Follow-Up to SEO Pricing: Evolution of Pricing Models for Services

October 9, 2008

Two days ago I wrote an email-turned-blog-post about SEO pricing. It got me to thinking a bit about the relationship between pricing models and responsibility or metrics for evaluation.

a) Scale of Pricing Models

My thoughts…

pricing models, evolution of service pricing

pricing models, evolution of service pricing

  • Hourly Rates – responsible for time spent on work, quality input during that time.
  • Flat Project Rate – responsible for the completion of the project and quality execution of all components, a step beyond the individual inputs (hours) involved.
  • Per-Action (CPA, CPL) – responsible for generating leads or conversions (traffic-to-lead or traffic-to-sale), producing results, a step beyond execution of the campaign.
  • Revenue Share or Commission – responsible for contribution to generating revenue, also would include cost-per-acquisition (another CPA), a step beyond lead generation.
  • Ownership – responsible for overall entire success of the business venture (profit, etc.), would also include profit-share and stock, a step beyond revenue.

My argument is that these are listed from most simplistic to most involved. As you go down the list, not only do they become more involved but also become more closely associated with the overall success of the company. That is, Company X buys hourly work to contribute towards a project or campaign… that campaign has a goal of generating leads or prospects… some percentages of those prospects turn into sales (revenue)… the owner or CEO or other manager has the objective of not just generating that revenue but doing so profitably. They must control limited resources and also identify which components of the revenue are truly profitable, and which are not. That last item is something I’ve really worked on lately – don’t take silly little projects – they aren’t profitable!

I think each model has its merits, and none is better than the other… just depends. As a buyer, its probably best to match your objectives (what you want to acheive) to a pricing model that is in line with that. Probably not bad from a seller’s standpoint either.

Your thoughts on this “evolution of pricing models” or scale of sorts? Agree? Disagree? Something to add?

b) SEO Pricing Resources, Models and One-Time Projects vs. Ongoing

Here are some other great resources about pricing, with respect to SEO services. They are still fairly relevant for any type of consulting or professional services, though.

Let me also add that my firm used to take on “one-time projects” where we would do A, B and C, and we would charge $x. We don’t do that anymore. My problems with that model… for us… are:

  1. SEO takes time, and with that model you aren’t around to see the results and enjoy the fruits of your labor.
  2. SEO has elements of time built into it… Google likes to see sites improve over time. Even if you could write a ton of great content, overhaul the site infrastructure and build a ton of great links overnight you probably shouldn’t do it. It looks fake, and that could hurt you versus spreading things out more.
  3. We’re better in month 6 than we are in month 1. The hardest thing about SEO for our clients – for me – is really learning the client’s industry and the details of their company. It takes me a little while to really learn that, and if we did one project and finished it and moved on to another then we would never be able to learn enough about the industry to be as effective as we are when we partner with our clients for a longer term.
  4. Things change. SERP algorithms change. Competition changes. Competition starts optimizing when they hadn’t before. Trends emerge. New keywords emerge, etc. One-time projects only get a snapshot.

When I did offer the one-time project option I knew all of the above, but we presented it basically as a low-cost option for clients who simply didn’t have much of a budget allocated for SEO. It was a compromise.

6 Responses to “Follow-Up to SEO Pricing: Evolution of Pricing Models for Services”

  1. Ryan Says:

    Jon, I appreciate you taking the time to post something like this. Pricing has different angles based on the project no doubt. However, it’s a constant dilemma laying out all the facts and variables when people ask “why the other SEO or lead gen firm I met with costs one amount and your firm costs double that amount (or is priced differently)”. I try to rely that you pay for what you get, but this display provides a great reference. I’ll be sure to link this post when people ask. Good layout.

  2. Nice post, Jon (again). I’m probably starting out at the low end of the spectrum, but I’m OK with that as a starting point…for now.

  3. “The hardest thing about SEO for our clients – for me – is really learning the client’s industry and the details of their company.”

    I agree. By taking the time, you’ll not only better understand everything that the client offers and how to leverage it, but also understand better who their target audience is. But do you bill this out as “independent research” or do you itemize it at all?

  4. jonpayne Says:

    @Ryan & @Monty – just because someone charges by the hour doesn’t mean they are cheap. SEOmoz used to charge $1,000 per hour back when they still did consulting. My services are much cheaper in comparison, yet we charge a monthly retainer (sort of like by-the project but a bit further to the right on this scale IMO). My argument here is not for the price or cost, but rather how the pricing is structured and how its tied to the objectives that the business is seeking.

    @George – yeah we find the more you learn the more you find industry-specific vertical sites that are good sources for links and for networking / promoting your site or service in that area. That takes time. We include this as part of our monthly fee, so no we don’t not bill this out separately. For me, this is essential to providing a good service. I would feel as though I were robbing my clients if I didn’t take a little time to educate myself on their industry in general, particularly popular websites, etc.

  5. Dean Says:

    “and none is better than the other”

    I think from the business standpoint, each level is better than the other. When tasks are completed on an hourly basis or maybe a flat-project rate, the seo does not have motivation for getting the best results and can just sign-off on the project after a certain point, and wash their hands clean of it. So the more a professional seo is vested into a project, the better the results, albeit more expensive of a service.

  6. jonpayne Says:

    @Dean – I would have to agree with you here, I think perhaps I should not have used the word “better”. My intention there was to say that there is a situation in which each pricing model is appropriate. For instance, for a project where the SEO has little input or effect on pricing, site layout, marketing strategy, business expenses etc. I think an hourly fee probably makes more sense. Not fair to evaluate them entirely on profit if they don’t control the costs! Each has its place, but certainly I think there is an evolution through one’s career where they start to view things more holistically than in their early days 🙂

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