The Great (1-Sided) PPC Pricing Debate

Kirk Williams@PPCKirk

State of Search Conference, Dallas 2015

Who am I? Who are you? What is life?

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To the chase!

There is noperfect PPCpricing model.

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To help us think more deeply about our pricing & find the best model for our individual situations.

“ ”—————————

Our Goal Today:

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but first…

*3*CrucialCaveats

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but first…

*3*CrucialCaveats

#StateOfSearch @PPCKirk@DFWSEM

but first…

*3*CrucialCaveats

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but first…

*3*CrucialCaveats

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philosophiam pretium

“What are the underlying principles that should drive our

pricing model choice?”

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philosophiam pretium

“What are the underlying principles that should drive our

pricing model choice?”

how you measure value matters.

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philosophiam pretium

“What are the underlying principles that should drive our

pricing model choice?”

your pricing model should fit with your customer relations.

how you measure value matters.

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Principle #1 - How you measure value matters.

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Principle #1 - How you measure value matters.

Time

=

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Principle #1 - How you measure value matters.

Time Task

=

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Principle #1 - How you measure value matters.

Time

Expertise

Task

Aunt Edith Brad Geddes

=

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Principle #1 - How you measure value matters.

Time

Expertise

Task

Results

$

Aunt Edith Brad Geddes

=

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&

My Take on Measuring Value: Task & Expertise + Results.

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principle #2: your pricing model should fit with your customer relations, unlike Han.

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pricing should be seen as marketing

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Status Quo = a la carte, confusing!

pricing should be seen as marketing

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STRESSED brides

pricing should be seen as marketingStatus Quo =

a la carte, confusing!

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STRESSED brides

We Said: “Screw

ala carte” & simplified it to

1 flat price.

Oh… and we raised prices

50%.

pricing should be seen as marketingStatus Quo =

a la carte, confusing!

#StateOfSearch @PPCKirk@DFWSEM

STRESSED brides

We Said: “Screw

ala carte” & simplified it to

1 flat price.

Oh… and we raised prices

50%.

Feedback from Stressed Brides?“We. Love. It.”

pricing should be seen as marketingStatus Quo =

a la carte, confusing!

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ask yourself: “How will my future price changes affect my loyal client’s orientation to me?”

pricing should be seen as customer retention

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ask yourself: “How will my future price changes affect my loyal client’s orientation to me?”

pricing should be seen as customer retention

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PPC Pricing Models…

There’s… too many of them!#StateOfSearch @PPCKirk@DFWSEM

Performance??

Combination??

% of Spend??

Flat Fee??

Hourly??

a PPC pricing model analysis.

Pros &

Cons

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hourly

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“hourly makes sense to my corporately trained brain…”

HOURLY Benefit #1: Pricing Simplicity

Client

(but…)

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HOURLY Benefit #2: You *Have* to Get Into the Account.

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HOURLY Benefit #3: Helps Prevent Scope Creep

Initial Agreement2 weeks

3 months6 months

1 year

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“hourly makes sense to my corporately trained brain…”

HOURLY Concern #1: Pricing Disconnect

Client

“…BUT HOW MUCH DO YOU MAKE AN HOUR?!?!”

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≠

HOURLY Concern #2:

When you look annoyed all the time,

people think that you’re busy.

“ ”

Busy Work ≠ Good Work

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HOURLY Concern #3: Discourages Speed & Skill Growth#StateOfSearch @PPCKirk@DFWSEM

HOURLY Concern #3: Discourages Speed & Skill Growth#StateOfSearch @PPCKirk@DFWSEM

HOURLY Concern #4: Screw You, Tools

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Easy to sell, but selling your soul to the clock isn’t worth it“ ”—————————

HOURLY SUMMARY

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performance

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I make $,you make $

Performance Benefit #1: Rewarding to both parties.

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No futurehagglingrequired

Performance Benefit #2: Scaleable

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Performance Benefit #3: Sounds Great!

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performance pricing is like Dudley Dursley

(it’s everyone’s favorite, but is, in reality, quite boorish)

but....

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Performance Concern #1: Complicated Negotiating

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Performance Concern #2: What if Client Breaks Something?

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Performance Concern #3: Seasonal Trends

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Can you really trust them??

Cancelled Orders

Phone Orders

Tracking Errors

Include Brand??

Performance Concern #4: Data Accuracy

X

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The Performance Model Attribution Pie-Chart

PPC Everything Else

NO

TO

UC

HY

!!!!

!

Performance Concern #5:

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Looks like puppies and unicorns from afar, Turns out to be werewolves & donkeys.“ ”

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PERFORMANCE SUMMARY

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flat rate

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FLAT RATE Benefit #1: Simple to Sell

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FLAT RATE Benefit #2: Pricing WYSIWYG

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FLAT RATE Concern #1: Not Growth-Focused

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FLAT RATE Concern #1: Not Growth-Focused

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FLAT RATE Concern #2: Can Invite Scope Creep

Initial Agreement2 weeks

3 months6 months

1 year

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Simple selling with no eye for the future.“ ”—————————

FLAT RATE SUMMARY

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% of spend

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Fee

$1000 $3000 $10,000 $50,000

% of SPEND Benefit #1: Simple to Sell

Fee

Fee

Fee

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No futurehagglingrequired

Fee

$1000 $3000 $10,000 $50,000

% of SPEND Benefit #2: Scaleable

Fee

Fee

Fee

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¯\_(ツ)_/¯ Fee

$1000 $3000 $10,000 $50,000

% of SPEND Benefit #3: Simple to Track

Fee

Fee

Fee

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% of SPEND Concern #1: Misaligned Goals

ClientAgency $#StateOfSearch @PPCKirk@DFWSEM

“Are we seriously going to have to go through this again?”

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Client Agency

Can we please kill the misaligned goals attack??

$Reality: Client doesn’t increase spend

unless client is J with results!

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% of SPEND Concern #2: Client Issues

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`

$1,500 Spend

% of SPEND Concern #3: Small Account Issues

$1,000 Spend

$500 Spend

SAM

E WO

RK

LOA

D

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Scales well, but small business is the pits.“ ”—————————

% OF SPEND SUMMARY

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My Model (combination)

+

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Ad Spend Budget Management Fee

Tier 1 $0 – $2,500 $400

Tier 2 $2,501 – $5,000 $800

Tier 3 $5,001 - $10,000 $1,200

Tier 4 $10,001 - Up 12% of Ad Spend

% of Spend with a Flat Rate Twist

*not my actual SMB pricing rates, but close enough to be helpful

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Prevents Small

Account Drain

Not Difficultto Sell Scaleable

Spend Reduction

Means Work Reduction

Client Goals Aligned with

My Goals

% of Spend with a Flat Rate Twist

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TIP: Always, always, always charge a Setup Fee

Each build isyour Mona Lisa

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keep searching for the best model

for you.

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State of Search Conference, Dallas 2015

Questions? Ideas? Insults?——————————————————————————————————————

@PPCKirk

Slides & Links: bit.ly/ppc-pricing