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
- 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.
- SEOmoz – SEO Pricing & Costs (2007)
- Johnon’s Take – SEO Fee Structures
- High Rankings Newsletter – One-Time Fees vs Contracts
- Search Engine Guide – Barry Lloyd’s Per-Per-Visitor Model (somewhere just below pay-per-lead?)
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:
- SEO takes time, and with that model you aren’t around to see the results and enjoy the fruits of your labor.
- 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.
- 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.
- 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.