In our past posts, we’ve covered a lot about AdWords as a service. We’ve broken down how to sell it to clients, and even how to optimize campaigns. But, we have not yet faced one glaring question: How much do you charge clients for AdWords management? The internet is filled with answers but many are vague or written for agencies and longtime professionals. This blog series may be dedicated to web professionals (like web developers, website designers, etc.) but this post will be helpful for anyone new to the AdWords game.
Methods of PPC Pricing
Let’s look at the most common pricing structures for AdWords services and the pros and cons of each. Think about how you charge customers currently and which type will easily be incorporated into your pricing plan. AdWords management is certainly strong enough to stand on its own, but it makes a great add-on service to any monthly website, SEO, or other IT package.
The simplest form of pricing, this flat fee covers exactly what offer in your proposal. Whether it’s 3-5 hours per week or month, your fee promises quality work month after month.
Pros: This steady income stands alone or adds onto any current offering with no confusion.
Cons: Flat fees may be more difficult to increase over time. It’s also easy for you to get in a routine and stop innovating.
More flexible than the first format, an hourly rate pays you when you must work harder some weeks but relieves your client on slower times. Typically, an hour estimate is determined at the beginning of the month then additional hours can be added if necessary.
Pros: You get compensated for all the hours you work.
Cons: You must keep track of hours and bill after and it’s not predictable.
This is our favorite option for web pros. Charging your clients a percentage of their ad spend makes it relevant to all your customers, no matter their budget.
Pros: It’s flexible and you’re rewarded if and when your client decides to add more money to their budget.
Cons: Lower budget accounts can still take up your time and it’s a bit more complicated when it comes to billing.
No idea which option will work best for you? Well, the typical AdWords management fee via an agency or freelancer is 15-25% of the ad budget. Whichever format you choose, we recommend charging no less than $150 per month for AdWords management. It’s a time-consuming channel, even for smaller, cheaper campaigns and your time is valuable. Also, never accept an AdWords contract for less than 6 months if you’re a beginner at PPC. AdWords marketing is a long-game strategy and can take months to gather enough data to fully optimize campaigns and find the best producing, targeted keywords. The longer the contract you can secure up front, the better!
Download Teacup’s AdWords Bundle! We’ll email you 5 great AdWords resources including: a Budget Calculator, a Duties Checklist, a sample Client Proposal and more!
How to Charge Clients for AdWords
Now that we understand the different pricing options for AdWords services, let’s do the math. Say you charge $1,000 to design a website. You are able to continue making money on this one-time website design because now you offer a $150/month maintenance plan. Do the same with AdWords! Now, you can charge $150 per month marketing fee on top of that. Suddenly you have doubled your revenue for one client. Now, imagine doing that for 10 of your clients and suddenly $1,500/month extra is a solid bonus revenue stream.
If you’re interested in charging a percentage of ad budget, consider a tiered system. We recommend a range of 10-25% depending on the monthly budget. For clients spending less than $2,000, charge $150. For those with budgets of $2,000 – $5,000, charge 15%. Then, for larger clients with over $5,000, we suggest fees of 10%.
The last thing to decide when structuring your AdWords pricing is how you will take out your fees. Will you add your fees to their monthly budget, or remove your fees from their budget total? Let’s say your client’s ad spend is $500 a month and you are charging $150. Does this mean your client will pay $650 per month, or $500 but only $350 actually gets spent within AdWords? Be sure to clarify which you are performing so your client is absolutely sure where their money is going.
How to Calculate a Client’s AdWords Budget
Now that you know how to charge for AdWords services, does your customer know what to spend? Small business owners ask us every day what their AdWords budget should be. If they don’t know, help them calculate it! You first need to determine two numbers: average CPC of a keyword you plan to use (find this using Google’s Keyword Planner), and the desired clicks per day (we recommend 5-10 for small budgets). Multiply these two numbers by 30.4 (the average days in a month) and that will give you an estimate of what their minimum budget should be. It’s a simple formula, but it’s an effective starting point for most small businesses unsure of where to begin. If you want some help, download the Teacup AdWords Bundle for a free AdWords budget calculator to also help you compute ROI!
Don’t Stop There
While a monthly management fee is a nice addition to your salary, you can do more. Once you have a solid grasp on your AdWords offering, you can begin offering additions like setup fees, campaign predictions (calculate their budget, estimated ROI), keyword research, or even a competitor analysis. Another incentivized program you could introduce is a rewards-based system. For every X amount of new customers you attract, you get a bonus. The sky is the limit when you discover creative new ways to charge clients for AdWords management.
Packaging It All Together
There is plenty of money being spent on PPC marketing considering Google made over $95B on AdWords last year alone. AdWords is a complex platform but there are countless businesses and people who make a living from helping business owners reach those top search ads. Every web business is different and thankfully the flexibility of AdWords pricing can simplify your offering. Have confidence in your AdWords management pricing – just be sure to back it up with valuable results!