We’ve all been there. Open up a bill and feel our stomach drop as we experience sticker shock. No one likes high cost surprises, especially when you haven’t budgeted for them.
A PPC management company’s pricing model will affect your ROI either positively or negatively. Choose the wrong pricing structure, and it will be near impossible to stay within budget.
To avoid budget mishaps, it’s important to review available pricing options beforehand. Most companies offer five: hourly, fixed, percentage, per click/keyword, and performance-based. Depending on your needs, each will have pros and cons.
In honor of the upcoming holidays, we’re gifting you some pricing transparency. Mull them over then decide which one best fits you.
Hourly Rate
Should you elect to go with an hourly rate, the company bills you based on the amount of time they spend managing your account every month.
Fixed Fee
After you and the company both review the campaign details and goals, you draft an agreement for a fixed fee. The fixed fee could be a one time payment like $ 500 with no contract, or a monthly fixed fee depending on the terms of the agreement.
Percentage-Based
Percentage-based pricing structures fall into two categories: percentage of profits and percentage spend. The latter is the most common structure amongst advertising agencies.
Percentage of Profits. The agency bases its fees on PPC activity. When a person clicks on a PPC ad and places an order, the company gets a percentage of that sale. You pay nothing until a sale is made.
Percentage Spend. How much you spend in your PPC accounts will determine the amount of fees taken. For a $ 1,000 service, Wordstream would take anywhere from 7 to 10% of spend.
Per Click or Per Keyword
Per click or per keyword pricing is just how it sounds. Per click pricing is popular amongst third parties. For some, pay per click management fees start as low as $ 750 per month and upwards of $ 7,500 for larger clients. Typically, the percentage fees follow a tiered structure of 9.5% to 15% of total monthly pay per click spend.
Per Click. The more clicks you get, the more money you (and the company) make.
Per Keyword. The company bills you a fee, usually monthly, based on the amount of keywords managed.
Performance-Based
A performance-based method gives the company you hire an incentive to work hard. You only pay them for each sale or inquiry you receive from the campaign. Or you pay them a percentage of each sale generated.
Conclusion
Before selecting a pricing structure, be sure to communicate your needs. Take time to review the available pricing options, and carefully reading the fine print. Then weigh the pros and cons for each and choose the one that works best for you.
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