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.
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)
- Work experience
Total costs are the sum of variable and fixed 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:
If you don’t have any variable costs aside from labor costs, then your total labor costs are your total variable 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.
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.
Add your variable and fixed costs to compute for the 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.
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:
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:
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).
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.
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).
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.
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