I would greatly appreciate input from any of you guys here.
we also employ a max fee of £1250 i have worked for 2 companies now the last charged 10% and we charge 15% i know some of the big players also charge 15%... also look at contact lengths, most are 3 months, but we only ask for 30 days rolling contract.... hope this helps
[edited by: jim2003 at 5:43 pm (utc) on Sep. 4, 2006]
I believe an hourly rate is better for the client that a %. If you are charging a percentage rate of total spend, you don't have a real incentive to manage for the lowest possible cost. An hourly rate compensates you for your time, which is really what you are selling. Consultants, Lawyers and Accountants all have expertise that they sell on an hourly rate. I think that is where you want to position yourself.
f you are charging a percentage rate of total spend, you don't have a real incentive to manage for the lowest possible cost. An hourly rate compensates you for your time, which is really what you are selling.
I don't know any client that pays for your TIME. Charging an hourly rate doesn't provide you with incentive to work quickly and efficiently, either.
The real reason consultants, lawyers, etc, charge by the hour is to protect themselves from faulty estimates, time over-runs. It offers virtually no benefits to the customer, who then pays more if the person they hire is slow and stupid (and rewards the slow and stupid in the bargain).
It IS fairly standard, but let's be clear that it has NO benefit for the customer.
However professionals typically offer estimates of what is involved and how much time it will take to complete a project. Good professionals protect thier clients from cost over runs due to poor estimating. If you understand what you are doing, you should be able to estimate for the client pretty closely how many hours you expect to bill for and the customer can decide if its worthwhile or not. If you can't estimate your time, you probably don't understand the job. In many cases, the customer has been doing the ppc marketing themselves and has a pretty good idea of how much time is involved. So estimating a job is rarely very complicated either for you or the customer. Again this advice is for those that are not slow or stupid.
On the other hand gyrating min. cpc's, new competing customers driving up bid prices and other things not in yours or the clients control. are not things that should really cost the customer more money. It is perverse to tell a customer "one of the ways I make more money is to drive your costs up"
On the other hand when I write new ad copy for a client that doubles CTR and drives total costs down, it doesn't seem reasonable to pay me less than if I write poor ad copy that requires higher bids to achieve the same CTR. Another example is finding an eliminating non-productive keywords. Why would you expect to get paid less than if you continue to let them run.
From a pure capitalist point of view, the best way to charge customers is the one that makes you the most profit over the long haul. If you can find customers who want to reward you for driving up costs, good for you. But I have found finding ways to align myself interest with my customers is the most effective marketing pitch.
As an aside the Google "my change history" tool, allows you to pretty easily show a customer what you did with your time. It doesnt take a lot of expertise on the customers side to see if your estimates,bills and change history correpsond to one another.
If you can find customers who want to reward you for driving up costs, good for you.
My point actually there are positives and negatives to different fee arrangements.
If you can find customers who want to reward you for slow work, or work that takes longer, good for you.
Once again webmasterworld has proved to be an invaluable source.
Cheerz
An hourly rate compensates you for your time, which is really what you are selling. Consultants, Lawyers and Accountants all have expertise that they sell on an hourly rate. I think that is where you want to position yourself.
Spot on!
Hello,
I believe an hourly rate is better for the client that a %. If you are charging a percentage rate of total spend, you don't have a real incentive to manage for the lowest possible cost. An hourly rate compensates you for your time, which is really what you are selling. Consultants, Lawyers and Accountants all have expertise that they sell on an hourly rate. I think that is where you want to position yourself.
Charging hourly also keeps the client from making to many random requests that may not benefit them. When they know they will have to pay for each and every change to the account in the form of your time, they will be a little more restrained in their requests or demands.
When you start managing huge accounts, the hourly charges often end up coming out lower than a percentage of spend but you protect yourself on the lower end clients. If they are willing to pay what may be up to or greater than 100% of their ad spend by paying you hourly, they tend to be pretty serious clients for whom the value of the traffic far outweights the costs of the clicks and your time.
Unless you can get a bunch of small $1,000 - $5,000 accounts running on autopilot for months at a time for which you collect a percentage, it's tough to make anything charging a percentage of small acounts like that.
The reason I bring this up isn’t because I like to sit back and do no work, it's because in the first month of receiving a client we do a LOT of work, normal total overhauls of accounts which take days/ weeks, and this would mean an initial cost of like £1,000. The way we make our money is, break even in the first month and then profit from then on.... IMO the % approach is less intimidating to clients quoting prices of £125 - £300/£400 is much easier to digest than 1000 for the first month then £20ph from then on...
