How Much Should You Spend on SEO?

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If you are here, you are probably either already working with an SEO agency or are thinking about hiring one.  For those that are new to the industry, it can be very difficult to figure out how much you should be spending on SEO services and what you are getting for your money.  After all, you just give them the money and voila, rankings!

Some SEO “experts” will try and make you think this is how it works and give you little to no information on the work that they are doing on your behalf.  The hard and ugly truth is that there are many agencies out there that take advantage of the ignorance in the industry by offering spammy techniques or charging too much for the services they provide.

Increasing Transparency in SEO

Fortunately, competition eventually seems to drive industry transparency and honesty as consumers begin to vote (pay) for the services that actually work from companies they actually trust.   Thanks to a survey of over 600 SEO agencies on pricing and cost structures from the folks at SEOmoz (and an awesome corresponding infographic by AYTM), it is becoming easier to understand how SEO works and what it is worth.

Whether you are researching to see how your current agency stands up or planning to shop around for SEO services for the first time, there are two essential questions; how much should I be paying and what services should be provided at that cost?  The answer is going to vary based on many factors like your niche competition level, the size of your business,  whether or not you need local optimization, and many more.  Below is a look at what you can expect to pay and get as a small, medium, and large business.

*monthly retainer will be used as the main price point for the fact that it is very common and simple to understand

Small Businesses – Startups to under $10m in revenue

As a small business, it can be tough to fit SEO into your budget with an already tight margin.  That being said, SEO is one of the highest ROI marketing efforts there are with over 88 billion searches a month worldwide.  One important thing to look out for is not to fall for inexpensive SEO packages and lofty guarantees.

Close to 60% of agencies in the survey reported charging between $500-$7500 as a monthly retainer for services.  Only 16% reported charging under $500 a month and there is probably a good reason.  While some newer agencies might legitimately offer lower pricing as they are in the growth stages, many times pricing that low is a red flag.  As a small business you can generally expect to pay a little less than a typical medium or large business.

Local SEO is also a huge factor in increasing search traffic leads since Google displays Places results towards the top of the page.  One aspect of SEO that influences the monthly, hourly, or project costs is how large of a geographic area you need to locally optimize for.  A single retail store would most likely pay less than a chain store with 100 locations.

Medium Businesses – $10m+ in revenue, National Brands

As a medium business, you have likely already created a larger branding and marketing plan that SEO is just a part of.  You have dedicated more money than a small business to marketing and know that the web is the place to meet customers.  In some ways, having a larger budget can significantly help boost your SEO efforts.  Great content like videos, infographics, and well-researched white-papers require an investment of time and often money.

Search engine optimization is about much more than keywords and links, it is about creating a powerful brand and online presence that people can trust.  For this reason it is important to invest when possible in high quality content.  For a medium business, depending on how aggressive your marketing efforts are, you can expect to spend closer to the top of the range mentioned above with monthly retainers of over $5,000.

Big Businesses – Fortune 1000 companies

To be really successful with SEO on some of the most competitive keywords and industries, a company must have a complete inbound marketing strategy that expands beyond SEO.  For this reason, it can be tough to estimate costs for large businesses as many agencies are SEO only and others are complete marketing consultants.

At this point, it is best to consider a complete online marketing strategy in terms of pricing if you want to see results.  The top 9% of agencies charged between around $5,000 and $25,000 a month with a few outliers going as high as $250,000 retainer.   One thing to consider when looking at this data is that fortune 1000 companies often have in-house SEOs which is one reason that monthly retainers don’t go much higher than $25,000.  Large corporations and fortune companies can spend millions or more a year on marketing.

Key Factors that can Influence Cost

This raw data can give you a good starting point in terms of what you should pay for SEO services, but still leaves the question of “what should I get?” unsolved.  As stated before, the price can vary greatly in all sizes of business.  In order to demystify pricing a little more, here are some key factors that influence the cost of SEO:

• Initial Consultation and Setup Work – Most pricing models, whether project based or a monthly retainer, have the initial consultation and setup costs built into their model.  Work associated with this cost consists of things like keyword research, on page optimization, analytics setup, social media setup, and other first time tasks.
• Content Creation – This is a very broad category that includes everything from video production to graphic design and infographics.  Quality is king and investing in great content for your target market is one of the best web strategies.
• Linkbuilding – Investing in linkbuilding with a capable company can have a direct effect on rankings and SEO traffic.  Some packages are priced based on the effort or hours put towards building quality links.
• Hands on vs. Hands off – Some agencies offer the in-the-trenches SEO services by actually creating the content, building the links, and maintaining the website.  Others are consultants and everything in between.  The pricing models will vary depending on the hands on or hands off approach.
• Project based costs – SEO is most effective when in sync with other online marketing efforts.  As the industry environment and business capabilities change, certain SEO projects can take advantage of timing like press releases, contests, and seasonal promotions.

The inbound marketing and web professionals as a whole are a great group of people that are creating a more honest, open, and transparent internet for businesses and consumers.  As the value of social media increases and accountability becomes standard, SEO will continue to gain trust and grow. The most important thing to remember for considering the price of SEO is that the price is not nearly as important as the quality of service you get for the price.

James writes for AYTM, who provides market research for small businesses and startups. AYTM allows you to create market research surveys specific for your business and get quick responses from their market research panels.