Payment models for SEO services

Flat fee payment model

The most popular billing model in SEO is a flat fee model. This model involves agreeing on a specific monthly budget (e.g., 3000$) and then selecting keywords, optimizing content, running a campaign, and tracking its performance within that budget.

Every month, we receive an invoice for the agreed-upon amount, along with a list of tasks completed within the campaign, such as backlinks acquired and content created and optimized. Unlike advertising campaigns (e.g., Google Ads), SEO doesn't yield immediate results. We can expect to see results after 3-4 months. After this period, we should receive a report from the agency detailing the campaign's performance, such as website traffic. If we only receive an invoice or an incomprehensible report, it's a sign that the cooperation is not fruitful. Reports should be clear and contain the data we need.

Flat fee model in a nutshell

Pros:

A known project cost

No long-term commitments

Monthly invoices and reports

Cons:

Uncertainty about the results of working with an unknown agency

Lack of motivation to achieve better results due to a fixed project cost

Performance-based payment model

The second SEO billing model is pay-per-rank, also known as performance-based pricing. In this model, payment is triggered when a website achieves a top 10 ranking in search results. A cost matrix is created, essentially a spreadsheet listing keywords and corresponding rates. The matrix specifies the cost for achieving positions 6-10, 4-5, etc., for each keyword. These rates are typically monthly.

However, it's essential to be wary of significant price jumps between ranking positions (e.g., from 6-10 to 4-5). Such jumps can disincentivize agencies from striving for higher rankings. If positions 6-10 were achieved through basic optimization, but reaching positions 4-5 requires hundreds of backlinks, the effort might not seem worthwhile, especially if the monthly fee difference is minimal (e.g., only 10$). Pay-per-rank contracts often include long terms, lengthy notice periods, and even penalties for early termination. This is justified because agencies incur costs for audits, keyword research, and link building during the initial months, and remuneration occurs only after results are achieved. Consequently, SEO companies aim to retain clients for as long as possible, with contracts typically lasting at least 12 months.

Performance-based model in a nutshell

Pros:

Success fee

Keyword selection and regular monitoring

Estimation of visits and conversion rates from SEO positions

Cons:

Lack of flexibility in changing keywords

Ranking does not guarantee website traffic

Traffic-based payment model

In the third SEO billing model, payment is tied to the number of website visits. Using Google Analytics as a benchmark, we can establish a baseline number of monthly visits. If the agency surpasses this baseline in subsequent months, they receive a predetermined fee for each additional visitor. For instance, if the baseline is 500 monthly visits, the agency might earn 10 cents for every visit beyond that.

A positive aspect of this model is that it generates genuine website traffic. Unlike pay-per-rank models where a high search engine ranking doesn't necessarily translate to increased visitors, this model focuses on delivering real users. However, it's important to note that Google Analytics data can be manipulated through unethical practices such as using bots to generate fake traffic. These bot-generated visits often have extremely short durations, leading to inflated bounce rates. To mitigate this risk, it's recommended to include a provision in the contract that requires visits to have a minimum duration (e.g., 10-15 seconds) to be considered valid.

Traffic-based model in a nutshell

Pros:

Success fee

Continuous monitoring of organic traffic

Ideal for new websites and when the goal is to increase website traffic

Cons:

Quantity vs. quality of clicks - unfortunately, this can be manipulated

Difficulty in tracking results for specific keywords

Summary and a hint 💡

Each of the three SEO billing models presents both advantages and disadvantages. Consequently, we suggest experimenting with a blended approach that aligns with your unique requirements and preferences. For instance, a hybrid model could incorporate a fixed monthly fee to cover ongoing agency costs such as employee salaries and link building, combined with performance-based incentives tied to achieving specific goals like improving search engine rankings or driving website traffic.