Pricing & Contracts For The Small SEM Shop

Aug 9, 2006 - 7:42 pm 2 by

Ken Jurina from Epiar, Inc. is up first and says to start that the information presented is their opinion and there are many ways to do things. He then goes into various industry pricing models. 1. Retainer-based – monthly fees (6-18 month contract) or the search and peak. 2. Fee-for-service model – project based, with finite scope about what is going to be done. 3. Pay per performance – skin in the game, commission structure. 4. Hourly consultation – he says this may be a tough one as when you have an hourly rate and a fixed expense. He says the services offered are more valuable than an hourly rate can compensate for. There standard SEO services, is more service based than monthly fee. There are three “branded” core service phases. They go into extensive keyword research (20,000-100,000 phrases). Keyword placement & site architecture. He says not every clients needs are the same. He talks about virgin domain vs. established site with past SEO and can be an inherent mess. There are different level of services available, which may include website audits, web analytics, monthly maintenance plans, hourly consultation. The importance of profiling. Determining your target market and go after it. Small companies usually buy in quicker, but can’t afford the services. Larger companies can afford, but buy-in is not always possible across depts. Or there a long sales cycle. Mid-size seems to work great for them. When you can talk to the owner or c-level executive approval is easier without having to go through marketing or IT departments. Now, from a pricing and perception side of things. There can be some initial sticker shock from prices they charge. No opportunity for clients to “taste the goods”. The redid the pricing models, and starting presenting the ROI and benefit from the beginning. As for proposal must be detailed and comprehensive. But get to the point, they have them down to 5 to 6 pages. Show the transparency in the services. Ensure that logic evident, clients buy in & refer when they understand the deliverables. Proposals and contracts much be seriousness and professionalism. They define the work without being bound to a guarantee. Cover Your Arse clauses should be in the proposals and contracts as well.

Pricing based on what can bear is important. When pricing is out of the major marketing such as New York and LA. They can be a tough sell. Small town companies except big town services for small town prices. That can be tough. Don't put up with it if you can.

So why should we go with you? Common question most clients consider. You choice between being a “me too” organization and offering a unique value proposition. What are your competitive advantage, are your competitively prices, experience, etc.. In closing a little advice. Keep your focus, niche serve and product. Don’t be distracted by shiny object. Often flexible payment plans to accommodate your customers, costs can be spread of the projects. Work with thousands of dollars a month. Develop a strong home base. Well known local brands = credibility.

So what about promoting your own brand? Finding it tough to rank in the SERPS? Promote your brand, promote yourself. Be active, present, blog, doing training seminars. Become a recognized experts. Awards? Not-so obvious conferences & tradeshows. Trademarks, copyrights – register them (increases goodwill). Develop an exit strategy… do you have one?

Todd Frisen from Range Online Media opens talks about how he tried everything when he was one-man operation. Now contract issues to never compromise. 1. Indemnification – indemnification is a two way street. Make sure your contract only agrees to indemnify your client for negligent acts, errors, or missions. 2. Agreement Termination – a contract that allows either party to terminate for any reasons with 10 days written notice isn’t a good contract. Restrict a client right to terminate the contract to you committing a serious breach that cannot be remedied with 14 days time. 3. Intellectual Property Rights – never agree to relinquish you intellectual rights to anything you create or contribute to unless you’ve negotiated a separate (large) fee. An SEO should not be a “work for hire consultant. 4. Confidentiality. 5. Resolving Disputes – Key point he made here, resolution needs to happen in your jurisdiction. Never compromise on this one. It could cost you a ton of money. Make sure that any potential legal disputes are settled in the your jurisdiction. You might want to also require mediation/resolvement in your area only.

He next goes into performance based contracts. He says establish a proper baseline data. Before you can determine if a rev share deal will work, you need to be able to properly access where the potential client is at. What is the overall search activity for their space. How well do they currently rank for those terms. How many search related sales are they currently making. Always work off gross revenue as you don’t have any control over net profit. Be reasonable on the percentage you ask for. If you know you can remove a robots.txt file and triple their revenue overnight, don’t ask for a percentage that will make your 100k a month in two weeks. Make it based on what you think it would take for you to be making the same amount you would charge for upfront consulting in a reasonable amount of time (30-60) days. Set a time for the contract to expire. Provide an early exit clause for the client.

So what do you charge hourly? Good. Double It! Great information.

Jessie Stricchoila from Alchemist Media, Inc is up third. She says if your not a big dog or large SEM operation, there is a good chance you are dealing with some of the following issues in your business development. There is good reliance on Word of Mouth lead generation. Lack of top 10 rankings possibly in the engines for local terms. If there is a limited cash flow/lack of marketing budget to spend on paid advertising – on the web, or elsewhere. She next goes into client relationship management in the SEM world is unique for many reasons. We are dealing with , among other things. Expectation management with a ever fluctuating SEM industry. There is cost variation due to lack of commodization of SEM-related services (not that is a bad thing). Some of the things that make a good client relations is, clients understanding of the SEM industry. If there are prior SEM engagements, how about development resources, commitment and availably of those resources and the stability of the organization.

She next goes into companies that have prior SEM engagements. Zero to two SEM engagements is fine, but when they have been through 3 SEM companies this is a red flag. You need to investigate this. She next recommends what you need to inquire about the client’s accounting process? Is it Net 30? Net 60? Determine where you will have a direct accounting person to communicate with. Jessie recommends as well that in regards to communications, that you need to tell the client exactly what you are going to do and won’t do.


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