Why SEO Companies Are Underpaid and What They Can Do About It.

Even though a few well-known SEO companies get paid a nice fee of $10K+/month making on average about $120,000/+annually per client, most SEO companies and consultants are undervalued. So why is it that businesses are willing to pay Google PPC over $40K/mo but when it comes to SEO they run from $5,000/mo quote? Why are SEO companies undervalued? Answer is…

Actually there are few answers.

  • PPC is easier to understand and thus … if a prospect is not confused he/she will buy
  • SEO is too difficult to understand and most SEO companies think that they need to be “aggressive” to sell
  • People don’t like to wait for results. Google is simple and fast. Create an “ad” and it’s up and running in minutes

I see companies that spend around $20K every month on Google where their market is still easy to optimize for to rank in natural results. But once they hear that SEO will cost over $3,000/month they have difficulties breathing.

Problem is not in the cost of SEO but the perception people have. Even though we are so smart these days, we still function under the logic …. I’ll give you 3 bananas and you give me 4 apples right now, NOT TOMORROW.

SEO is a complete opposite. “Give us 3 bananas and we’ll give you 30 apples in 5 month … maybe”. Can a “guarantee” help? It would but it would also be a lie.

I personally spoke with about 30-40 SEO companies in the past 2 months. Out of these about 3-4 were private consulting guys. Yes … I spoke to some people who might be reading this post. Here is what I think about you. (Your prospective clients might agree).

Some of SEOs come off too strong. You lie and try to connect your company to people like Matt Cuts (Google engineer and frequent conference attendant and speaker) as if he’s your best friend and you tan in the sun with him every weekend. Oh and he also shares the secret Google algorithm with you just because you have a nice smile.

You confuse people with too many options, plans, strategies and oh you also do PPC (Pay Per Click advertising)? You get my point? I called and asked about SEO services. In 5 minutes we were talking about PPC and other services you were doing. I was bored, your prospect might have already turned off his hearing device.

What amazed me most is that an SEO sales person would start giving serious advise after just 2 minutes into the conversation. You would get my attention if you would have first asked me few questions about the industry and what we do. People like to feel as if they are getting “personalized” / “customized” service. No one likes cookie-cutter approach especially when it comes to SEO for their website.

Bottom line is … when a human being is confused, his wallet does not open. People like “simple and easy”. They hate “difficult and confusing”.

In reality, Search engine optimization (SEO) is 20 times more valuable than PPC, even though I always implement both (real estate space). With time, businesses will be more keen on selecting an SEO company and paying it a “fair” fee.

When Rand Fishkin from SEOmoz posted his SEO fees on his Blog, he received a mixed reaction even from other SEO companies and consultants. Some were surprised that his company charged so much and others praised him for shooting higher.

Another point to consider is … what is the SEO fee based on? Cost per hour? Cost per results? It’s not easy to explain where the fee of $5,000 / mo comes from. Link building, research, hours of hard work?

I spoke to one SEO company about 7 months ago and got a quote “$4,000 initially and then $300/month maintenance”. I called them 3 weeks ago to see if the price has changed. Oh it changed all right. The entire cost per service changed. Now it was $1,500 /mo with 1 yr contract. Why? They changed their SEO strategy from just link building to PR releases.

Here is a possible solution to fixing the “Underpaid SEO community”.

1. Make it easy to understand exactly what you do and how you do it

2. Start with lower cost. Let your prospects start building a relationship with a smaller contribution. This is done so that they at least get a feel about working with you. (Sometimes people just want to see how it goes)

3. Focus on one service at a time. Do not try to sell everything. If what they want is SEO, give them SEO

4. Don’t scare them with “oh your industry is hard to optimize for”. Who wants to work with an SEO who’s not confident in his/her abilities?

5. Compare your prospects spending on PPC to your SEO. If you do this right, you will win them over.

Final note …… Try to listen to the prospect. Don’t talk over them and your self. Listen!

10 Comment(s)

  1. Good post, Igor. You’re dead on with your three “answers”. SEO is confusing and it doesn’t help that every SEO does things differently. That makes it very difficult to compare apples to apples.

    Stoney deGeyter | Aug 30, 2006 | Reply

  2. Igor, I really appreciate the perspective you bring to the SEO client/vendor situation. Prices do change as tactics change to meet demand and increased competition. I think that’s pretty normal.

    What is disappointing though, is to hear that so many firms are pushy and trying to make the “Matt Cutts connection”.

    Lee Odden | Aug 30, 2006 | Reply

  3. Lee, most of the time, the pushy ones were the less-known SEOs as they apparently didn’t care about their reputation within this industry.

    I was surprised though when I spoke (actually met) with a very “VERY” popular SEO company and they said that Google now allows Paid Inclusion. Oh and they also somehow had engineers that knew the future of the Google’s algo. (I kept quite as they rambled on).

    Igor Mordkovich | Aug 30, 2006 | Reply

  4. I agree with Lee on the pricing thing. We change our pricing more often than I care to admit, but each change is driven by changes in strategies, usually adding services or expansion of certain elements to provide a more rounded and effective service. But Matt Cutts gave me the inside details of the Google Algorithm when he was over for dinner last week so I have no problems doing the hard sell on all our services! ๐Ÿ˜‰

    Stoney deGeyter | Aug 31, 2006 | Reply

  5. Igor, I couldn’t agree with you more. Paid media is dead and natural is very much alive IMO. There is a huge disconnect between paid and non-paid right now. Especially with the vast amount of algo updates in Google AdWords lately. More strategy needs to be applied to the paid spectrum because I’m not buying 1/2 of what is out there right now. A lot of the systems being used for paid are automated and use some sort of fuzzy logic. I think these people were hit hard with the last GGL update and now are scrambling to SEO’s to get feedback on how they can build better landing pages and optimize their system(s).

    Instead of a continued separation between paid and natural, we need to see a joint effort from both parties and ensure a competitive pricing equilibrium in the near future.

    Jonathan Nelson | Aug 31, 2006 | Reply

  6. Stoney, I agree on the “pricing change for SEO services”. It’s quite normal as the methods change and thus the pricing model will change. I would be more skeptic towards SEO companies that have the same price structure they had 2 years ago. That’s a red flag right there.

    Yea, Matt told me about that incident at your house. He said that everything he told you was a lie. ๐Ÿ˜‰

    Igor Mordkovich | Sep 1, 2006 | Reply

  7. Jonathan, thanks for commenting.

    You’re right about the integration of Paid and Natural search. I still hear people choosing which one to implement alone (PPC vs SEO).

    Igor Mordkovich | Sep 1, 2006 | Reply

  8. With regard to this blog post, here is some additional insight and a suggestion. As someone who has been burned by Google AdWords and several SEO’s, my confidence level is pretty low.

    How about the vendor and client agreeing on some sort of tangible goals for the project and the SEO agreeing to providing the initial month of service for free? If the SEO person/firm is really that good, the client would be an ass not to agree to a contract at a reasonable price. Personally, I would jump at something like this.


    Scott | Sep 6, 2006 | Reply

  9. I don’t know if you’d ever find an SEO that would do the first month for free. That first month requires a lot of work that the client wont’ get the results from for several more months.

    Stoney deGeyter | Sep 6, 2006 | Reply

  10. Stoney is right. If you would be doing PPC advertising then yes, you can see the performance of it in the first 1-2 months (unless your industry has a “latent conversion” of over 2 months before you get sales)

    With SEO, it’s a process. Customers will always feel uncomfortable about it because they will have to trust and “pray”. Hence a reason for taking your time and trying to choose the right (not necessarily cheapest) SEO company.

    Igor Mordkovich | Sep 6, 2006 | Reply

2 Trackback(s)

  1. Sep 20, 2006: from In-House VS. Outsourced SEO Services for Your Website.--BizMord Search and Marketing Blog
  2. Oct 24, 2006: from Performance Based SEO Payment Model Will Kill The Conventional SEO Companies--BizMord Search and Marketing Blog

Post a Comment

To prove you're a person (not a spam script), type the security word shown in the picture. Click on the picture to hear an audio file of the word.
Anti-spam image