There's been a lot of talk recently about the feasibility of performance based pricing for professional search engine marketing. I do think that it is entirely possible for an SEO and client to work out a pay for performance pricing structure that is fair to both. Though logistically, the tracking involved to accomplish this would add additional layers to the total process of ranking and reporting. If both the SEO and the client are willing to take that on and set parameters that are agreeable between them then by all means a fair agreement can be reached.
Personally, I would not price SEO services based on performance unless I was given 100% control over the client's website, something very few clients are willing to hand over, and rightfully so. (This is a lesson I learned the hard way, more than once.)
I love analogies, so I'll provide one here: Providing SEO services based on performance (without 100% site control) is akin to a dietician asking to be paid based on the amount of weight lost by a client they are consulting. The dietician may set the plan, medications, workout schedule and menu for their client, however if the client sneaks Big Macs and ice cream on the side, lounges on the couch instead of getting on the treadmill, or adds a few extra high-carb foods into their meals, then the client is not likely to lose much, if any, weight.
If the dietician was able to monitor the client 24 hours a day and ensure that the plan was being followed explicitly, then (and only then), real success can be assured and a pay for performance pricing model would work.
In the SEO business, there is a lot that can be done to a client's site that is likely to give them success. However, even in the best of circumstances limitations to what can be performed on a site are inevitable. Does the SEO have free range over the entire site or just a few pages? Do they have permission to re-design the site, reword content significantly or change the navigational structure? Can the SEO dictate to the client how they should answer their phone or respond to email inquiries?
These are all important issues that lend directly to the sales conversion ratio achieved.
Another issues with pay for performance is tracking. Does the SEO have complete access to all sales statistics, including costs, profits and overhead? If payment model is based on profits, rather than just sales, does the SEO have a say in how the client spends his/her revenue? Does the SEO also have a say in regard to pricing? This, too, can have a great effect on conversions.
Beyond that is the issue of timetables. If the SEO does a fantastic job of increasing the clients sales and profits, can the client at any time fire the SEO to start hoarding all the additional profits for themselves? A pay for performance would only be fair if the SEO was guaranteed to receive the benefits of their optimization efforts for up to 12 months AFTER they had been released by the client. After all, good SEO does have long-ranging effects, and not just immediate top rankings.
Once a client is performing well on search engines, many other things begin to happen naturally, that would not have happened before. The most obvious is obtaining natural links from other websites. Now that the site is known and/or popular, thanks to the work of the SEO, the snowball that the SEO had started continues to roll, and therefore the SEO should rightfully reap those ongoing benefits.
I don't think it is impossible for an SEO to charge based on performance, and I admire those that do. There are many other pricing models that can be considered outside of what I laid out above, which some SEOs utilize. For me, however, without 100% control of the site I don't see a workable pay for performance pricing model that is satisfactory. There is just too much that can go wrong with a campaign if the SEOs hands get tied in any way.
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September 2, 2005
Stoney deGeyter is the President of Pole Position Marketing, a leading search engine optimization and marketing firm helping businesses grow since 1998. Stoney is a frequent speaker at website marketing conferences and has published hundreds of helpful SEO, SEM and small business articles.
If you'd like Stoney deGeyter to speak at your conference, seminar, workshop or provide in-house training to your team, contact him via his site or by phone at 866-685-3374.
Stoney pioneered the concept of Destination Search Engine Marketing which is the driving philosophy of how Pole Position Marketing helps clients expand their online presence and grow their businesses. Stoney is Associate Editor at Search Engine Guide and has written several SEO and SEM e-books including E-Marketing Performance; The Best Damn Web Marketing Checklist, Period!; Keyword Research and Selection, Destination Search Engine Marketing, and more.
Stoney has five wonderful children and spends his free time reviewing restaurants and other things to do in Canton, Ohio.
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