There are several different pricing models for SEO. Trying to determine the best or most suitable pricing structure for your business can be challenging, however, there are some basic principles of which you can follow. Below are some of the more commonly used ones.
Hourly rates - What clients think we do when charging hourly.
This is the most straightforward method of charging for SEO work. The SEO consultant charges a flat rate for every hour he puts in. Depending on the level of experience and type of work required, rates may range anywhere from a low of $40 per hour for entry-level consultants to a high of $300-500/per hour, or more, for reputable professionals. Mid-level consultants charge around $100 to $250.
Under this pricing model, both the consultant and client agree on certain matters beforehand: what specific tasks need to be completed, estimated hours for the entire project, maximum hours allowed, and a procedure for approval in the event that additional hours over the agreed limit are required.
Because unforeseen problems, and delays are common amongst most projects, consultants often find themselves spending additional time working on campaigns, and not being compensated for the extra time spent. This is one downside to this pricing structure. However, hourly pricing gives SEO consultants the assurance that they are being paid for the actual time they spend working on a project.
For the client, hourly pricing allows them to know precisely how much to budget since a limit for hours of work has been agreed upon. It also affords a great amount of adaptability. If during the course of the project, the client wants additional work done, he can easily get an estimate of the cost without having to go through the process of a new project proposal.
In this model, there is one flat, inclusive fee for the entire project. The fee is based on an estimate of time required for project completion, personnel and materials, and other expenses required that may be needed. Because the fee cannot be changed if contingencies arise, this model affords little flexibility and requires meticulous attention to the details and definitions set forth in the contract. The advantage for the client is that he has a fixed budget and he knows the results that will be achieved. The disadvantage comes if he wants to add to or amend the scope of the work as this will require, either a completely new proposal or a change request order.
Pay for Performance.
Clients pay only if a predetermined result is achieved, such as a certain search rank for a keyword or a certain number of site visitors for a set period. Both the client and the consultant agree upon the desired results, the method by which to measure results, and a time frame for performance.
This model affords the professional a good way to introduce the benefits of SEO to clients who would otherwise not want to set aside a budget for it; however, for consultants, it is extremely risky and can result in uncompensated hours put into the project, especially as most consultants cannot control all the factors that enter into getting the promised results, such as search engines changing algorithms or competition activity.
When using this model, it is advisable for consultants to get clients to agree to pay for necessary incidental expenses such as directory submissions and press releases. Agreements need to be very specific as to the parameters of the promised results, and these must be made understandable to the clients. Clients benefit from this type of arrangement because they are guaranteed a return on their investment.
This is the pricing structure that I have adopted and used quite successfully over the years. I feel this works very well for a number of reasons. Firstly, you have guaranteed income for an agreed period of time; ie the duration of the campaign. This in itself is a great asset to have. Especially when you begin accumulating a large number of clients. Secondly, it allows you to forecast the project and get on with the work ahead without having to worry about payment installments. You just bill the client at the beginning of each month, receive payment and perform the work as intended. This can be a very good model for businesses seeking to retain clients over a long period of time, but it can also be abused by those who claim (hopefully falsely) that the site will "lose its rankings" if the customer cancels.
In this model, something like a partnership is created between the consultant and his client. The payment for work comes from a portion of the client’s online profit. When the optimization work done by the consultant results in improved sales for the client, the contractor gets paid a portion of that profit. Conditions as to length of effectivity of the agreement, a cap on the consultants share of the profits, minimum payment for the consultant, etc. are worked into the contract. For such a model to work, it is essential to have very accurate capabilities to track online transactions and even transactions that begin online but end up in offline sales.
The profit sharing model can be very beneficial for both the consultant and the client as they share a common goal: increased profit. The SEO consultant makes money when the client does, and the better his results, the more he gets paid. Since the client pays the consultant based on income, he is assured of being paid. For certain clients, such as start-up companies, the advantage of this type of pricing model is the ability to acquire quality SEO work without having to lay out a big investment.
Because not every pricing model works for every element of a project, many SEO professionals use a combination of pricing methods in the one SEO contract, matching each element of the project to the pricing model that best suits it. This allows for greater flexibility towards the client’s needs and budget. It is not uncommon to see a mix of hourly fees, performance-based fees, and monthly retainers in one SEO package.
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Here's an excellent article by Rand Fishkin of seomoz where they performed an extensive survey and got actual pricing figures from seo firms around the globe. Its definitely worth a look.
SEO Pricing: 600+ Agencies Share Costs of Services & Pricing Models
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