How to Price Your Link Building Services

link-building-pricing

The demand for link building services had grown for the past several years given that companies still believe that links are still a huge factor in search rankings.

Link building firms are now looking for ways to offer a service that can grab the attention of their target clients.

And one way to attract clients is to lower their link building prices.

Lowering your prices so as to win over your competitors will help you win the competition but you will lose money in the end. Your proposal will be accepted by your prospect client but when you start working on the link building campaign, your services will result to loss instead of profit since your total costs will be higher than your sales.

link-building-pricing

Now, the question is, how can you set a price for your link building services in a way that you can attract more clients to your business and at the same time, earn your desired profit?

Before going through some basic formulas in determining the right selling price for your link building services, let’s first discuss some factors that can affect your pricing decisions:

  • Total costs (both variable and fixed costs)
  • Skills
  • Capacities
  • Work experience

Total Costs

Total costs are the sum of variable and fixed costs.

Variable Costs

Variable costs are costs that changes, in total, directly proportional to the changes in the level of activity (or cost driver). If an activity increased by 20%, total variable cost increases by 20% also, and vice versa.

For link building companies, one of their variable costs would be labor costs. Labor costs are the salaries of their team members (or employees). They may be paying their staff in an hourly or monthly basis. It depends on the company size, sales and profit  every month.

Total labor costs can be determined by multiplying the hours spent by all of the employees to the labor rate (rate per hour).

For instance, you have 4 team members working with you and each of them has the rate of $10 per hour. If all of your team members are working full time, then they would consume 160 hours of monthly work each (40 hours every week).

By using this formula (labor rate X labor hours = total labor costs), you’ll be able to compute for the total labor costs:

labor-cost

If you don’t have any variable costs aside from labor costs, then your total labor costs are your total variable costs.

Fixed Costs

Fixed costs are costs that remain unchanged, in total, as the level of activity (or cost driver) varies within the relevant range. If activity increases or decreases by 20%, total fixed costs remains the same.

For link building firms, here are their fixed costs (but are not limited to the items below):

Overhead costs (for SEO tools)

SEO products/tools have their own pricing tables that list down monthly costs for their customers.

If you are providing link building services, then you might be using the following paid SEO tools:

  • Ahrefs or OSE (link prospecting, backlink profile reporting, link audit)
  • Buzzstream (PR and linker outreach)
  • Cognitive SEO (link prospecting, advanced link analysis)

To compute for the total fixed overhead costs for SEO tools, then you need only to sum up all the monthly costs incurred for using SEO tools.

For instance, you have the following monthly fixed costs:

  • $79 – Ahrefs’ monthly cost for Professional plan.
  • $99 – Buzzstream’s monthly cost for Plus plan.
  • $99 – Cognitive SEO’s monthly cost for Professional plan.

By simply adding all the monthly costs above, you will get a total monthly fixed cost of $277.

Utility costs

If you own a company and you’re doing in-house work with your team members, then perhaps, you are renting an office space for your team. And aside from renting an office space which is an expense for your business, you also incur electricity, water and internet costs every month.

By adding all the above costs, you can compute for the actual monthly utility costs.

Total Fixed Costs

To compute for the total fixed costs, simply add the fixed overhead costs (for your SEO tools) and utility costs.

If you have a total utility cost of $700 and total overhead cost (for SEO tools) of $300, then you will have $1000 as your monthly fixed costs.

Total Costs

Add your variable and fixed costs to compute for the total costs.

total-costs

Now the question is, “How do you compute for the selling price of your link building services?

There are two ways to price your link building services: hourly basis or link building packages.

Let’s first discuss the per hour link building service.

Hourly Link Building Service

In a per hour type of link building service, you need to compute for the selling price per hour.

To compute for your selling price, you will need the data you gathered earlier (total fixed costs and total variable costs/variable cost per unit).

Then by using the formula below, you can now compute for the selling price.

desired-sales-per-unit-hours

Other items to be considered:

Contribution margin per unit – is the difference between your selling price per hour and variable cost per hour. If you have a selling price of $25/hour and a variable cost of $10 per hour, then you have a contribution margin per unit/hour of $15.

Desired sales in units – this will be the number of hours you need to complete a certain link building task for your client. Let’s say you need 25 hours to complete a monthly link building campaign for one client and you have 4 clients, then you will get 100 as your total number of hours.

For instance, you have the following items to compute for your selling price:

  • Fixed costs – $700
  • Variable cost per hour – $10 per hour ($6400 / 640 hours) 640 hours is the total number of working hours of all your four employees.
  • Desired profit per month – $2000
  • Desired sales in units/hours – 200 hours

Using the formula above, you can compute for the selling price:

selling-price

This is now the selling price that you will offer to your potential clients.

Link Building Packages

The old packages for link building service are ineffective in this age of internet marketing since there are a lot of things that need to be considered such as the quality of links being acquired for a certain website and the effects of each link built for a particular site.

Here is a bad example of an old link building package:

old-link-building-packages

This type of link building doesn’t add real value to a certain business given that the links are built for the sole purpose of ranking a certain keyword on search results. It can achieve short term goals but can be the cause for future penalty issues (because of the acquired unnatural links).

unnatural-links-notification

Now let me discuss one way to price your link building packages.

To compute for the selling price per link building package, you need the formula you used earlier for hourly link building service.

For instance, you have the same items you gathered earlier:

  • Fixed costs – $700
  • Variable cost per hour – $10 per hour
  • Desired profit per month – $2000
  • Desired sales in units/hours – 200 hours

By using the same formula, you will get $17 as your selling price per hour.

selling-price

Multiply $17 by your desired sales in units (which is 200 hours) to get the sales of $3400. Then divide the product by the number of packages that you can offer for a 200 hour work.

Number of packages will depend on the number of hours you spend for one link building campaign. Let’s say you can do broken link building for one client and it will consume 25 hours to complete all the activities in that particular link building technique (from link prospecting to outreach). If you have a desired sales in hours of 100 hours, you can offer four packages (100 divided by 25).

Going back to my earlier example, if you have $3400 sales and you have 200 available hours of work every month, then you can compute for the selling price: $425 per link building package (see the computation below).

link-building-package-selling-prices

How to Increase Your Profit as a Link Building Service Provider

Lower your fixed costs

Instead of using several SEO tools to perform your link building activities from link prospecting to actual link acquisition, why not think of free tools that can offer the same features as other premium SEO tools do. For instance, you can use Gmail, Boomerang and spreadsheets instead of premium outreach management tools to track your link targets’ responses and conversations. By doing this, you can lower your fixed costs and thus, earn a higher profit.

Another way to lower your fixed costs is to contribute articles to product companies in exchange for free access to premium SEO tools. Using this technique, you can reduce your fixed costs by $200 or more every month. You are almost free of charge to all of your SEO tools when you managed to provide regular guest articles on SEO product websites.

Train your team to improve their efficiency in work

To accommodate more clients for your company, you need to train your team members. Training will help your team to become more efficient in their work.

For instance, they can prospect for 100 high quality link targets within the span of 60 minutes. This can happen actually if you can provide them tips to qualify a link target quickly.

Adding new members to your team doesn’t guarantee an increase in your profit as a business owner. Even if you have 25 members in your team but they are not well trained and efficient, then your team can only handle 5-10 clients. This will result to a lower profit since your labor costs will be higher than your sales.

Show the exact (or estimated) link building prices in your service pages.

To push your clients down through the marketing funnel, make sure that you show your link building prices in your landing pages (either in an hourly rate or in a package rate basis). Stating the prices in your service pages (landing pages) will let your prospect clients aware of the value of your service.

It would be easy for you to track clients who’re really interested for high quality link building services and are able to pay a considerable price for the quality of work done. It is a waste of time talking to someone who demand many working hours but are not willing to pay the right price.

A service page that lists down link building prices can discourage those low-paying potential clients.

Determine which marketing channel gives you the highest conversion rate

A regular audit of your Google Analytics to identify the marketing channel that highly converts your visitors to clients is a good way to help you get the most out of your marketing efforts for your services. Once you tracked the highest converting channel, you can now exert more effort in getting more brand visibility for that specific channel.

conversions

If you want to get more link building tips, subscribe to this blog (use the optin form below) and follow me on @venchito and Google+




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8 Comments

  1. 1

    Thanks Venchito for creating this valuable piece of content on link building prices. Yes i am agreed with you, but I have often seen or experienced the customers have been arguing us Why we charge them high, & this article sounds good to them to teach WHY it is so?

    • 2

      Thanks for your comment Ram. You really have to prove to your clients that SEO is a worthy investment for them. They need to understand that they can get a high ROI (return on investment) in this investment.

  2. 3
  3. 4

    Hey Venchito ,First of all thanks for showing us something which was needed to be considered since those days of SEO when The snake oil selling like linkbuilding packages lost their value.

    Honestly If I say, I am weak in Maths & let me tell you it took me twice to understand the formulae but at last I grasped it thoroughly and it is helpful for me to make right price for my linkbuilding skills. Cheers !!!

  4. 5
  5. 6

    Written like a true accountant. 🙂 Excellent piece by the way. I think a key element in the ability to charge a fair value is a demonstrated understanding of one’s art. This blog is an excellent example of your skills in the SEO space and any customer needs to consider the many thousands of hours that have gone into acquiring this knowledge. Knowing I’m dealing with a provider who “gets” the new strategies but is also pragmatic and can get results is worth its weight in gold.

  6. 8

    Hi Venchito,

    this is a great piece on how to come up with a price for your services.

    However, I think that you should never explain your price like that to the client. Instead you should work backwards and anchor your price to the possible business upside of your service.
    Say your lead is a rehab clinic and they make $20,000 per patient checking in. You ask them how many leads they need to get one patient and they answer “10 leads to get one patient”.
    You can’t influence the profit they make per patient and you can’t influence their conversion rate, but you can deliver new leads. And each lead is worth $2,000 ($20,000 divided by 10).

    Now you should anchor the price to the business upside in your proposal:
    “If I build links to your website for the sole purpose of getting you 1 new lead every month – which is worth $2,000 – you are looking to make $24,000 within the first year – right?”
    At that point they *have* to say yes: You are just parroting the information they just gave you and doing some math.

    You have effectively anchored your service (link building) to a potential financial upside (leads/patients) for their business. By doing this you have also transformed their thinking from “Hiring Venchito is an *expense*” to “Hiring Venchito is an *INVESTMENT*”. This is an important shift in mindset and allows you to charge more for your services.
    You also demonstrate that you think about their business first – not about how much you stand to make from it. They can have faith in that you will try everything to get them that 1 new lead each month, no matter what obstacles.

    Uh well.. this has gotten really long. I hope it makes some sense, if not feel free to ping me. I’d be happy to explain this further.

    Again, your way to determine the price is great. I just think you should anchor it to the business upside when talking to prospective clients.

    Cheers,
    Christoph

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