Justifying The Expense Of SEO – Calculating Your Break Even Point And ROI
We put out a lot of proposals… and many potential clients are impressed with the results we have achieved for our existing clients and genuinely want to utilize our services but choose not to because of the cost. Many people are scared away by the recurring monthly fee, which they consider to be too high. In some cases it may actually be too high and the potential client may legitimately not have the cash flow to justify the investment; however, for many others, our services would be a very sound business investment.
How do you determine whether SEO would be a sound investment for your company? The first thing to consider is the break even point. The break even point is simply how many products you need to sell or deals you need to close in order to break even on the cost of our services. To do this, you simple take the monthly fee that we would charge and divide it by your average profit per transaction. For example, let’s say that you are an electrician who averages $250 profit per job and we provide you an SEO quote of $500/ month. By dividing 500 by 250 we see that the electrician would have to book two jobs as a result of our SEO services per month to break even… and anything over that would be pure profit. Therefore, from a purely mathematical perspective if we could get this electrician just three jobs a month, it would make sense for him to invest in our services. It’s obviously the most elementary math in the world; however, many of our potential clients fail to do this simple analysis.
ROI is another big one. This one can be tough to project… as there are so many factors involved (position, search volume, conversion rate, etc.) that impact the result. However, one can usually come up with a rough estimate/ range. Also, ROI is super easy to calculate once you actually start investing in our services. ROI is just profit divided by spend. So if you are a lawyer that makes $1000 on average per client and on average five clients a month utilize your services that found you via SEO, if we charge $700 per month then your ROI would be 7.14 to 1. So basically for every one dollar you give us, we would be giving you $7.14 in return.
I also want to point out that we frequently have clients who achieve an ROI that high… or even significantly higher. SEO is a pull marketing initiative, which basically means that you are only advertising to people who are specifically looking for the product or service that you offer. You are not pushing your message onto people who have no interest (push marketing) as you would be with billboards, radio, TV, print advertising, etc. Thus:
1. Investing in SEO often produces a very high ROI
2. Our clients tend to stick with us a long time. Sure… it definitely requires some patience in order to achieve a top ranking (especially for very high competition keywords), but once you are there your investment in SEO often becomes extremely profitable. Why would a client cancel our services if they are making a huge profit on our services each month? If you had a machine that you could stick one dollar into and get seven back in return would you continue to put money into the machine?