Starting New PPC Service - Question about pricing

It puts you in a position but it doesn't mean that you need to take advantage of it. Actually, higher spend often means more work too as more spend can be generated by adding extra keywords, ads, audiences etc.

You can agree on a monthly spending limit with the client to put overspending out of the question.

So, flat fee has some advantages but I also like the percentage model. If you can really prove that you're good at the beginning, you can offer them to raise the monthly budget and both of you would likely benefit from that.

You can sign a deal like you said but it would be even better if client pays your salary upfront for 2 months.

Yes, clients will do that, drop you without warning. Happens all the time. That's why I ask for money up front before I start anything. I suggest you do the same or some variation so you are not doing twice the work for half the money received.

Hi jgsketch,

While there is an undeniable appeal in the simplicity of a flat fee, I believe you should look out for your clients interest, putting that ahead of what is easiest for you.

I read a post that suggested that "you are doing a fixed amount of work" on your clients accounts. If you are then shame on you.

Each client will have a different set of needs and the amount of work they need done will vary a great deal. You need to have an adjustable fee schedule, unless you are only seeking clients of a very narrow range in size, who also have no goal of ever growing their business. Otherwise, you are doing your clients a great disservice. But hey, at least it is easy for you, right? (sarcasm intended)

There is no way that you can do a good job for a client with an eCommerce site that has 12,000 skews nationwide at the same "fair"flat rate as you charge a client with 3 skews targeting a small local market. The amount of work required for those 2 types of clients is miles apart so if you charge a flat rate, at least one, if not both, of those clients is getting a raw deal. At the very least you should offer a tiered fee schedule, or let clients know that you only accept clients with a fixed ad budget that doesn't exceed the level your fee can accommodate to do a proper job.

If anyone reading this thread is considering hiring a PPC agency, I suggest you be very leery of an agency that offers a single flat rate. It might sound appealing to pay half what another agency will charge and not have to pay more if your business grows, but what is really happening is that you are incentivising your agency to do as little as they can get away with to manage your account and have a built-in disincentive for them to help you grow your business. It only makes sense to hire an agency with a flat fee if you are in the process of winding down your business, perhaps for retirement, or similar reasons.

As far as setup fees go, that is something I have never charged, not because it is smart, because it isn't. After you take on a campaign with 20,000+ skews and you realize that even a hefty setup fee may not come close to covering the cost for the initial setup work you might rethink the idea of a setup fee. For sure you do not want to do that amount of work without some assurances that you can recover most of your costs with the first 90 days.

Here's an idea that I have for setup fees: You can make setup fees standard, but waive them for clients as an incentive to signup with your agency. That way when you have extra capacity to take on clients you can offer to waive the setup fee, and when you are at full capacity charge a setup fee so you only take on work that can come close to break-even on during the first month of service.

Hi PPCDan,

So how does that flat fee work whenever you do such an awesome job that the client's business grows every month along with the scale of their campaigns?

Do you try to limit the growth of your client's business to stay within the range of your fees?

Do you do the extra work required for free?

Or, do you negotiate a new fee each month as the workload scales up?

This is a serious question because I use profit-driven marketing principles and it often leads to very rapid growth in the client's business. I have not figured out how to make a fixed price work in this scenario. So what do you do about those type of clients? How did you manage to make a flat fee workout for everyone's benefit?