Productivity / Decision making

How much should I spend on SEO (or anything)?

How much should you pay for any business related service? Well it depends on what that service is worth … to you.

19 January 2015 by

What’s a reasonable cost for a logo? Is this a fair rate for a narrator? Is that a good deal for a promo video? Am I paying too much for SEO?

We tend to think there are fixed answers to these business expenses questions. Yet we instinctively know it’s silly to ask a question like “What’s a reasonable price for a watch?” without further information about the buyer’s circumstances and needs.

The question you need to ask instead

“What’s it worth to MY business?”

In other words: “what’s this logo/promo video/SEO etc. worth to me?”

Spending $500k to produce a 60 second video might be a good investment for Nike, but it’s a different equation for Bob the local plumber. There’s nothing unfair about the $500k price-tag, it’s just not a good investment for Bob.

Both Nike and Bob want the same thing (and it’s the same thing you want), a return on their investment. You’re looking to spend $X on something that will earn you $X+ in return.

"Spending $500k to produce a 60 second video might be a good investment for Nike, but it’s a different equation for Bob the local plumber. "

Know your numbers

So how do you make a good investment decision? Well, you need to be across your numbers.

For instance, want to know if you’re paying too much for SEO? Well forget about page 1 of Google and keyword rankings – the service either makes you money or it doesn’t. To make you money, SEO has to bring you enough traffic to earn your fees back. So if you’re paying $500 per month you need to know exactly how much traffic earns you $500.

At a minimum, you need to know two numbers:

  1. Your monthly traffic; and
  2. The monthly profit earned by your website.

Once you know the average dollar value of a visitor, then you can measure the traffic (and therefore dollars) your SEO company is delivering.

Become an investor

Once you’ve done this calculation a couple of times you’ll start to see everything differently. When you figure out that each visitor to your site is worth $1 (or 20c or $5) you’ll be able to start acting like an investor – you can assess the profitability of your SEO service, and you’ll know how much to pay for each click on Adwords, or for a 1000 click Facebook campaign.

What about that logo?

Services that aren’t aimed at getting you traffic should be aimed at increasing your conversions – in other words, getting more sales.

So if you know your website brings in $500 per month, you need to estimate the increase in sales the logo (or sales video, or web redesign, or copywriting, or better photographs) will bring. If you guess 10% then that’s a $50/month, or a $600 return over the next 12 months.

So now you have some basis for deciding how much to spend, and also a way of assessing where you should spend your next dollar.

Have you ever looked at business expenses like the above as investments? Or simply necessary costs of flying solo?

Dave Gillen

believes the problem with online marketing is that you’re continually being asked to gamble your money. He provides companies with a way to invest more safely at Bankable Online Marketing (Brisbane).


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