How To Calculate The Value Of SEO

“How much do you charge for SEO?”

“I’m calling a few companies to get an idea of prices…”

And that’s it. No information about the company or how much its products or services are worth. This is often the kind of enquiry you get as an SEO consultant.

Being involved in SEO for a length of time means you learn a lot about the value of SEO to a whole range of different businesses. This knowledge also helps in client meetings when there is the inevitable question about budget and how much should be spent on it.

The central problem is that clients often have little idea of how to place a value on SEO. They see SEO as a cost rather than an investment as this article on Search Engine Land explains further. This often leads to shopping around for the cheapest price then abandoning SEO altogether after a couple of months cursing the ineffectiveness of the consultant or company.

The downside of this is that money isn’t actually being saved it has already been wasted.

Abandoning an SEO campaign makes the initial investment pointless in some cases because there may not have been enough done to achieve a good ranking.

How much should you spend on SEO?

The answer to this question largely depends on 3 things:

• Demand for the product or service
• the level of competition
• And the cost of the product or service vs the cost of SEO

Some business sectors are saturated online such is the ease of creating a website. These sectors will inevitably require more SEO work if the target is to rank nationally. The amount of work required also depends of course on the age and popularity of the website.

This contrasts with businesses on a local level where there are still plenty of opportunities to do some basic SEO and have a site ranking on page one or even the top places on page one. This is certainly achievable at a relatively low cost – assuming the website is built to the latest standards.

So whether you own a business as a therapist or sell your goods via an ecommerce store, search engine optimisation should always be a consideration alongside other areas such as online advertising as long as you look carefully at the following…

What Is The Return On Investment Of SEO (ROI)?

But no matter whether your target is to rank in your local town, the UK or even globally, the important thing every business owner should consider when hiring an SEO is the return on investment. There is no one-size-fits-all SEO price.

For smaller start-up business websites with limited budgets some SEO at the beginning will be beneficial and set a platform ready for further investment in organic search as the company grows.

However with SEO now becoming more and more focused on long tail queries, the volume of traffic gained from it is likely to be smaller. It will be more targeted to what customers are trying to find which means careful consideration should be given to how much these long tail keyword rankings are worth to the business. At the start of any SEO campaign a target should be set according to how much each individual customer enquiry is worth to the business.

To rank on national searches, significant investment will be needed and also more time due to the level of competition. Getting to page one however will generate a major increase in enquiries for some businesses and the only problem then might be coping with all the extra work!

How Much Profit Will SEO Bring In?

Say for example it’s a small SEO company. One enquiry might be worth £3,600 over a 12 month period. Now if the SEO company decides they are too busy to do their own SEO work, they may have hired someone to work on it at a cost of say £200.00 per month for a 12 month period.

So the net return on ranking for this one keyword would be:
Income: £3,600 – £2,400 = £1,200
Return: £1,200

The SEO company actually gets a return on investment simply from one customer finding them on Google. Multiply this by several customers and the company can continue to expand its client base and increase revenue so that the initial investment is paid for many times over.

If rankings are maintained then ranking on the first page of Google for keywords like ‘SEO UK’ brings in traffic and saves more than $2,000 a month on advertising. IT also gives valuable insight into the kinds of keywords that are worth paying for and at over $20 a click this is an important area.

If, on the other hand, I’m the owner of an ecommerce store then the calculation can be more complex. With several products to optimise for and a lot of competition, it’s often tricky to calculate the value of SEO unless you break it down to a simple calculation. How many products do I need to sell to cover the cost of SEO and generate a profit?

If the website sells products that are low value then any investment in SEO beyond the set up phase must be carried out on the basis that keyword rankings are actually achievable. If demand is high for a product and it can be sold in volume then the same £200 investment in gaining a better search presence will more than cover its cost.

So the key thing to remember before starting any SEO campaign is the income you are likely to generate with a higher search ranking. There is little point spending £200 a month on SEO if the most it can generate in sales each month is £50 or even £0 in some cases due to the level of competition for the product or service.

Spending on SEO should always be relative to how much profit it can potentially generate in the long term.

Brett Tudor

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