SEO Pricing and how we work
I have wanted for quite some time to write this post but just never got around to it so here we go. Side note before we start I don’t handle the pricing in my company (Becky does), in fact I don’t really know how much a client pays, I don’t need to. I do this to win and if I have done my job before we start then I should never need to know the billed amount.
OK, we don’t have a minimum monthly fee, we have a client expectation to a return on investment value, and this is how I have always worked. If the retainer is too small we find it hard to make a positive return on the clients investment, in fact we both could lose money on the deal. If everything goes right and I identify the competition correctly, the ROI graph looks something like this. The pink area is the bit I need to get out of quickly, it’s the amount above the retainer we have to do in the early months for things like analysis, content, man hours and implementation.
The blue line is Bronco output and the green is the client ROI. We accept in the early months we both lose money I can’t just flick a switch and traffic turns up, that’s not the way these things work, but a client can really mess the whole process up by not moving quickly enough with the changes we need so if everything goes according to plan, we see this:
If I get it wrong or the client is way too slow at moving forward, and it happens, I'm losing money in fact we both never get a return, of course if this was a 3 year contract we might start seeing profit but that's something I wouldn't want to enter into. Now the graph below maybe due to a too low retainer it just means I can’t spend the time needed or buy in all the data i need to get a win, it just drags on and on .. unhappy SEO and unhappy client
But what’s worst than that is if I over charge, now this seems an odd statement but roll back to the top of this post where I said “we have a client expectation to a return on investment value” if I ever see a graph like the one below I have got it wrong simple as, I have over charged they will have the rankings they wanted but are paying over the top so they never get a good ROI and I end up with an embarrassing bag of cash you would think it wouldn’t bother me but it does!
My all time favourite is the quick win I don’t actually make any more money from it I still have to produce the reports, buy the data etc but when it happens it looks like this
Dave
Dave Naylor a UK Seo
7 Comments
Mike - http://www.mercurythread.co.uk/
3 year contracts – god I wish.
Chris Peterson
Thanks for your chart. Your graph has explained every thing. And about the price, it will depend on the client budget. According to the client budget and time frame, you should target your competitors then you and your client will get benefit.
Chis
Interesting Dave. It’s probably a rough concept a lot of people try to work to, but seeing it in a graph helps you put a bit more thought into the process.
What would be interesting to know is when you inform Becky of the predicted Bronco input and the client return values, would she then base the quote for the retainer based upon the expected Bronco output (hourly rate) or the potential return for the client, as only when you know the investment can you judge the ROI (for Bronco and client). The fee she quotes would also set where the pink line falls on the graph.
In a real world example, you have a large corporate company approach you the same time as an small independent retailer based on Ripon High Street, you predict the Bronco input will be similar for both clinets’ campaign but the returns will be far greater for the corporate client… is that fact reflected in the retainer?
Chis
Giving it some more thought, there would be a high fee that would match the clients return (no return on investment for client) and a lower fee that would match Bronco’s investment (no return on investment for Bronco), so I suppose it’s about finding a happy medium between these two figures to have a happy client and a happy agency. Depending on which side has the higher risk factor could determine which extremity the happy medium falls line falls closer to.
Dan Horton SEO - http:www.danhorton.co.uk
Sustained ROI is of course key as is managing client expectation levels by I guess being upfront and honest setting realistic and achievable business goals. Many seo companies look for the quick fix and work by smoke and mirrors, some over promise and under deliver resting on their laurels whilst the client is still unaware just exactly what they are paying for.
Its worth noting in present economic times just how greedy some clients can get though.
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SEO Partner - http://www.proseopartner.com
Those diagrams are awesome!
Thanks for making me think about consultant work from the point of view of return on investment – charge too much or too little and the client won’t see a return on their investment and won’t be happy either way.