Starting New PPC Service - Question about pricing

15 replies
  • PPC/SEM
  • |
I have a small business that does Web Development and SEO. I getting ready to promote my PPC service and wanted to get some thoughts on pricing structures.

I've seen many different ways of doing this. When I first started the research a couple of years ago, it seemed most companies used a fixed percentage of PPC spend. I think 10% was the average. I now see more packages based off of a spend range. The average seems to be about 20% for the smaller package and then decreases as the spend gets higher. So an average minimum package is $300. Lastly, I see some people basing their pricing on results and taking a percentage of the actual sale.

I was wondering how you guys setup your pricing and more importantly why you chose that way. It seems that a fixed percentage would be ideal. If I can get their sales up, then they would be willing to spend more, so my fee goes up as well. So in a way it's tied into performance.

Also, I see some companies charging setup fees. I think this is something I'm going to avoid in the beginning. As a business owner, I would hate to have to pay a setup fee before seeing results, especially to a no name company. But once I establish trust in my company, I think it would be easier.
#ppc #pricing #question #service #starting
  • Profile picture of the author fasteasysuccess
    You have tons of options. When i took ppc clients I did it on a monthly "management" fee and percentage of results (not clicks). Usually i did other services first and then tied ppc to it as well so never charged those clients the set-up, like they needed copy for sales page and emails, needed marketing help and then obviously needs the traffic so seo or ppc was the next option.

    When took clients straight ppc only charged set-up and monthly with percentage,

    The real key is make it worth their while, more risk on you versus them and most importantly...give them the results they want.
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  • Profile picture of the author ALEXppcbuzz
    set-up fee is a bad decision, avoid this practice for as long as possible. regarding your main question: you can start with a set price for your services and if you can deliver you can go with fixed percentage based on the budget.
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  • Profile picture of the author PPC-Coach
    I used to do this and did a mix. But I think a flat fee is best personally now. You are doing a fixed amount of work on their accounts and charging based on the ad spend puts you in a position to possibly artificially jack up their ad spend without it being warranted all in the effort to make more.

    I would go flat fee.

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    • Profile picture of the author Bright Future
      Originally Posted by PPC-Coach View Post

      I used to do this and did a mix. But I think a flat fee is best personally now. You are doing a fixed amount of work on their accounts and charging based on the ad spend puts you in a position to possibly artificially jack up their ad spend without it being warranted all in the effort to make more.

      I would go flat fee.

      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.
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  • Profile picture of the author maxsi
    YES we hate to pay start-up fees.....

    We need a ppc expert that create/manage our ppc campaigns for an honest price
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  • Profile picture of the author jgsketch
    Thanks guys for the input. I will skip the setup fees and start with a set price for spend range for smaller spends. Once I hit a certain threshold, I will switch to a percentage of spend.

    My only concern now is having a client drop me early after putting in all that work and setup. Technically it will be in their account. Maybe having them sign a 2 month deal so I will at least get paid twice before they drop me. I know if my work is good they would keep me on and I won't have anything to worry about.
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    • Profile picture of the author Bright Future
      Originally Posted by jgsketch View Post

      Thanks guys for the input. I will skip the setup fees and start with a set price for spend range for smaller spends. Once I hit a certain threshold, I will switch to a percentage of spend.

      My only concern now is having a client drop me early after putting in all that work and setup. Technically it will be in their account. Maybe having them sign a 2 month deal so I will at least get paid twice before they drop me. I know if my work is good they would keep me on and I won't have anything to worry about.
      You can sign a deal like you said but it would be even better if client pays your salary upfront for 2 months.
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    • Originally Posted by jgsketch View Post

      My only concern now is having a client drop me early after putting in all that work and setup.

      Maybe having them sign a 2 month deal so I will at least get paid twice before they drop me. I know if my work is good they would keep me on and I won't have anything to worry about.
      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.
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  • Profile picture of the author RichardSalinas
    I have seen others operating with this model: Small base fee + % of total monthly ad spend..
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  • Profile picture of the author CharlesWells
    If you are confident in your service, go with the flat fee, that will put instant money on your hand too!
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    • Profile picture of the author dburk
      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.
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  • Profile picture of the author Liam89
    Hello from the UK ! I found that many clients only spend around £100 - £300 a month on Adwords so it is difficult to charge more than £300 to manage an account. Based on this I generally charge/sell Adwords to clients on a "retainer" model at £200 a month - at first this involves making account changes so you are happy with the running performance, but further down the line when you have a few clients this works out as a nice fee for changes once a week and a monthly report. If your client is happy with the results you can reduce your agency time on the account (and increase it again if they are not)
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  • Profile picture of the author PPCDan
    I avoid set up fees and percentage fees. Most of the time I offer a flat fee depending on how much work is required on my end. Anywhere from $100 to $1000 a month.

    I even have a client who offered me a percentage of every sale because in the beginning they could not afford PPC Service. So now they get a bunch of deals a month and I am getting a piece of the pie. Only downside is you may not get much money from them in the beginning. It's up to you to really build up the traffic.

    Some times even hourly rates work if a client only wants you to go in for like 1-3 hours and optimize the campaign. This usually works well for small to medium size campaigns. I don't offer hourly rates for national campaigns.

    Have a set pricing plan, but don't be afraid to go off the path.
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    • Profile picture of the author dburk
      Originally Posted by PPCDan View Post

      I avoid set up fees and percentage fees. Most of the time I offer a flat fee depending on how much work is required on my end. Anywhere from $100 to $1000 a month.

      I even have a client who offered me a percentage of every sale because in the beginning they could not afford PPC Service. So now they get a bunch of deals a month and I am getting a piece of the pie. Only downside is you may not get much money from them in the beginning. It's up to you to really build up the traffic.

      Some times even hourly rates work if a client only wants you to go in for like 1-3 hours and optimize the campaign. This usually works well for small to medium size campaigns. I don't offer hourly rates for national campaigns.

      Have a set pricing plan, but don't be afraid to go off the path.
      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?
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      • Profile picture of the author PPCDan
        Originally Posted by dburk View Post

        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?
        Hey dburk,

        No, of course I do not limit the growth and nor do I work for free. I have 3 kids to feed...aint nobody got time for that. It really depends on the kind of client it is. If you have to raise the price then do it.

        For example,

        Most of my clients are small businesses, therefore I can get away with charging flat fees. Most of them only advertise on the search network targeting their respective neighborhoods. Eventually (and it doesnt take long) these small accounts "stabilize" and you only have to come in 1-2x's a month to optimize. Every quarter I offer these small businesses something new to expand their businesses. Such as rlsa, display, call only mobile campaigns, etc...When they bite I do INCREASE the price as I have to do more work. It is still a flat fee though.

        I don't do flat fees for everyone especially national accounts and difficult markets.

        Again, if you have to raise the price go for it.

        Best Regards,

        Daniel
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