PPC Agency Pricing
This is a question for other agency folks out there. I represent a PPC agency that has traditionally done PPC management on a minimum charge / % of spend model for calculating the charges for our services. This usually works out great, and I think pretty equitably for what most clients are getting.
However, when we have clients that significantly increase their spend, my personal feeling is that the amount of work we are doing usually doesn't scale proportionally with that spend, and so the % of spend model feels like we'd be gouging a bit. We've considered a number of options to address this, such as having tiered charges after reaching certain spend breakpoints, or putting a fee cap in place.
I'm curious what other agencies out there are doing, and what might be considered best / fair practice.
Thanks in advance for your thoughts.
Re: PPC Agency Pricing
I totally agrees with marketsharer. If I give fix price (and most people want that), I do explain that it is based on how many hours I believe is needed to reach certain results or accomplish certain tasks, and what my hourly rate is. And I emphasize that results can not be guaranteed, but that they depend on many things. If it´s a new customer, and/or a new AdWords-user, I explain we have to start with discovery phase, and that AdWords is a continoúos process of optimzation (explore - test - analyze - optimize - ......)
I am very result or goal oriented, even declining requests from potential clients that I believe won´t be able or prone to set up proper measurement (like sometimes Event Tracking in Analytics). When we have goals to strive for and use as yardsticks the client-consultant relation gets much more transparent and you feel like working together. And it gives the client the opportunity to assess me. If I can´t reach the goals we have set up together - well, then maybe I am not worth my rate or any hours at all.
I have been rather succesful using this model. Biggest challenge is small companies don´t wanna do sufficient investments, neither in consultant nor in ad spend. Also, many have websites that suck, which means results are hard to reach.
I loath the % of ad spend model, simply because it gives the agency too string incentive to spend money, wisely or not
Re: PPC Agency Pricing[ Edited ]
March 2013 - last edited March 2013
Out company does PPC pricing on both levels. For large clients spending more than a million dollars per month we charge on an hourley bases, however for smaller clients we will do a percentage but still back that into an hourley rate. In the end it is all about the sales process and which way you are most comfortable closeing the deal.