How should you charge for SEM work? Monthly fee? Percentage of ad spend? Percentage of sales? We explore a variety of options in this session.

Moderator: Kevin Heisler, Executive Editor, Search Engine Watch

Speakers: Mike Murray, VP, Fathom SEO, Damian Finlay, Managing Director, Epiar Inc., John Grudnowski, Director of Modern Media, space150

The percentage of the spend SEM model is one of the most common of SEM pricing models, this model in particular allows for the ease of client budgeting, the profits of the agency increase with the campaigns, it great and easy for new clients. But it has its own flip side such as pays the agency simply for spendings on his behalf. The naturally-expanding scope is sometimes understood as a sales pitch by the clients and its not profitable for client who've a spend lesser than 50 k.

The other model is the per per performance this offers ease in when you sell your services the first time client and it can get you good margins. But it becomes tough to scale up the campaign, and there's further difficulty with the integration of campaigns. Not well suited to reputation and campaign management, as there aren't well defined KPIs so they would need a different treatment. You also have to unnecessarily control the entire experience, including audit processes etc.

Fixed hourly rates allow for enhanced resource planning ability, and great scheduling. You can easily plan for the campaign month wise, it leads to multi-year relationships. Often analytics license and bid management are integrated at flat fees. But it needs a process to manage a scope-creep. And if you have flexibility then commitments and client service come along. The long term trends show a less profit vs percentage spend.

The other option is customized SEO services, with different client needs you need these. There are some service providers that provide ala carte services, which are coupled with other models viz. site audit, site redevelopment, maintenance plan, hourly consultation, copywriting services, web analytics and application development.

Then the question that arises is how you should go about choosing your target prospect. You need to view the pros and cons of the clients a quick buy from small companies is easy to come by, but their budgets are lower. The smaller clients can be quite demanding as well. The large companies have a hands-off approach and there are many departments, legal issues, and brand limitations. The sales cycle is a bit too long, but they've got the funds to pay well.

The midsized companies combine the best of both, shorter sales cycle, easy approval, less departmental layers, and they can pay well too.

It is suggested that the proposal are important because the expectations should be mutually well understood, it also "shows professionalism." it provides a cover, proposal writing can also be impressive. The pricing part's important too it should depend on the markets that you serve, negotiation is involved as "small-town companies expect big-city service at small-town prices."

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