, the client must agree to a 6/12 month contract (lower fee for longer contracts) which would be a set monthly fee, no longer tied to performance.
- If I fail to improve things in the first month, the client does not pay me a penny.

On the surface it looks like a pretty good model as it's no risk to the client, and I'm very confident in my own ability to save companies money on Adwords. A possible issue would be any major changes rolled out by Adwords, or website downtime etc.

I just wanted to see whether anyone could see any potential flaws in the model, or whether they think another pricing structure would work better?

 

[directmarketingadvice]

On the surface it looks like a pretty good model as it's no risk to the client

There's risk for the client: they're tied to you for another 5-11 months.

Guarantees for PPC are difficult to offer because...

(1) businesses are usually seasonal (or affected by holidays)

(2) new competitors can arrive and push you down the page

(3) competitors can lower prices or improve their offer

(4) products can go in and out of stock

But you could call these things the cost of doing business and accept that there'll be times you'll do a good job, but won't get paid.

Steve

 

[KM-Tiger]

As said the guarantee is risky if you cannot deliver due to factors outside of your control.

Whichever way you do it, you will get better conversion (for yourself I mean) if you can offer a choice. People like to make such a choice - think Economy, Business, First, or Lidl, Tesco, Waitrose - and always have a view on where they fit in.

BTW: Just realised who I am replying to: hope you are well!

 

[leadprop]

The most common way of charging for PPC is a % of spend. The last digital Agency I worked at we charged 10% of spend as fees. Only if a client messed around a lot asking for campaigns and then cancelling did we insist on a set-up fee but that was rare.

 

[Peter Bowen]

I can only give you my experience for what it's worth.

I've found that the clients value having certainty in what things will cost.

I've got 2 kinds of clients - those who want to touch things and tinker and the other kind who just want the results.

I built www.marketingmotor.net for the first kind. It lets them build their own campaigns rapidly without making too many beginners mistakes. They pay a light fee for the system and I charge them per hour if they need intervention. If they're in a reasonably high value business they can afford to run campaigns at below optimal levels and still make money. They're happy and I'm happy.

For the second kind I charge them a fixed monthly fee and they pay for the Google spend. Some months we need to do more work and that drives the hourly rate down, other months there is less work and we score. It evens out over the years. They're happy and I'm happy.

 

[intelligentppc]

BTW: Just realised who I am replying to: hope you are well!

Do I know you?

PS very well thanks!

 

[intelligentppc]

The most common way of charging for PPC is a % of spend. The last digital Agency I worked at we charged 10% of spend as fees. Only if a client messed around a lot asking for campaigns and then cancelling did we insist on a set-up fee but that was rare.

There is a definite conflict of interest with this model though. Why would you want to save a client a fortune (by, example, opting out of the display network) if it seriously eats into your monthly commission cheque?

 

[KM-Tiger]

Do I know you?

PS very well thanks!

Sorry, no, that was me getting mixed up.

 

[leadprop]

There is a definite conflict of interest with this model though. Why would you want to save a client a fortune (by, example, opting out of the display network) if it seriously eats into your monthly commission cheque?

I'm not sure what kind of clients your working with but generally clients will have a set monthly budget for PPC and they will want the best return for that budget. Clients never asked me to save them money, they simply asked me to get the greatest return for the budget they had and that's exactly what I did for every account I worked on. Furthermore most clients will advice on a max CPA which keeps things in profit.

 

[Lenzcrafter]

I find that doing ppc yourself is much better. Read ppc for dummies and off you go.

 

[Chris Ashdown]

PPC for Dummies is only the starter I read that and a few others but still useless and had to hire a professional who charges a reasonable monthly amount, Obviously in the first months they probably loose some money based upon a hours worked to get things into shape, but hopefully make easier money later on and that's how it should be

Most companies are happy to outsource accounting so why not skills like PPC

Mind you after 10 years of using various so called experts my present person is the only one I have full confidence in and hope for a very long and profitable relationship for both parties for years to come

Cannot relate to amount spent on PPC to claimed wages for doing a job, workload should relate to what wages are asked for after all everything you do is time based

 

[Lenzcrafter]

Ok it's basic but it's good for starters.
Remember google do offer a free google adwords number to call. I have called them many many times and they have been massively helpful, all for free!!!

 

[Peter Bowen]

There is a definite conflict of interest with this model though.

Agreed.

PPC for Dummies

I love this book even though I've never read it. When a busy small business owner who just needs to make a few more sales to pay the bills at the end of the month sees that she needs to read 472 pages it's easy to sell something that takes that pain away.

 

[intelligentppc]

Remember google do offer a free google adwords number to call. I have called them many many times and they have been massively helpful, all for free!!!

 

[directmarketingadvice]

I always think that, if you're going to hire a PPC manager because the person has been certified by Google, why not give the job to Google? They'll do it for free.

(Set up and optimisation, not ongoing management.)

Steve

 

[intelligentppc]

Yeah they can easily wreck your account for free.

Thanks for all the advice - I've finally decided on a pricing model, and it depends on the client because some want training whereas others say they want the whole thing outsourced:

Training/consultancy - charged by the hour/day

PPC Management - charged as a fixed monthly fee which is relative to their monthly spend, minimum 6 month contract with a 10% discount for 12 month contract.

 

[Chris Ashdown]

If you have confidence in your work why the 6 month contract, its good for you but you are unknown to the customer, maybe you could prove yourself and then after a few months offer a slightly discounted price if they sign a contract. Both sides win

 

[intelligentppc]

The 6 month contract is there because a big chunk of the work involved takes place at the outset in restructuring or creating new campaigns. It's an alternative to a big setup fee, which is what most agencies ask for, for the same reason.

 

[directmarketingadvice]

Yeah they can easily wreck your account for free.

Because, if Google knows who is and isn't a competent PPC manager, then surely they know if their own staff are competent?

So, unless you believe they're intentionally putting incompetent people in charge of advertisers' accounts, then why pay for someone who is "Google certified" when you can get one for free?

Steve

 

[Chris Ashdown]

The 6 month contract is there because a big chunk of the work involved takes place at the outset in restructuring or creating new campaigns. It's an alternative to a big setup fee, which is what most agencies ask for, for the same reason.

Thats true, but I would think any site but the smallest will take quite a few months to get into shape, and manymonths after that to get the most out of sales and costs,

Therefore myself as a company owner, I would be looking for the long term, monthly costs or hourly are not massive overheads so if I could try someone for a few months and they produce sum proof to me that they are notcowboys but know their business why on earth would I dump them

Companies like mine get a minimum of 6 or 7 phone calls or emails ever week from companies google partners offering a free apraisal, all go in the bin as they are sales people trying to get the business and never the actual consultant, which in my case interpretates as big companies and no personal service, many also try to hide their length of contract

If you are confident you offer a professional service then drop the contract and have confidence in you work being appreciated

 

[leadprop]

The 6 month contract is there because a big chunk of the work involved takes place at the outset in restructuring or creating new campaigns. It's an alternative to a big setup fee, which is what most agencies ask for, for the same reason.

We almost never charged a set-up fee for PPC and always worked on a rolling month contract - this seemed to put clients at ease and as a result I think we got more business and companies stayed with us longer.

The idea is to be so good at driving qualified traffic and conversions, for any given budget, that the client can't leave )

 

[intelligentppc]

Thats true, but I would think any site but the smallest will take quite a few months to get into shape, and manymonths after that to get the most out of sales and costs,

Therefore myself as a company owner, I would be looking for the long term, monthly costs or hourly are not massive overheads so if I could try someone for a few months and they produce sum proof to me that they are notcowboys but know their business why on earth would I dump them

Companies like mine get a minimum of 6 or 7 phone calls or emails ever week from companies google partners offering a free apraisal, all go in the bin as they are sales people trying to get the business and never the actual consultant, which in my case interpretates as big companies and no personal service, many also try to hide their length of contract

If you are confident you offer a professional service then drop the contract and have confidence in you work being appreciated

Ok, how about a 1 month rolling contract with no setup fee, but a discount available if you agree to a 6 month contract after the first month (once I've proved that I'll save you a fortune)?

 

[makeusvisible]

Ok, how about a 1 month rolling contract with no setup fee, but a discount available if you agree to a 6 month contract after the first month (once I've proved that I'll save you a fortune)?

We have looked at tie-in-contracts in the past, and have always opted to avoid it. The best way to retain custom is by doing a good job....if you do save people 'a fortune' then they will stay with you....without a contract....that's what we find anyway.