How Much Does SEO Cost? How Much Should You Be Paying?

How much does SEO cost? How much should business owners be expecting to pay for SEO?

These are typical questions that come to the mind of any business owner when trying to make sense of pricing within the SEO industry.

Some say $99 a month, others start at $2,000.

So what gives? Why the huge difference?

Confusion about SEO pricing

There’s an enormous amount of confusion about how much SEO costs and that’s for good reason.

To demonstrate my point, I did a little bit of research across a number of websites offering SEO services and found that out of the sites I looked at, pricing varied enormously. Some providers were offering SEO services for just $99 per month, whilst others ranged anywhere between $2,000 to $5,000 per month and beyond.

seo-pricing

So what the hell is going on here?

How can business owners make any sense of this? I understand there are obviously differences in quality and service offerings, but how could the gap be so wide?

Let’s look a bit closer at some of the existing problems.

Many business owners don’t understand the service offering

Let’s say for instance a business owner is faced with several sites – some offering SEO services at $99 per month, whilst others are in the thousands.

If the business owner has no idea what any of the service offerings mean, then many SEO packages might look something like this.

confusing-seo-pricing

 

And when this happens, they focus on what they DO understand – which is price.

When there is a lack of understanding of the actual service offering, it becomes near impossible to differentiate between good SEO and bad SEO.

Needless to say, when there’s a level of uncertainty or confusion, many business owners might try to minimise the risk by throwing the smallest amount of money at it in hope that it works. Again, this happens because they don’t understand the service offering.

Of course this isn’t going to be true in every case – but according to some studies, many site owners are spending as little as possible on their online marketing. In my experience, most that I’ve seen are small business owners.

I don’t know how many business owners I’ve worked with that have used cheap SEO agencies, have said,

“We really had no idea what they were doing, or what we were paying for – but at $199 a month we figured we didn’t have much to lose, so we gave it a go”.

Taking this approach (decision making based upon price alone) especially in the SEO space, is EXTREMELY DANGEROUS.

Cheap SEO is incredibly expensive

Firstly, what would I define as “cheap SEO”?

Anything less than $500 a month. Definitely anything in the $99-$299 range. Infact I would go as far as saying anything less than $1,000 per month.

Why?

It comes down to paying for time (I’ll cover more on that below)

Before I continue, I want to point out that expensive SEO doesn’t instantly mean “better SEO”, but it should at the very least indicate a level of care and quality. Investing in very cheap SEO is extremely dangerous because it can work out much more expensive in the long run.

To give you an example, let’s say there’s a problem with your car, and you take it to a professional mechanic. The quote comes in at $2,000 to repair your car. You think to yourself “This is ridiculous, I can’t afford this”, so you call your brother in law (who knows a guy that knows a guy) who can do the job for $800.

So you take the car, and get the work done.

Everything seems fine until a month later when suddenly – BANG!

Your engine literally explodes and you’re left on the side of the road, stranded.

Realising the terrible mistake you’ve made, you return to the original workshop where they shake their heads and say “Oh mate, this is really going to cost you now because the repairs are going to be far more extensive than they were before.”

So now you’re out of pocket the initial $800, plus $160 for the tow truck, and now it’s going to cost $6,000 to get fixed instead of $2,000 (plus your car is going to be out of service MUCH longer)

All because you tried to save a few dollars.

cheap-mechanic

I see this ALL THE TIME in the SEO space, and as a result I find business owners that have –

  • Lost all of their site revenue
  • Been burnt by some cheap SEO agency
  • Had their sites penalised as a result of dodgy work
  • All of the above

When this happens the damage has been done, and in many cases it becomes extremely difficult to undo it. Sometimes the damage is so bad, the business owner has to dump the domain and start over. That can be an incredibly expensive exercise, especially if it’s going to impact your branding (vehicle decals, signage, uniforms, print media, stationery etc)

Again, expensive SEO doesn’t immediately mean “instant success”, but there are signs to look for. (I’ll cover those in a moment)

Many business owners consider SEO an expense

SEO will be nothing more than an expense if you’re not focusing on the metrics that matter.

If you’re paying for SEO, then you should be focusing on putting a dollar in, pulling the lever, and getting 2 dollars out – not just rankings.

A great deal of business owners make the mistake of focusing on rankings alone. Infact, I had an interesting discussion with a client recently, who said “We don’t care about the money, we just want to rank”.

This was said in response to me trying to educate the client about the importance of measuring their marketing efforts. Having comprehensive reporting in place so that they knew how their site was performing.

Within any SEO campaign, you should know –

  • What percentage of traffic you’re receiving is organic search traffic
  • What percentage of that traffic is actually converting
  • What your conversion rates are
  • Overall site revenue (per month)
  • …and whether or not your numbers are improving each month

Having this information will ensure that you can work towards making your site profitable – and when that happens, SEO is no longer an “expense”, but an “investment”. That should be the whole point of the exercise.

Making your site profitable – NOT RANKINGS.

This is where cheap SEO fails every time, because service providers in this space offer useless features like –

  • Directory submissions
  • Social bookmarks
  • Free crappy press releases
  • SEO articles

None of this stuff is going to make any difference to making your site profitable in any way, and this is what separates the cheap crap from good quality work (that you pay for)

Any reputable service offering is charged accordingly

Here’s an interesting diagram that I did up based upon a survey carried out at Moz. This diagram shows average hourly SEO rates within Australia.

hourly-seo-rates-australia

As you can see, the majority of hourly rates falls between $76 to $200 an hour. Here at Works Media, we charge anywhere between $75-$125 an hour, depending upon what type of work is being performed.

It’s interesting to note how there are a small percentage of firms charging at both the high end $750 an hour (which is extreme) right down to less than $25 an hour which is typical of rates that you might find overseas (India for example)

What this diagram shows us is that any reputable SEO company, in order to provide a quality service, and run a profitable business – needs to be operating within that $100-$200 per hour range.

This is why I shake my head at site owners investing in SEO at $99 a month.

It doesn’t take a mathematician to work out exactly what sort of work you could expect at such a small fee.

SEO takes time. Time is money

I’m not quite sure what site owners are expecting to happen at $99 a month, but I can tell you it won’t be much. Infact, it may be nothing at all (yes, I’ve heard of SEO companies taking payment then doing absolutely nothing) The problem that exists when you’re talking about such small fees are – profit margins.

If you’re paying an agency say, $99 per month, then for them to be making ANY sort of margins, they’d need to be making at least say $50 out of it – which leaves $49 to go towards your marketing. Seriously??????

But SEO agencies can charge so little because they’ve got thousands of clients, right?

Exactly, which brings me to my next point.

Churn and burn.

Agencies that push clients through the wringer at $99 a month couldn’t give a SHIT about the success of their clients, let alone be able to service them in any effective manner. I mean seriously, how could you possibly provide any quality of service to clients when you have thousands of them?

You could, if you had hundreds of staff, but how can you pay for staff when the margins are so small?

It just doesn’t work unless –

  • The entire system is plugged into some crappy PBN
  • The work is being outsourced overseas at $5 an hour
  • Customers are being fooled into thinking work is being done, where nothing is being done at all

For effective SEO, there needs to be bums in seats.

That is, staff doing the actual work. And staff expect to be paid.

Keeping perspective

What I find irritating is how some business owners actually expect results for just a few hundred dollars a month. That is – build their business and enhance their marketing and sales, for just a few hundred dollars. I’ve sat on calls with potential clients that have said, “We want at least 6 enquiries a day (each lead was worth several thousands of dollars) and our budget is around $500 per month, can you help us?”

Needless to say I ended the call quite quickly.

$500 per month equates to $6,000 per annum. That, in terms of marketing is ridiculous.

Let me ask you something….

Would you work as an employee for someone at $500 per month? Of course not.

Infact according to this article here published by news.com.au points out that the lowest paid job right now in Australia is a “Fast Food Cook” who earns just $37,705 a year.

$37,705 a year equates to just over $3,100 per month.

Even fast food cooks wouldn’t get out of bed for $500 a month. So why are business owners expecting to pay that for marketing?

It’s ridiculous.

How to make sense of the costs involved

I’ve never shown this before, but this spreadsheet helps us calculate the costs involved for each campaign we work on. This spreadsheet is actually a customised version of one that was originally put together by Lane Boland – so I want to give credit where credit is due.

keyword-seo-calculator-estimation-tool

Firstly, you have the top 10 keywords as chosen by the client. (no we’re not talking about PPC, keep reading)

These keywords are entered within Google’s Keyword Planner to identify the CPC or “cost per click” for each term. As you can see, each keyword has a value, along with estimated traffic and the cost of acquiring that traffic. It should be noted that we use Adwords to get an idea of what a client would be paying if they used paid traffic as opposed to organic SEO.

We then calculate the estimated traffic x cost, then total it up.

In this instance, it comes to $14,447.40.

We then divide this figure by 10% to calculate our monthly SEO fee. (We charge 10% of what paid traffic would cost). Here, the total comes to $1,444.74. We then add 10% of the LTV (the lifetime value of the customer) to this total which now gives us $1,524.74. We then calculate the difficulty rating of the chosen industry using a proprietary difficulty measuring tool to get an average of the difficulty overall. In this case it’s 25%. So we add that percentage of the total, BACK to the total. More competitive markets result in much higher ratings, therefor costing more.

So we’re now at a total of $1,905.93 cents which we round up to the nearest dollar – $1,906 per month.

This equates to 15 hours worth of work per month, (again rounded as it went slightly over) to which we can then present to the client within our proposal and quote.

From here two things can happen –

  • We go ahead at the agreed quote
  • We negotiate the amount of hours the client wishes to work at, if we are above or below the clients allocated budget. Some clients want more hours, others less.

At the end of the day, it equates to roughly $125 an hour.

You might be asking, “Well if it’s a flat hourly rate, why not just offer fewer hours to accommodate cheaper clients?” ($500pm)

There’s good reason why we don’t, and it’s because putting in 4 hours of work per month on SEO would be a complete waste of time. It’s just not viable, especially when some areas of what we do may take 10 hours or more (eg research, onpage optimisation etc)

You get what you pay for

To finish up, I want to say – as with anything, you get what you pay for. SEO is no different.

Here’s a simple diagram that illustrates my point. You can see that anything around the $25 an hour mark has the potential to be spam, which could damage your site, or there may be no work performed at all. At the other end of the scale you have agencies with large teams that may charge up to $200 an hour or more. Typically agencies of this size are heavily involved with media, and only work with large corporate organisations such as banks and government.

I think anywhere in the $75 – $200 an hour range should see decent quality work performed that will bring about tangible returns on investment.

seo-cost-quality-chart

Conclusion

It really amazes me when business owners just throw their sites over to some random SEO agency for a few hundred dollars a month, and they think they’re going to get some sort of valuable service in return. I mean, trolley boys collecting trolleys at Coles wouldn’t work for $300 a month, and you’re asking for BUSINESS MARKETING services?????

Really?

Here’s the thing – SEO takes time, and that time needs to be applied for any successful campaign.

So next time you’re on the phone to an SEO agency, ask them “How many hours per month do I get for X$?” and I will almost guarantee you that they will stumble and stutter through some illogical response and eventually admitting that they don’t break their service down into “hours”, which is total bullshit.

They’ll say something like “We don’t charge an hourly rate, we just have deliverables each month”.

Again, total BS.

For a few hundred dollars a month, they’re not going to do a damn thing. I mean, would YOU work for $300 a month?????

As with anything, you get what you pay for.

I know when it comes to pricing, it’s a very sensitive subject and many may argue against some of the points I’ve made in this article, which is a good thing. If you have something to say, I want to hear it. Post up your thoughts below, and let me know what you think.

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