One of the most uncommon SEO pricing structures within the industry is what’s known as “commission based SEO”, whereby you, as a consultant get paid commissions rather than an hourly rate or a fixed amount.
Commission based SEO are one of those requests that typically come about every so often from new clients that are trying to squeeze as much out of you as possible before signing the dotted line. In most cases, they’re putting cost ahead of value, which revisits prequalifying your clients.
For those that arent familiar with the term, it basically works like this.
1. You rank the clients website favourably for their target keywords.
2. The client then converts visitors into buyers by closing deals at their end.
3. You, as the SEO consultant are then paid a commisson or an agreed percentage of that transaction.
4. Everyone’s happy and making money.
Sounds great doesn’t it?
Now this might seem like a good idea at first, and to be honest, it can be quite lucrative, when it works, however, once you start looking at this business model closer, it is to say at the very least - ugly.
Now don’t get me wrong, I’m sure plenty of SEO consultants out there have been able to pull this off. So I’m certainly not saying that this method can’t or doesn’t work, but for those that want to run a successful, long term business without any dramas, I myself personally would avoid it.
In all the years I've been providing seo services, Ive been asked a few times by potential clients to agree to this pricing structure and Ive declined every time. Not because I didn’t want the job, but moreso, I just didn’t want the hassles.
So why does commission based SEO suck?
Why is a commission based pricing model so bad? Let’s now take a look at why agreeing to a commission based contract for seo is a bad idea.
The Element of Risk.
Commission based SEO is one of the most riskiest pricing models there are for search engine optimisation. Why? Because paying clients (your clients customers, not yours) might cancel, ask for refunds, or deals might just fall through due to other reasons that are beyond your control. What can you do if your client calls you and says “That deal we did last week fell through, so I’m going to have to ask you to send that payment back to us”. Sounds horrible doesn’t it?
Take on your own business risk, not someone elses.
Which brings me to my next point.
Lack of Control.
How can you possibly agree to being paid to do something that you have no control over? There are literally so many influencing factors that are beyond your control here, that I don’t even know where to start.
Lets say for examples sake that you do actually rank a clients site first page within the major search engines and they begin generating a great amount of traffic, and getting enquiries.
How then, can you possibly know whats going on at the other end?
You cant control the ability of the client to close deals. Some business owners couldn’t sell crack cocaine to Charlie Sheen. This is the biggest problem. Your income is now based upon someone elses ability to sell.
You cant control walk ins and phone calls either. What about walk ins and telephone enquiries? What if a potential customer performs a search, then decides to drive to the actual business and make an enquiry face to face? What if they decide to call instead? Again, you’re at a major disadvantage.
You can't control as to whether or not the buyer is motivated, comparing prices or is just kicking tyres. Not only are you dependant on the clients ability to sell, but also, where the clients customer is in the buying cycle. There's bound to be a percentage of people that are “just looking”, in which case, the client has captured at the very least a lead, and you’ve received nothing.
All of these factors and more can result in you having invested months to rank the clients site and not getting paid. This, along with all of the issues I've raised above, stack the odds against you considerably.
Essentially, the client when asking you to agree to this pricing structure, is doing nothing more than asking you to change your business model to suit themselves. It's almost like walking into a car yard and saying “Listen, I'll buy that car over there, but I’ll only pay for it if it doesn’t break down while I own it”.
Its ridiculous and positions the client favourably, whilst putting you at an immediate disadvantage.
One of the most imporant factors, (and I talk about this specifically in my business kit) is establishing a business model that you’re comfortable with. Myself personally, I follow the following pricing structure, and I stick to it – because it’s proven and it works.
If ever you find yourself with a client that refuses to sign a contract until you agree to their terms by having to change your business model – grab your bag, your laptop, your phone, and run away; as quickly as possible.
Dishonesty and Trust.
You being paid essentially hinges on someone else being honest. There’s a saying “honesty is the best policy” but unfortunately this isn’t always the case - especially in business. So how do you know for certain that your client is being honest with you?
The answer is, unless you have direct access to their books, you wont be able to. And even if you did have access to sales figures, who says they’re truthful anyway? It just goes round and round in a viscous circle of endless possiblities.
In the end, it’s a matter of trust, regardless of your efforts. Do you trust your client enough to invest potentially months of your time with the chance of not being paid?
As I said in another article – trust doesn’t pay the bills.
Landing the project might be all well and dandy, but getting paid using this payment method remains uncertain. Lets say you rank the client to number one spot, and they don’t close – then what?
How will this look on paper when you’re seeking finance for your business? You can’t exactly tell the bank manager, “I’ve landed 10 high profile clients, as soon as they start making sales, I’ll start getting paid...”
This isn’t going to do anyone any favours, except your clients.
Also, what if your client goes out of business? You’re a definite goner then. And there wont be a damn thing you can do about it.
You can lead a horse to the dancefloor, but you can't make it dance.
The buying cycle is always dependant on numerous factors, and it's not always price, although this is definitely one of the most common.
Other elements come into play, especially online. Such as the appearance of the clients website, their pricing, their message, functionality, usability and more. All of these elements can indirectly affect the sales process.
Regardless of your efforts, there’s no way you can control the aformentioned areas of a site, unless of course, you're hired especially to take care of those areas also, but the fact remains – even though you’ve successfully directed targeted traffic to the clients site, there are simply too many other factors that may influence the decision made by the customer that could potentially result in a non sale. This of course, then directly affects you.
Here’s something else I bet you didn’t take into consideration – competitors. Who'se not to say that the client wont be outdone by a competitor, or continually fighting against competitors over weeks or months? Where does that leave you as an SEO consultant? I'll tell you – wishing you’d never agreed to being paid a commission that’s where!
I couldn’t think of anything worse than pushing a site to first place in Google, then being outdone by competitors just days after reaching that spot. And who’se not to say that a Google algorithm change or update wont see that happen as well?
Again, there are far too many factors beyond your control as an SEO consultant to even consider being paid commissions as a viable payment option.
In summary, search engine optimisation shouldn't be measured simply by the number of sales. Instead it should be measured by the increase in exposure of the clients website itself – which is typically done by increasing unique visitors coming to the website via the major search engines.