Q and A: As a freelance SEM, how should I structure my fees?

Dear Kalena...

I've been running PPC campaigns and advising my employer's clients on SEO for a while and last month I finally decided to go freelance.

Something you may be able to help me with is how I should structure my standard charges for new clients? The fees charged by agencies vary enormously so it would be good to get your opinion on what constitutes a 'realistic' pricing structure for a freelancer. What works best for you?

Some SEM's charge a CPA but while this may at first seem attractive to some clients, I'm not convinced it's always as transparent as they are led to believe. Is an hourly rate better? Should I charge differently for SEO? Sorry for so many questions, but I'd really appreciate your advice.

Thanks
Giles

Kalena's Answer:

Hi Giles

It's really difficult to advise on fees because SEM and SEO consultants all work differently. The way you structure your fees should reflect both your working style and the projects you take on. I used to quote every client on a project-by-project basis, which required me to conduct a full analysis of each site up-front, for no fee (as this was technically pre-sales activity).

I soon learned that this was not cost-effective for me. I now charge an hourly rate and quote projects based on the estimated hours each will take. But some clients may not like an hourly rate. When it comes to freelancing, here are my tips:

1) Don't provide a fixed quote for any project, always provide an estimate in case the work takes longer than you expect.

2) Don't undercharge for your work. Quote a rate that you're worth or you will resent the project and the client. If you lose a project to undercutting by a competitor, let it go! It's not worth compromising the value of your expertise.

3) Unless you have full access to the client's site metrics, a solid understanding of and respect for their product and access to their current and future online sales figures, avoid any cost-per-acquisition or commission-based deals.

4) An hourly rate is often more cost-effective for you and easier for your clients to understand.

5) Try to quote in hours, not in dollars. This makes it easier to divide larger projects into smaller jobs and helps the client understand how valuable your time is.

6) Keep strict timesheets when working on a project to ensure you don't undercharge. A fantastic online tool for keeping timesheets and invoicing clients based on project hours is Freshbooks.

7) A monthly retainer for clients can often work well, with the ability for clients to top up hours as needed.

8) Allow clients to buy your hours in bulk for a discount e.g. 10 percent discount for a block of 10 or more hours.

9) Always ask for a percentage of the costs up front e.g. five retainer hours towards the project.

10) If a client is asking for exclusivity in their industry or market, don't be afraid to charge extra for the privilege. After all, it may mean you have to turn down future work.

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