How Much Should a Business Invest in SEO?

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How much should a business invest in SEO?

Whether you’re a small business owner, a large company executive, or an attendee at one of the workshops that I teach for SCORE East Bay, one of the most common questions I hear is: How much should a business invest in SEO?

Search engine optimization (SEO) is one of our core services, therefore we have a vested interest in selling SEO services.  However, in this article I will do my best to focus SEO from a business owner’s perspective and try to be as unbiased as I possibly can.

There are 4 key questions a company should be able to answer before making a large SEO investment.

  1. What is your marketing budget? 
  2. Who are your target markets and top competitors?
  3. What are the different options available? (This section answers how much.)
  4. Who is the right consultant or agency?

Below I will guide you through each question.  However, there is one point I would like to make before we get started.  While SEO can be a very valuable way for a business to generate leads and grow their business, I do not recommend that a business owner attempt to master the SEO process.  As business owners we often look outside our business to subject matter experts (accounting, taxes, insurance, legal advice, etc.) and the complexity of SEO is one of those expert areas.

Determine your Marketing Budget

Most business owners avoid or have given very little thought to a marketing budget.  Not determining your marketing budget is a huge mistake.  This step is crucial because it will help you set clear guidelines and develop a campaign that will generate a positive return on investment (ROI).  It also puts you in the driver’s seat when you are ready to start interviewing SEO agencies and allows you to make an apples-to-apples comparison when comparing proposals.

Depending on your industry, you should know the answer to these questions:

  • Which products or services do you want to promote?
  • What is the average profit margin of those products/services?
  • What is the lifetime value of your customer?
  • How much are you comfortable spending to acquire a new customer?
  • How many new customers do you want to acquire each month?

For example, if you are an individual chiropractor the service provided is typically an adjustment done once a month and the customer is billed $150 per month.  The profit margin is very high as there are few costs attached to the service.  The average client stays for 3.5 years thus the average lifetime value of the client is $6,300.  If you are willing to spend 10% of the lifetime value of your customer and establish an SEO campaign goal to acquire one new client each month, then your monthly SEO budget would be approximately $630.

Now you have data that you can use when interviewing an SEO consultant or agency.  There is a clear budget for them to work with and there are clear expectations for what the campaign needs to produce.  As long as the SEO campaign produces at least one new customer each month, then you will have a very good ROI.

Preliminary Market and Competitive Analysis

Think about who your customers are and how they would use a search engine such as Google or Bing to find the products or services that you provide.  If you own a daycare in Pleasanton, CA, then the parents looking for your services are probably going to search using terms such as “daycare”, “daycares near me”, or “daycare costs”.   Create a spreadsheet of the different terms that you think your customers would use.

From there just start searching for those keywords using Google.  Note the top competitors for each term and try to find your own website within the first two pages of search results.  Take a look at your competitors’ websites and make notes about the things that you think are helping them perform well.

The goal of this exercise is to help you begin to understand how your website currently performs against your competition.  If your website showed up in the first position for every search that you typed into Google, then you might already be optimized as well as can be done.  If your website was nowhere to be found, it’s going to take some work to enable it to generate leads.

Understand the Different Options Available

There are different options available to a business looking for SEO services.  Which one you chose depends heavily on your internal resources.

Retainer/Contract - A monthly retainer is the most common way to improve your SEO. You pay a set fee every month in return for a specific set of deliverables. These services usually include regular reports along with keyword analysis and implementation, link-building, and content creation. This option works well for businesses that have limited internal resources.  Some agencies will require a yearly contract, others will allow you to cancel with a 30-day notice.  At WSI Connect, we believe that we need to earn your business each month so we follow the 30-day cancellation model.  The vast majority of our clients are on a monthly retainer.

Project - This can be a good option if you have the internal resources that can handle content production, link building, and reporting and you just need specific technical SEO help.  Activities that would fall into this category would be SSL implementation, website performance improvements, or marketing automation setup.  We recently had a request to convert an HTML website to WordPress.  The client had enough internal resources to handle the other SEO activities so we utilized the project option.

Hourly – Be cautious when utilizing this option.  It should only be used when you are in need of one specific task.  Some agencies will require this option when implementations are very complex and it is difficult to give a clear estimate of the cost of the project.

What should you pay for your SEO investment?

We create our scope of work based on how difficult we believe it will be to help our clients rank for the keywords related to their core products or services.  The biggest factor is typically their competitors.  If some their competitors have very strong SEO strategies, it will inherently be more expensive to do effective SEO.

The costs below are based on a medium sized company with one website. Larger companies or those with more than one website should expect to pay more.

Retainer/Contract - $750 - $5,000 per month. The variation in cost is based on the scope of work and how quickly each aspect of the service is introduced.  Monthly deliverables would include content creation (blogs, whitepapers, eBooks), social media syndication, link-building (citations, data aggregators, industry blog submissions), and reporting (analytics, conversions, ROI).

Project - $1,000 - $20,000. There is a large range here because of the different amounts of services that could be delivered.  Since most of these are technical projects, it is especially important that you do your due diligence when vetting the agency that you are going to work with.

Hourly - $100 - $500 per hour.  Agencies will typically require a 4-hour minimum.  If their fees are at the higher end of the range, you are often better off requesting that they provide you with a project based quotation.

Identify the Right Consultant or Agency to work with

Now that you’ve determined your budget, performed preliminary competitive analysis, and understand the different options available, your are ready to start talking to vendors.

Here are a few things that the agency must know in order to build a specific proposal for your business:

  • Your goals for growth. The more specific and measurable your goals are, the easier it will be to define the scope of work.
  • Your most profitable products or services.
  • The type of buyer that makes the best kind of customer for your business.
  • Any current marketing campaigns.
  • Your top competitors.
  • If you want them to help build an ROI model, they will need to know your profit margins, average lifetime value of a customer, and current customer acquisition cost.

Communicate openly with the agencies that you are evaluating and expect them to do the same thing.  They should provide a clear plan that illustrates how their work will help your business achieve its goals.

Be cautious of agencies that have predetermined packages and pricing.  One size does not fit all when it comes to SEO, or any type of marketing.  Predetermined packages are a way for agencies to maximize their short term profits.  Look for an agency that is interested in building a long-term relationship.

Lastly, be cautious of agencies that do business with your top competitors.  Ask them directly if they work with anyone in your industry and determine if they are a direct competitor.  For example, we have several clients in the self-storage business.  None of them are located near each other, so they don’t compete for the same customers.  This allows all of our clients to have the best SEO strategy and not worry about being second place.


SEO can be an extremely valuable lead generation tool for businesses.  It takes a lot of hard work and the right techniques before it can produce results.  With clear goals and the right consultant or agency, your business will flourish with a strong SEO campaign.

If you have any questions feel to give us a call to schedule a free consultation.

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Topics: SEO

Luke Middendorf

I help our clients develop and implement effective digital marketing strategies. I spend a significant amount of time learning about their products, services, and target markets so that we can create a plan that delivers a real return on investment.

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