n Your Worth: PPC Management Pricing for Agencys //

If you’re like many agencies we speak with, your client list and PPC spend-under-management are on the rise. It’s a great thing for many reasons but there are some growing pains.

Each new PPC client presents unique challenges, which put your workflow to the test. It is difficult to plan expenses and staffing due to the (often messy and unorganized) existing ad account, seasonal fluctuations and different levels of service.

Setting the right PPC pricing upfront is the best way to ensure predictable revenue. This article will give you a good overview of the most common PPC pricing models, as well as some tips and context to help you choose the best one for your agency.

What factors affect PPC management cost?

According to most reports, the PPC fee is typically between 10% and 20% of the ad budget. The amount of money that a client spends on PPC ads will directly impact the fee that you charge. There are some nuances to the calculation which can affect your fee.

Client industry

It’s only logical that, since some industries pay more per click than others do, they also pay more money to the agencies who manage these campaigns.

In our Google Ads Benchmark Study we found that arts and entertainment and real estate are relatively inexpensive at $1.55 a click. Google’s ad-clicks will cost your clients over $9.

The law firms that you work with are likely to pay you a premium of 450% for the same goal. Although their ROI will differ, ROI may be similar.

Advertising rules are also stricter in certain industries, such as health. A specialist agency in these industries may charge more because of the additional work and knowledge needed to run their ads.

Scope

Some clients want you to track their Google PPC or Bing budgets. Some clients want a comprehensive service that includes ad creation, reporting, optimization of campaigns, and strategy. You will charge a client based on the amount of work they require.

Number of channels managed

Google still dominates the PPC advertising space with a $280 billion revenue. Bing’s ad revenues are $11.5 Billion, while Facebook’s are 113.6 Billion. Since the CPC average is lower for Bing, clients may choose to divert some funds there.

You’ll need to take into account the extra work required when clients want their ads on more than one ad network. When a $10,000 PPC budget is split between three or four platforms, it takes more time to manage. The agencies that charge more should be able to cover their additional staff costs.

What are some common PPC management pricing structures?

Clients come in many different flavors, as we have already mentioned. As you might expect, your PPC pricing can also vary. Choose the best one, and you will get more clients and receive more in return.

Flat fee or flat rate

A flat fee is an amount that’s charged each month for all costs associated with managing PPC campaigns. Some of these fees include ad spending, but they are often charged separately.

It’s easier to predict profit and loss statements with a flat rate structure. Billing is also easier for those who are in charge. It’s likely why a th of the agencies we surveyed chose flat rates.

A cautionary tale exists about flat-rate fees. You could lose money if you don’t know how much it will cost to run PPC campaigns on behalf of a client.

The percentage of advertising spend

A percent of adspend fee structure charges a client a certain percentage of the total advertising spend that is under management. The agency’s fee increases as the client’s advertising budget grows.

When PPC Budgets increase, they often also become more complicated. It is necessary to target and research more keywords, run more campaigns, and engage in additional PPC platforms. This PPC pricing model has the obvious advantage that you are paid more when your workload increases.

It is not as predictable. This is particularly true for clients who have seasonal peaks and valleys in activity. This model will help you maximize your revenue if you can quickly shift resources from one account into another as the needs change.

Advertising spend + flat fee

A hybrid model of PPC pricing involves agencies charging both a fixed recurring fee as well as a variable portion of the ad budget.

This model allows you to automate repetitive tasks such as campaign creation and reporting, while also generating more revenue with increasing ad spending. This may explain why a third (33%) of the agencies we surveyed chose this option.

This hybrid model has its own weaknesses. Planning resources can be difficult because a large part of your revenue remains unpredictable. The flat fee is calculated based on an educated estimate, so you could be at a loss in case you are not confident about the time required to complete the task.

Charges per hour

Calculating the hourly management fee for PPC is as simple as multiplying your rate by hours worked.

Some clients find that paying an hourly rate makes it easier to justify your work. The client pays for the time spent after they see how many hours you have worked. The benefit for agencies is that they know no matter how much time you spend on a client’s behalf, you will be paid for it.

Hourly PPC pricing can penalize efficiency, and redirect finances to less important tasks. Imagine that your agency purchases a tool to speed up the creation of campaigns. In an hourly fee agreement, you pay more for the same work but receive less. Your client will also pay the same for reporting and monthly meetings, as well as for campaign management.

Performance-based fees

The performance-based PPC management fee is calculated based on pre-agreed success metrics. It is usually conversions, dollars or leads. You get paid more if you generate more sales and leads.

Theoretically, clients love performance-based pricing because they pay only when they see results. It’s not always sustainable for agencies. Too many factors are out of control for the agency to make this work. We didn’t expect to find so few agencies using this PPC pricing method.

Five tips for setting PPC management prices for your agency

It’s now time to select your model and set rates.

1. Billing separately for PPC Management

PPC management could be included in a bundle of services you offer if you are a agency. This is something we hear from agencies every day. To highlight the importance of PPC management to your clients, we always recommend that you separate it as a separate line item.

2. Charge management and setup fees

Consider charging a campaign setup fee or a fee for account management, even if your preferred method is to charge by a percentage of the ad budget. This is particularly true for new clients, where you will often be putting in the most effort at the start of the relationship.

3. Understand the competitive environment

How can you help your client find other agencies? This is a crucial question for agencies as “getting new customers” is always a concern.

Are you a low-cost, high-volume agency? Do you provide white-glove services to a few select businesses in a specific niche market? Do you offer strategy, creative support and SEO services? Are you going to just push buttons in Google Ads Manager or do you have a strategy?

Compare the PPC prices of other agencies who offer similar services and those who don’t. This will help you to set a competitive price and provide you with talking points for differentiating yourself from other agencies your client may choose.

4. Cost-benefit analysis

Your primary goal should be to help your client succeed with advertising. If the agency is losing money, then you will not be doing this for very long. Before you decide on PPC pricing or set rates, you should know the costs involved in offering that service.

Think about the technology that you will need, the staff you’ll hire and the accreditations to help you legitimize your business. Do not forget to include the essentials like internet and office space. Compare your operating costs to the fees that you will collect.

Know your break-even cost for new clients. You may want to charge more upfront or get a longer contract if the cost of transferring accounts, creating new campaigns and creating a plan will equal a full year’s fees.

5. Hire a PPC Partner instead of hiring

When managing PPC campaigns in-house for clients, there are many things to consider. Infrastructure and technology costs, as well as HR expenses and R&D investment, are all factors to be considered. What happens to institutional knowledge when an employee leaves the company?

Working together with a partner who has the experience and technology to resolve the most common operational issues like campaign entry and onboarding as well as reporting and billing, can be an enormous benefit for your agency. Your partner can take care of these tasks, allowing you to focus on developing better strategies for clients. Your agency associates are more efficient and will manage more media budgets than they could otherwise. You’ll experience growth without growing pains.

PPC Management Pricing Doesn’t Have to Be Difficult

The price you charge for PPC is one of the biggest decisions your agency will make. Calculus is not required to determine the price.

You need to do the following:

Decide if you want to hire more staff to handle more clients or if partnering with a business partner will help scale your growth and revenue.

The article Know your Worth: Mastering PPC management pricing for agencies first appeared on WordStream.

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