Category: SMB

PPC Management Pricing: 6 PPC Agency Pricing Models to Consider

Posted on by Daniel E. Lofaso

What’s the best PPC management pricing model for your business?

A PPC agency takes the time-consuming task of optimizing your account and maximizing ad spend off your plate.

For many small businesses, the average PPC management fee, which runs between $250 to over $2,000 per month or billing cycle, is a well-earned ROI.

After all, PPC management costs not only cover an agency’s operational expenses but motivate certified PPC managers to surpass and exceed their clients’ KPI goals.

The bad news? PPC agency pricing models can be confusing as they vary by company, service packages, monthly fees, and more.

That’s why I’ll give you a quick rundown of the six most popular PPC management pricing options in this guide, including the benefits and drawbacks of each.

PPC Management Pricing: Pros and Cons of PPC Agency Pricing Models 

There are six popular pricing models PPC agencies tend to favor:

#1. The Flat Fee 

Consider the flat fee like paying a retainer to a PPC agency. You’ll be charged an agreed-upon sum each month, and your agency will work on your PPC account.

Benefits

 
  • Predictable invoices. You’ll know exactly how much you’ll be spending on your PPC management costs because they’ll always be the same month-to-month.
  • Consistent work on your account. Agencies with retainers always have someone working on your campaigns so they’re not ignored.

Drawbacks

 
  • Low accountability. The flat fee doesn’t show you how many hours someone’s actually putting into your account. Your account may get stagnant on a set-and-forget track.
  • May limit growth. If your account performs well, your PPC agency may require an increase in their flat fee to justify the extra work it will demand. Or they could limit performance to stay within your budget. Neither is desirable.

#2. The Hourly Rate

When a PPC agency charges by the hour, PPC managers will work on your account for a set number of hours each billing cycle. 

Benefits

 
  • Dedicated billable hours. Your account won’t be ignored or only worked on for a few minutes once a month like the risk flat-fee pricing brings.
  • Control campaign size and regulate invoices. With only a set number of hours PPC managers can work with, your budget won’t balloon out of control, and you won’t get surprised by huge invoices.

Drawbacks

 
  • May not see a correlation between billable hours and success. Sometimes optimizing a single landing page eats a massive chunk out of your billable hours allotment, leaving no room for other campaign-drivers.
  • Potential for wasted hours/money. What happens when A/B testing shows the original performed much better? Your company’s still on the hook for paying for those “wasted” hours without any ROI.
  • It doesn’t reward efficiency. If an agency knows they’ll be working a set number of hours each billing cycle, they may drag out tasks instead of quickly turning them around.

#3. Percentage of Ad Spend

Many PPC agencies charge a percentage of your total monthly ad spend to manage your account. The average PPC management fee, in this case, ranges between 15% and 25% of your budget.

Benefits

 
  • Scalable growth and predictable invoices. As your budget increases, so does the amount of work a PPC manager will need to perform to generate new leads and manage larger campaigns. Since their fee is tied to and scales with your budget, you’ll get to skip rate negotiations and simply perform a quick calculation anytime you want to increase or decrease spending.

Drawbacks

 
  • May require an account minimum. Since payment depends on your budget, an agency may need a minimum account value to cover its operational costs. 
  • No incentive for optimizing your budget. An effective PPC manager could slash your cost-per-conversion and boost your spending budget. But this doesn’t earn the PPC agency any more money since their fee is directly tied to your budget.

#4. Hybrid: Management Fee + Percentage of Ad Spend

Hybrid pricing models charge a flat monthly management fee (like option #1) and a smaller percentage of your total ad spend (like option #3). 

Benefits

 
  • More control of your spending budget. You never know what a PPC agency may do with your budget if you’re paying a flat or hourly rate. In this case, the flat management fee takes care of operational expenses and tedious tasks like weekly reports. These billable chores won’t eat into your dedicated PPC budget, which may be beneficial for your metrics.

Drawbacks

 
  • It may take longer to see results. The agency will always make their cut, even if your campaigns don’t do well. So you need a clear understanding of your goals and KPIs so you can track ROI and ROAS metrics.

#5. Performance-Based Pricing (Charge By Lead)

PPC agencies on performance-based pricing models leverage their expertise and work their magic to generate leads for your business. Then, they essentially charge you for those leads.

Benefits

 
  • Boosts lead volume. PPC agencies in this model only earn revenue when they acquire leads for your business. So to make money, PPC managers focus on boosting one KPI specifically: your lead volume. 
  • Incentivizes high performance. PPC agencies earn more revenue the more leads they bring in, adding incentives for hardworking PPC managers to grow your account. Their lead-generating tactics may even widen your audience reach.

Drawbacks

 
  • You may still pay a PPC management fee, especially if you’re starting from scratch. There’s lots of work to be done on the front-end before you can start generating revenue to sustain your PPC team. Once it brings money in, your management fee may lessen or disappear.
  • Unpredictable invoices. High-performing campaigns rake in more leads, so they’ll earn the PPC agency more revenue. The more you make, the more you may need to shell out in lead fees. Be prepared for rollercoaster invoicing.
  • Potential for low-quality leads. If your PPC agency only pays attention to monthly lead volume, you won’t have any other KPIs to judge their performance. These leads could turn into sales, or they could go nowhere. Low-quality leads will sink your ROI.
  • May tank your sales team. If your PPC agency sends boatloads of crummy leads to your sales team, they’ll burn through their resources barking up the wrong trees. This could topple successful sales processes through no fault of your employees.

#6. Milestone-Based Pricing

Milestone-based pricing widens the expectations of performance-based pricing by giving both your company and your PPC agency common goals.

During onboarding, you’ll set up custom milestones your PPC agency will need to reach in a designated time frame. You’ll also lay out the specific KPIs you want monitored and improved.

Your PPC agency earns their keep once they reach those milestone goals — and they’ll score bonuses for surpassing them too.

Benefits

 
  • Teamwork makes for robust growth. Setting clear expectations during the onboarding process gives everyone on your team and your PPC agency a clear understanding of your goals and where you want to be.
  • Greater accountability. Rather than concentrating on lead volume only, you’ll get to monitor important KPIs like CTR, CPC, and other vital data for your campaigns. These will show what needs further optimizing. You’ll also notice a clear ROI (or lack thereof).

 

Drawbacks

 
  • Longer onboarding process. Because you’ll be using your KPIs to set pricing, establishing an understanding of how you want them to improve can be time-consuming. But it’s required to make sure you’re both in agreement about where you want to see growth and how to track performance.
  • Difficult to price performance. Will your PPC agency charge more for conversions than simple leads? Will leads from different channels cost the same? Is there a seasonal element to your wins/losses that needs to be accounted for? It can be challenging to price the agency’s performance. So make sure you understand how success correlates with pricing on every metric level.
  • The price and scope of work must evolve as your business grows. You’ll need to revisit the onboarding process and lay out brand new milestones and KPIs for your PPC agency as you grow and these goals change. 
  • Bonus fees for surpassing milestones. If PPC agencies exceed the KPIs and goals set, they have the potential to earn bonuses, which could create unpredictable invoices.

What’s the Best PPC Management Pricing Model for Your Business?

Choosing the best PPC agency pricing model has everything to do with your company’s goals. That’s why it’s crucial to partner with a PPC agency that works hard to understand your current dilemmas and figures out ways to solve them.

This may take more than charging a basic PPC management fee each month. And it may require a detailed onboarding process and regular performance-tracking check-ins.

But the ROI will be well worth the spend and effort.

So is your business ready to dominate search engine market share and make more money? 

At Digital Elevator, we’ll help you build your brand, increase sales/leads, and discuss your best options for success. Schedule a discovery call today! 

The free online CSS cleaner allows you to organize style for websites.

How to Approach Website Development like an Agency

Posted on by Daniel E. Lofaso
https://youtu.be/oMpdtN1UNNY

Do you ever wonder how professional website development agencies map out website projects? If so, stay tuned as Digital Elevator’s Chief Creative Officer, Rob Hatch, and Chief Executive Officer, Daniel Lofaso, break down the process they use to build websites ranging from small 5-pagers to 500-page massive corporate sites.

Combined, Hatch and Lofaso have collectively built over 500 websites, and about 200 of those together at Digital Elevator. The company specializes in WordPress websites, but the practices used can be adopted and referenced for any professional website development CMS or platform.

We cover:

– how we approach web dev with our clients to produce professional sites.
– how we lay out a process laid out and we use project management software as our guide (ensures no loose ends, accountability, and sets a timeframe)
– client questionnaire dictates the goals and design direction the client wants (with our insight and feedback)
– gather design assets (branding guidelines, logos, fonts, images, etc)
– staging
– sitemaps
– wireframes
– graphic design mockups
– moving into development
– alpha testing (internal)
– beta testing (external)
– client handoff for review inside staging
– go live
– additional testing, indexation, SEO team processes

 

Posted in SMB

How to Calculate Revenue (With Revenue Examples)

Posted on by Daniel E. Lofaso

Revenue is an important metric for measuring business performance. Use these formulas and find out how to calculate revenue for your business.

When it comes to assessing business performance, there’s one figure that stands out above the rest—revenue. Obviously, money is important when running a business. Without it, your business is done.

Despite its fundamental importance, revenue is often misunderstood. Why? Because there are several different types of revenue. Accurately calculating it can be confusing. And, once you’ve finally figured it out, what do you even do with it?

What is revenue?

Before we jump into formulas, it’s important that we define revenue: the income generated through business operations across a specified time period. Revenue is known as the “Top Line” since it appears first on a company’s income statement.

It may also be listed as sales on the income statement and is deemed the single most critical figure in business. With that being said, there are different types of revenue, and being able to differentiate between these is fundamental to correct accounting.

Net Revenue Vs Gross Revenue

Understanding the difference between net revenue and gross revenue is important for several reasons, most notably for tax purposes. Essentially, a company’s costs are subtracted from gross revenue to calculate net revenue.

 
  • Gross revenue is all income generated from sales, without consideration for expenditures from any source. It essentially separates sales from the cost of goods sold. For example, if a cabinet maker sold a dining table for $400, the gross revenue would be $400, even though the dining table cost $150 to make.
  • Net revenue, also known as the “Bottom Line,” is calculated by subtracting the cost of goods sold from gross revenue. Any costs used to manufacture or acquire a product or service are deducted, including materials, direct labor, and overheads–such as shipping, storage, packaging, rent and so on. To continue the same example, the net revenue for the $400 dining table, which cost $150 to make, would be $250.

 

It’s also important to understand the distinction between gross revenue and net sales.

 
  • Net sales is a company’s gross revenue minus discounts, allowances and returns. It’s typically listed at the top of the income statement, just under gross revenue. However, in some cases, it’s factored into gross revenue. For example, if the same cabinet maker sold $500,000 worth of furniture last year. But, refunded $5,000 to unhappy customers, and offered $10,000 worth of discounts to seniors and students during the same year. The company’s net sales would be $485,000.

 

How to Calculate Revenue

Gross Revenue Formula: 

The revenue formula accounting professionals use to calculate gross revenue depends on whether the company is a product or service-based business.

 
  • Gross revenue formula for a product-based business is:

 

Gross Revenue = Number of Units Sold x Average Price of Goods

 
  • Gross revenue formula for a service-based business is:

 

Gross Revenue = Number of Customers x Average Price of Services

You may also see these expressed as the sales revenue formula. Here’s how it’s used:

 
  • If a company sold 20,000 postcards at an average price of $5 per unit.
  • Sales revenue = 20,000 x 5
  • Sale revenue = $100,000

 

Net Revenue Formula:

The formula for calculating net revenue is:

Net Revenue = Gross Revenue – Cost of Goods Sold

Net Sales Formula:

The formula for calculating net sales is:

Net Sales = Gross Revenue – Refunds, Allowances and Discounts

Recognized Revenue Vs Deferred Revenue

There are several pitfalls in using gross revenue to assess the health of a business, especially subscription-based companies. These businesses regularly receive payments for goods or services in advance (e.g. before it’s been delivered or received). That’s why it’s important to distinguish between recognized and deferred revenue.

 
  • Recognized revenue is a record of all sales regardless of whether the product or service has been delivered. As soon as the payment is made, the transaction is recorded.
  • Deferred revenue is money received in advance for goods or services that are to be delivered in the future. In accrual accounting, deferred revenue is referred to as “unearned” revenue and listed as a liability on the balance sheet. In cash accounting, however, paid, yet undelivered goods or services, are recorded as a receipt but not revenue.

 

Utilizing Data to Drive Your Business Forward

Calculating your revenue properly can provide direction for your business, especially when it comes to budgeting. You should take a close look at both your revenue when:

 
  • Planning expenses: analyzing historical revenue data can help formulate a smart budget and plan future expenses, such as inventory, wages, and suppliers.
  • Managing cash flow: measuring revenue on a weekly or monthly basis is important for determining when to pay specific bills or heavily invest in inventory or marketing.
  • Identifying growth strategies: revenue can be used to determine the most effective growth strategies from previous years. For example, what marketing strategies were associated with major peaks in revenue?
  • Pricing Strategy: analyzing revenue against changes in your price point or monetization model can help direct future decisions regarding the most profitable price for your products or services.

 

How to Prevent Revenue Loss?

Many start-ups and small businesses have trouble maintaining a positive net revenue. There are dozens of problems and hidden costs that can eat into your bottom line without you even realizing it. The losses may be small at first, but 12 months down the line, your business can be hit hard.

That’s why it’s critical to identify the reasons why your business isn’t making money early. The quicker you find the crack, the faster you can repair the leak. So what are some of the reasons you’re losing money and what can you do about it?

1. Your price point isn’t right

It can be difficult to determine the perfect price for your products or services. Sure, a higher price tag can lead to a chunkier profit margin. But it can also push customers away. On the other hand, strategically dropping your prices may entice more buyers. The reward is a higher gross revenue, but it comes at a cost: lower margins per unit.

Cutting costs might work for large companies who can afford to operate with minimal margins due to higher sales volume and lower production costs. But dropping prices is risky for start-ups and small businesses, especially since it’s a challenge to raise prices in the future.

It can also erode the value of the market once competitors catch on and begin dropping their prices too. To help get the price right, conduct a market analysis, study your competitors, and utilize customer data to test different price points on each audience segment.

2. You don’t have an online presence

These days, almost everyone is online. So, if someone wants to find a new business to buy from, where do you think they’ll start their search?

If your products or services can’t be found online, you can be missing out on a lot of customers. That’s why every business needs an online presence. Even if you don’t sell products online, an SEO-optimized website will help people discover your business and can help you appear higher in search results. Your online presence shouldn’t begin and end with a website.

To make the most out of the world wide web, create social media accounts and keep them updated with fresh and engaging content. Social media is a brilliant way to show off your products, generate interest in upcoming events, and build a loyal brand following.

Your online presence also plays a critical role in generating social proof. Customers seldom buy from brands they don’t trust. So, encourage customers to leave reviews on your website, social media or industry-specific review sites.

Today, it’s also pivotal that you claim your business on Google. Over 90% of online searches begin on Google and 46% of those searches are people looking for local companies. By updating your business details on Google, you make your business easier to find.

Check out our SEO ROI Calculator to learn more

3. Your failing to convert the right customers

Plenty of clicks but no conversions? A strong SEO-strategy can generate loads of website traffic. However, for some businesses, an increase in website traffic doesn’t always equate to sales.

For example, say you’re getting a respectable 10,000 visitors to your website every day. However, your competitor is also hitting around the same mark. The key difference—conversion rate. You’re converting roughly 2% of your traffic. Your foe? Around 5%.

Let’s put that into numbers. Say you both sell a similar product for $50. Based on the conversion rates above, your gross revenue is $10,000 a day from 10,000 visitors. Your competitor? They’re pulling in $25,000 a day.

You can see the difference. If this sounds like you, it may mean that you’re targeting the wrong keywords with your content marketing or pay-per-click advertising. When selecting keywords, it’s important to look at the intent behind the search term. For example, the keyword “time management tips” implies that the user is looking for informative advice and strategies. These kinds of keywords can generate traffic and build brand awareness, authority and trust. Although, your content marketing strategy shouldn’t focus solely on generating traffic—it needs to be about conversion.

Now, let’s examine the keyword “time management tools.” It may have a lower search volume and higher competition. But, that doesn’t necessarily mean it’s a bad keyword. Once you take a look at the intent behind the keyword, it’s clear that the person is searching for a tool, such as an app or software, that they’ll potentially pay decent money for.

Keywords like this are much more likely to generate a sale and should be integrated into your website.

4. You’re not investing enough in your brand

Revenue losses can also be tied to poor branding or a weak value proposition. Ultimately, this comes down to knowing your target market. You may want to start by revising your buyer personas. It’s common for most businesses to have two or three hypothetical avatars based on your target demographic and existing customers.

Each may include basic information like age, location and income, in addition to specifics like needs and problems. However, in order to really hone in on your target audience, you need to conduct extensive market research.

Gathering data through customer surveys and competitor audits will enable you to clearly identify key contact points for each market segment and pinpoint the features of your products or services that appeal to them most. Essentially, you’ll have a clearer picture of your unique selling points and how to prominently express these on your website and packaging with the right brand image, voice, positioning and personality.

Getting your messaging right will increase conversions and prevent future revenue losses. After all, there’s no point pouring money into any form of advertising (digital or print), if people don’t like what they see or aren’t familiar with your brand. In fact, when scanning through search results 70% of consumers click on brands they know.

Investing in experienced graphic designers, photographers and copywriters can give your brand image the facelift it needs to appeal to the right customers. Whether it’s your website or your packaging, the imagery and the words need to portray exactly what your brand is all about.

Increase Revenue with Digital Marketing

Bad accounting practices and poor pricing models can be to blame for revenue losses. But if you’re really looking to consistently increase revenue and build a sustainable business, the tried and tested method is strategic marketing and advertising.

The $500k Full Circle Inbound Marketing Gym Case Study

Posted on by Daniel E. Lofaso

It seems like the goal of every gym is to attract new clients, retain existing ones, and upsell the ones who are already on board. Over the course of one year Digital Elevator was able to help one of our gym clients do just that. I wanted to share with you the approach we took and the kinds of results we have had for this client and how your gym can do the same thing.

We covered this gym – Big Al’s Family Fitness – early on to give readers an idea of our approach and the timelines. You can read about the early posts here:

 

 

Inbound Marketing Infusion

You can see from the links above that initially we performed a lot of the fundamental local SEO tactics that Digital Elevator excels at:

 
  • Strong content as a foundation
  • On-page optimization: title tags, meta data, picture optimization, etc.
  • Off-page optimization: link building, content syndication, citation building
  • Social media
  • Consistent content: blogging regularly, blog syndication and distribution

These tactics were all put in place to help the gym drive qualified traffic to the site. This aspect of inbound marketing lends itself mostly to search engine optimization, or specifically, attracting new clients to the gym.

Lead Nurture

Lead nurturing is perhaps one of the most challenging and overlooked aspects of a solid inbound marketing campaign. Most SEO companies merely drive traffic to a website and stop there. An inbound marketing campaign however, insures that traffic is driven to a website but also takes measures to ensure that that traffic gets closer to becoming a paid customer.

In the case of the gym, Digital Elevator setup email nurture campaigns to complement the gym’s existing lead capture tool: a free 30-day guest pass. This guest pass captures a visitor’s name, phone number and email address. The email address is one of the most effective ways to reach a potential customer and this is why: Email’s have the highest open ratios of any marketing platform, hovering somewhere in the 20% range. Plus there’s the fact that a person who signs up for a 30-day guest pass doesn’t necessarily capitalize on that pass. People are busy, maybe they forget to come to the gym, get caught up doing something else, or just plain forgot they have the pass. The remedy to this is to hit them up with strategically planned emails.

If a 30-day guest pass lead has signed up but has not yet come into the gym, we continue to send them email reminders until they do. The lead also has the option to unsubscribe to these emails should they decide they no longer want to join. Over the course of one month, the lead is sent emails to remind them of their opportunity to join the gym and get a tour of the facility. This lead nurture element alone has boosted the lead-to-conversion ratio some 10-20 percent.

We do this all via email automation software. This is an integral piece of the online marketing plan and one that almost has to be done automatically given all of the contacts and the ever changing states they are in – 30-day pass registrant, member, personal training member, etc.

Additional Gym Email Lead Nurturing

Existing members can and are also placed on email nurture campaigns to upsell them additional gym services. For example, we created separate email nurture campaigns for:

 
  • Senior fitness classes
  • Personal training
  • Group fitness (Yoga, Zumba, Koga, etc)
  • Kids’ fitness programs
  • Nutrition programs
  • The affiliated Muscle Maker Grill restaurant

These emails went out to existing members with reminders, offers and promotions to take advantage of the gyms other services and amenities. If you consider the amount of services a gym of this size offers, it is simple for a member to forget that they can take advantage of all of the happenings at the gym. Email campaigns are soft touches to remind members of the things that they were once told about but that are not always top of mind.

Nutrition Guide: Lead Capture, Brand Awareness and Link Bait

Digital Elevator wanted to help solidify Big Al’s gym as a great place to work out but also as a place that was chock-full of resources for members. We decided that a free downloadable PDF guide on Pre and Post Workout Nutrition would serve this purpose and others. We spent a considerable amount of time researching and creating a guide that was based on the latest scientific evidence in this area and made it available for free on the website.

From there, we promoted the guide on social media nearly every week but also did specific outreach programs to local businesses, fitness professionals and other influential people on LinkedIn. Over the course of two months the guide became the second most popular page on the website and received 100s of downloads.

The LinkedIn technique aided in lead capture because it gave the Big Al’s marketing team a way to approach local business owners with something valuable and bring awareness to the Big Al’s name. Secondly, online influencers who found the guide helpful would link to it and increase the authority of the website and help in our SEO efforts. The guide is also available for print and Big Al’s can use it to provide value to its existing members.

Blog Lead Capture

The blog is another area where Digital Elevator captures leads for the gym. We consistently created really great posts and drive traffic to them but also place pop-ups on the blogs with special offers for personal training. As our research indicates that the majority of people who read the blogs are existing members, we chose to cater a special personal training offer to these individuals who submitted their email. These people would then enter our personal training email nurture campaign mentioned above.

Making it All Work

The Big Al’s inbound marketing plan took some time to put together and carry out. When we came onboard Big Al’s captured about 20-40 leads from the website on a good month. Now it is fairly standard that we give them 150 leads a month or more (gyms are very, very seasonal). Big Al’s lowest paying customers make the gym about $240 a year in revenue (likely double that). If you look at the amount of leads we are bringing in times that revenue number (150*$240), we are putting a potential $36,000 per month in their pockets or $432,000 per year.

Here is a summary of the steps we took to form what I call full circle inbound marketing campaign:

 
  1. Create great content– services pages, pictures, videos, and graphics, all the best textual and visual content we could create originally.
  2. Implement on-page optimization– optimize site for title tags, meta descriptions, alt tags, and other on-page elements according to the keywords we researched.
  3. Blog like crazy– blogging is a great way to create content and earn links. It also has the added benefit of allowing you to rank for long-tail keywords and capture leads.
  4. Off-page optimization– build citations, links and relationships with other fitness websites. This is an ongoing process much like most of the items on this list.
  5. CRO– conversion rate optimization. Making the pages on the site convert more website visitors into actual leads via the 30-day guest pass. We also find other ways to convert visitors into leads as well as look at ways to upsell existing members other services.
  6. Email nurture– get potential members and existing members on individual email nurture campaigns until then become the type of customer you want. Non-members first become members and existing members are sold services like personal training, kids fitness classes and other group fitness classes.
  7. Maintain leads– maintaining leads involves a lot of the above in addition to pleasing them on social media, providing them with freebies and goodies, and making them feel good about being part of the Big Al’s team.

This list is not exhaustive but pretty much sums it all up. If you have a gym and want to do the same, contact Digital Elevator today!

Posted in SMB
preloader