Choosing the right price for your clients is one of the most crucial responsibilities for a PPC agency. If you charge too little, you look cheap and are making too little. If you charge too much, clients may not want to pay.
So how do you find this balance? That’s what we’ll cover today…let’s dive into the messy world of agency pricing!
How to Determine PPC Management Cost
Step 1: Examine Industry Trends
The first step is to research how much other firms charge for PPC services, and it’s only to give you an idea of how to charge your PPC services. Of course, you cannot price your services based only on industry trends, but you should have a general idea of what to expect from yourself and your clients.
The majority of PPC companies charge between 10% and 25% of the total ad spend. It isn’t just about charging a percentage of ad spend. Some agencies may charge a flat cost, while others may charge an hourly rate.
Step 2: List the Range of Services
After you’ve looked at industry trends, you’ll know how much agencies charge for PPC management. Suppose you are only going to charge for PPC advertising. In that case, you can list the services, bundle them into a package, or price each package separately.
However, if you offer various services, your cost may vary significantly.
You can separately charge for services like Landing Page Design, Content Creation, Reporting & Analytics, etc., or include them in a package or whatever works best for you & your client.
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Step 3: Determine the Level of Expertise
The expense of PPC service management is directly related to your level of skill.
You can charge more for your services if you have more experience, and your level of expertise reflects your ability to manage PPC campaigns. They want the best to manage their pay-per-click (PPC) marketing initiatives, and they are willing to spend more if you can meet their expectations.
It takes more than just saying you’re experienced. You’re going to want to have a list of clients, case studies, and testimonials ready to prove you can get the job done.
If you are still stuck wondering what is right for you, you should definitely check out our exclusive Pricing Webinar to learn more!
Step 4: Choose a Pricing model
Both the advertising budget and the cost of PPC management have an impact on each other. As your budget grows, so does your income.
Fun Fact: An average small business spends $9,000-$10,000 per month on Google Ads.
So, the budget estimate depends on the client’s capacity, which will significantly impact your income. Here’s are the 5 most popular pricing models that agencies use for PPC management:
- Flat Rate Pricing: One of the most basic pricing models is the flat-rate pricing strategy. Therefore 50% of agencies price their PPC services on a flat fee/retainer pricing model. You don’t have to worry about additional hours or the client’s ad spend budget. You will charge a set fee for the PPC services listed in the package. In addition to the fixed, flat monthly payment, you can charge the client a setup or onboarding fee. For example, you could charge a $500 one-time setup fee for a new client. In addition to these, the client will pay you a monthly fixed amount.
- Hourly Billing Pricing: This is the easiest way to bill your clients, especially those needing numerous alterations or revisions. You must be high enough to cover the agency’s expenses. However, inform your clients about how long the project may take, allowing you a few extra hours.
- Performance-based Pricing: Consider switching to a performance-based pricing model for your digital marketing business after you’ve worked hard to develop a reputation for your PPC agency and know you can produce great results. Of course, you’ll need the correct statistics to back up your work. For example, you could agree on a percentage of all sales closed by the company.
- Recurring model: Some digital marketing services, such as SEO, are long-term projects. You can establish a long-term partnership by giving flexible or discounted annual digital marketing agency price options. Long-term contracts are an excellent choice because they provide consistent revenue and attract clients interested in longer services, helping you build a good reputation in the market.
- Hybrid Pricing Model: The hybrid pricing model combines two or more previously described price models. If an agency provides various services to its clients, it can use a hybrid model. The services could be related to PPC, website building, SEO, or other needs. For PPC advertising, for example, you may charge a portion of the ad expenditure. In addition, you will charge a one-time setup fee. If a client requests that you design and optimize landing pages, you might charge an hourly rate for this service.
For us, we have a lot of success using a hybrid model that combines flat rates and ad spend (after a certain spend is met). This varies for each agency, but in general, this seems to be a solid way to price your services…especially if you have listed prices for each service you provide.
Step 5: Calculating the final Prices
Keeping all your expenses (and income) in mind, it is time to finally break down the actual numerical figures and decide what services should be charged in what manner. And a numerical breakdown will give you a clear idea of what needs to be charged.
The Bottom Line
Prospects are looking for a PPC agency that can provide the best services at the most reasonable prices. And we’d want to remind these prospects that the best isn’t always the most affordable. If you seek extraordinary outcomes, be prepared for the cost to reflect that.
To prepare PPC services pricing, businesses can follow the same mentioned above. You can justify your prices if your goal is to maximize ROI and conversions for your clients. Use case studies, testimonials, awards, and recognitions to demonstrate credibility.