In the Google Ads industry, you have to live with the fact that 90% of the money goes straight to Google. That leaves PPC companies and various freelancers competing around the margins for the leftovers. Still, considering that Google Ads generates more than $100 billion a year in revenue for Google, that still leaves major financial opportunities for savvy SEM companies.
So how should you price your PPC management services?
There are a number of different pricing models for PPC services, and the model you choose will depend on the average size of your clients and the range of services you provide.
To help you out, I’ve written a short guide explaining the most popular pricing models in the PPC industry. Most PPC companies will opt for one of the models described below, often in combination with some type of “start-up fee”.
Only Google PPC Management is The Way To Go
However, before we get into these options, there’s one question you’ll need to answer first:When was the last time that anyone has used Yahoo as their search engine in the last 20 years? How many people actually use it as their search engine todsye? The answer to most of thorse questions is a big huge no. The majority of people do not use any of those search engines. Every day over 100 billion searches are performed on Google, this makes Google the only search engine you should target for your PPC advertisement campaigns. It is the only search engine that the majority of the people use, and because of this it means that you should target it to find your ideal customers.
Deciding to only use Google is a very easy decision. It is not something that is made on opinion, but it is made on statistical fact. If you go and look at the amount of searches that are performed on Google every day for your ideal keywords and then compare them to Yahoo or Bing; What you will find without a doubt is that Yahoo and Bing do not get as much traffic because the majority of people do not use them. As a marketer you have to be where the people are. If you’re not where the people are, then you end up wasting your marketing budget.
For businesses who want to get the most out of their PPC management service, make sure you are using the right search engine to target. If you are attempting to use those other search engines just because it’s a little bit cheaper you will find the opportunity cost is much higher than the actual physical cost of Google. You might save money on the front end, but you simply won’t make enough money on the backend. You will pay a little bit more money for Google PPC advertisement because Google is where the people are, and that will make a lot more money in the long run.
As you can see, when it comes to search engine marketing there’s really only one game in town. Only one game in town is a Google. The rest of the search engines just will not give you the results that you are looking for. If you were looking to reach the most amount of people in the least amount of time, and Google is your only choice. Using any other search engine will not give you the results that you are looking for. Of course you want to get most of your money, and Google is the only way to do that.
Beyond understanding the simple fact that Google is the best choice, you also need to find the right type of management company. Without the right PPC management company, it could be difficult to really get a campaign to work as it should. The right PPC management company will work with you on creating the ideal campaign to reach the most amount of people, bringing the right kind of customer and it will help you reach all the goals that you have for your Internet marketing. Choosing the right company is one of the most important things.
Who’s Going To Pay Google?
Ultimately, no Google Ads campaign can get off the ground until you give Google a credit card or bank account number. There are three options here:
Have the client pay Google directly. This is usually done by adding their credit card number to the “Billing & Payments” section of Google Ads. The client is then sent a separate invoice by their PPC vendor for management. This can be confusing for some clients — “Why am I paying two bills?” However, it’s also the most straightforward option. Rather than act as a middle man for Google, the client pays Google themselves.
- You pay Google on the client’s behalf. Rather than charging a separate management fee, some vendors collect their client’s media spend and management fee in a single payment, usually once per month. The PPC manager then pays Google with their own account.
- Finally, there’s consolidated billing. If you are a PPC reseller, large SEM company, or handle a high volume of clients, you can set up consolidated billing with Google. You will work with Google directly to set up a single invoice for all of your clients’ media spend.
Once you’ve decided how you’re going to pay Google, you still need to decide how much to charge for your PPC management services.
That means it’s time to select a pricing model.
Related: How to Create a Marketing Budget
Charging By The Conversion
Although it’s a less common PPC pricing model, some SEM companies charge by the conversion. They work with the client to select a conversion goal, then charge based on the number of conversions the campaign receives per month.
For clients who don’t understand Google Ads very well, this simple approach can be easy to understand. Rather than explaining the nuances of managing Google Ads campaigns, your agreement is based on a simple transaction: the client pays you, you provide an agreed-upon number of leads.
Of course, there are some downsides. If you hit a slow month, you could easily lose money on the labor required to manage the campaign. In addition, when clients pay by the lead (whether that’s phone calls, form fills, sign-ups, or downloads), they may be tempted to split hairs on what counts as a “lead”. Sure, you got them 20 phone calls, but half of those were tire kickers.
A Percentage of Media Spend
I’ve seen more and more PPC vendors charging their client’s a percentage of their media spend. The exact percentage can vary widely depending on the company, but 10% isn’t uncommon. So if a client is spending $5,000 per month on Google Ads, the PPC company will charge $500 to manage that campaign, for a total bill of $5,500.
It’s a simple, straightforward way to charge clients for PPC services, which is why it’s so popular.
Finally, there’s the pricing tiers model. As a White Label SEO company, we have to keep our SEM services at a low price point to stay competitive. That’s why we’ve opted for this PPC pricing model.
We charge a flat monthly fee based on the client’s total media spend. Without getting into specifics, that means we charge $500 for clients who spend less than $3,000 per month, $700 for clients who spend $3,000-$7,000, and so on.
The Start-Up Fee
Many PPC management companies also charge a one-time start-up fee. Launching a new Google Ads campaign takes a lot of upfront work. There’s keyword research, writing ad copy, setting up conversion tracking, and more. Even if the client has an existing Google Ads campaign, there’s no guarantee the previous vendor knew what they were doing.
As a result, unless you charge a $500 setup fee, it’s easy to actually lose money in the first month of a PPC campaign. Some companies make that money back in the long run, but most companies now charge a separate set up fee. In fact, this has quickly become the industry standard.
Define Your Services
No matter how you decide to charge for your PPC management services, you should be transparent with the client. That means they need to know exactly what they are — and are not — paying for month-to-month.
This can prevent disasters in the making. If a client is expecting you to make daily updates to their campaign, then a 10% management fee will leave you deep in the red. By being totally upfront about what management services you provide each month, you can manage expectations. Ultimately, that’s how you maintain a high retention rate.
As time goes on, a successful campaign should require less and less active management, which means your profit margin should increase the longer you retain a client.