How to Price PPC Services: Step by Step Guide by Glorywebs

How to Determine PPC Management Cost? – Stepwise Procedure

Making a decent profit is the ultimate objective of pricing PPC services. But this doesn’t mean that you just have to rely on expenditure and revenue figures to calculate PPC management charges.

There are a lot of factors influencing PPC services pricing. Based on these factors, we have compiled a step wise procedure that you can follow to curate a personalized PPC services pricing structure.

Let’s dive in straight away.

The first step is to check out what other agencies are charging for PPC services. This is just to get an idea about pricing your PPC services. Of course, you cannot blindly follow the industry trends to price your services. This can hamper your online advertising business.

For example, most of the PPC agencies charge anywhere between 10 and 25 percent of the total ad spend. Almost 70 percent charge between 10 and 20 percent. Around 14 percent charge more than 20 percent of the ad spend.

And it’s not just about charging a percentage amount of the ad spends. Some agencies may charge a flat fee and some may charge hourly. Following a particular pricing model is solely your discretion.

So by analyzing these figures, you can decide the pricing mechanism for your PPC services. Not only this, but if you are offering PPC services that most of the agencies don’t offer, you can rake in more revenue.

For example, Amazon advertising is experiencing an exponential rise. Amazon has become the 3rd biggest digital ad seller in the USA, trailing behind Google and Facebook. If you are an expert of Amazon Ads, you can charge a better price for Amazon PPC advertising. Similarly, you can charge more for Quora advertising, Bing advertising, and Yahoo Gemini advertising.

Once you have analyzed industry trends, you are aware of what agencies are charging for PPC management. Now if you are charging only for PPC advertising, then you can simply list PPC services, bundle them in a package, and list prices for each package.

But if you provide a wide range of services, the pricing may fluctuate considerably. The PPC services package may comprise of – and not restricted to – the following services:

Landing Page Design

According to a study, PPC advertising generates the third highest number of leads that actually results in on-page conversions. This proves that PPC produces qualified leads but to ensure successful conversions, you must focus on landing page design.

And if you are taking the responsibility of designing and optimizing the landing page, you will charge extra for this service. Hence, the PPC management price will rise.

Your level of expertise has a direct impact on PPC management costs. The more experienced you are, the higher you can charge for your services. The level of expertise denotes your proficiency in managing PPC campaigns.

The customers have high expectations from an expert like you. They want the best to handle their PPC marketing campaigns. If you can fulfill their expectations, they are willing to pay a better price.

Now the question arises – how to determine your level of expertise? We recommend emphasizing on these attributes to evaluate your credibility:

Education

Are you a certified PPC expert or a self-taught online marketer? Although not a major indicator of your expertise, it may have a significant impact on your credibility. Whether it’s a certification, diploma, bachelor’s, or master’s in online marketing or related field, it will certainly boost your credibility.

Experience

Your educational qualification is important but it’s worthless if you lack experience in PPC advertising. The clients prefer working with experienced candidates rather than newbies. After all, PPC advertising is all about money and performance. Measure the overall experience of your team to calculate the total number of years spent on PPC advertising.

Reputation

The awards, the testimonials, the case studies, the reviews, the ratings, and the references are the indicators of your reputation. If you enjoy a stellar reputation, a client won’t hesitate to pay you a good amount of money.

Pricing PPC services is a tricky affair. You have to cover up your expenses, make a decent profit, and at the same time, ensure that the PPC management fee doesn’t burn a hole in the client’s pocket. Therefore, you must choose a suitable pricing model that’s accurate, transparent, and simple.

The advertising budget and the PPC management cost, both of these have an influence over each other. As the budget rise, your earnings rise as well.

The average small business spends around $9,000-$10,000 per month on Google Ads.

The budget figure may be more or less, depending on the client’s capacity. And yes, it has a direct impact on your earnings.

There are five types of most widely used PPC services pricing models. You can finalize any one, or more, of the following pricing models, depending on what suits you the best.

The pricing models are as follows:

In addition to the fixed, flat rate per month, you can also charge a setup fee to the client. For example, for a new client, you can charge a one-time, initial setup cost of $500. In addition to these, the client will pay you a fixed amount on a monthly basis.

Flat rate pricing is also known as tiered pricing because the flat rates are decided according to different slabs. Look at the table to understand the tiered pricing concept.

So let’s say your new client wish to spend $1,000 per month on PPC advertising. Your PPC management fee breakup will be:

Setup fee (one-time) + Fixed rate (monthly) = $500 + $150

Pros

The client and you list a common set of objectives to achieve. And now, it’s your responsibility to fulfill these objectives. Since pricing is already sorted, you can now focus solely on PPC campaign and work towards fulfilling objectives/goals.

Cons

It limits your potential to earn a decent profit. Sometimes, you may have to spend more time to optimize campaigns and produce desired results. But since the contract specifies a flat rate pricing, you can’t do anything about the service costs.

Pros

If every minute is precious for you, opt for the hourly billing pricing model. You put in your hard work, count the number of hours, and ask the client to pay for the services. Hourly billing ensures straightforwardness, transparency, and productivity.

Cons

It’s possible that you are an efficient PPC expert known for finishing the work before the deadline. And if you are charging hourly, you may be at a loss. So you must use your time wisely, don’t hurry up. In the hourly pricing model, there is limited scope for split testing.

So let’s assume if you charge 15 percent of the ad spend and a one-time fee of $999, the PPC services charge will be,

Ad Spend Budget = $5,000

15 percent of the budget = $750

One-time fee = $999

Total cost = $750 + $999 = $1749

Pros

If you can deliver performance and growth, the client would not hesitate on increasing the ad spend budget. Ultimately, your earnings will increase because you are charging a percentage of the ad spend.

Cons

The agencies may face a crisis with clients having a low ad spend budget. The low budget means less PPC management fee which may not be sufficient enough to generate a profit for the agency.

Pros

There is no limit on your earnings. Generate as much leads as you can with performance-based PPC advertising. The client is solely concerned with the leads, and the quality of the leads. Take care of these aspects, everything else takes the backseat.

Cons

The PPC campaigns may not produce fruitful results as per expectations. It may happen that the ad spend budget exceeds the earnings accumulated in exchange for the leads. Moreover, if you don’t generate quality leads, the client may terminate the contract.

Pros

Milestone-based pricing lets an agency discover its potential. This pricing model demands you to push your limits. In the process, you learn a lot and you earn a lot. Your earning is in your hands. Hit as many milestones as you can to maximize your earnings.

Cons

Working according to milestone-based pricing can be a time-consuming affair. You may end up wasting more-than-expected time in running campaigns and may not achieve desired results. Ultimately, resulting in loss of time and money. Moreover, any confusion regarding goals alignment between the client and the agency can also have a negative impact on the campaigns.

Let us do a hypothetical calculation to determine the PPC management fee that you should charge to the client. The process will give you an idea about pricing your PPC services. Of course, you can make adjustments as per your requirements.

Here, we will work with a client with an ad spend budget of $10,000.

Let’s do it.

Calculate Set up Fee for Each Client

You charge a one-time setup fee to each client. You need to divide it by 12 to calculate the setup fee for each month. Let’s assume you charge $1,200 as the setup fee.

Setup Fee/12 = Monthly Setup Fee

1200/12 = $100

Any Additional Cost

You may charge a client for additional services, such as research or any other service. There is no formula for this. You just need to determine the charge and add it to the final cost.

Calculate Total Monthly Cost to the Client

Sum up all the fees and expenses to calculate the estimated PPC management cost to the client.

Estimated Monthly Cost = Average Monthly Charge + Business Expense + Monthly Set up Fee

Estimated Monthly Cost = 812.5 + 250 + 100 = $1162.5