White-label SEO pricing and margins: The ultimate guide to profitability
Adding white-label SEO services is a good idea for agencies and other digital resellers right now. After all, with people doing more shopping online (DigitalCommerce360), your clients need to be discoverable on the web. One of the major roadblocks for business owners hoping to expand their services into SEO, though, is white-label SEO pricing.
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How can you price your SEO tools and services competitively and still turn a profit?
We take a look at the fundamentals of white-label SEO pricing and margins. Then we share some tips to help you supercharge your profitability.
Discovering the right white-label SEO pricing
Pricing SEO services can be tricky for a few reasons. The price for SEO tools and services is highly variable. When you add that you have to pay the vendor, you might worry your pricing won't be competitive.
Will your customers really pay what you have to charge to turn a profit?
You might feel pressure to price white-label SEO services and tools as low as possible to undercut your competition. If so, you might be looking at razor-thin reseller margins—and you might wonder if SEO is profitable for your business.
As it turns out, there’s usually a “sweet spot” for white-label SEO services pricing. Your customers will probably pay more than you think they will for this critical service, which can improve margins.
How can you find out how much people are willing to pay? These tips can help.
Research competitors’ pricing for SEO
The first thing to do is find out what your competitors’ pricing looks like. You could undercut them by offering lower prices, but there’s a reason they’re charging what they do.
One of those may be cost of delivering the service. Another is often the type of service they offer. If you’re planning to offer “do-it-for-me” (DIFM) service (where you do all the work), you can’t compare your pricing to DIY plans (where you resell SEO software your clients use themselves).
Gathering information about options from several competitors will show patterns in pricing. Find the SEO bundles they offer that are closest to what you want to offer and compare their pricing to yours.
Check in with your clients
Next, find out how much your own clients are willing to pay by asking them. You might think they want bottom-of-the-barrel pricing. The reality is that many business owners will pay more for better service.
Consider the difference between offering DIY service and DIFM services for SEO. Some agency owners make the mistake of thinking clients always want DIY service because it costs less. In fact, many of those clients would actually pay more to get their SEO provider’s help.
Much ado about white-label SEO margins
Now we come to the heart of the issue: white-label SEO margins. You’ve probably heard a lot about margins, so how do they work?
The formula is simple. Your margin is the price of the service less the cost of delivering it. Since white-label SEO margins are usually expressed as percentages, you then divide the difference over the costs and multiply by 100 (Investopedia). So, if you sell your SEO packages for $200 per month and they cost you $100 to deliver, you have a profit margin of 100 percent.
Software reseller margins can tell you the minimum price you’ll need to charge to break even or realize a profit. Since white-label SEO packages have sunk costs, it’s key to know margins so you can turn a profit on them. The margins you choose will affect the white-label SEO pricing you set.
Knowing your margins can also tell you whether a particular reseller program is a good fit for you or not. If the minimum price you’d have to charge is way above what your clients say they would pay, the solution isn't a good fit. If you'd have to charge two or three times what your competitors charge, you might want to look at other options.
If the SEO solution you’re hoping to add has good margins, then you have a bit more flexibility with your pricing.
What is a good margin for SEO resellers?
So, what is a good margin when you’re looking to resell white-label SEO packages? Generally speaking, a margin of 100 to 200 percent on white-label products is a good target.
Once you start looking at services, you’ll need to rethink your target margin. Software resellers sometimes miss this point. They end up pricing themselves out of the market by trying to achieve a particular margin.
Instead, examine your margins on a case-by-case basis. The cost for delivering SEO services is often higher, especially if you hire in-house. Adding white-label SEO services can help, as they’re often provided on a flat-fee basis.
White-label SEO services pricing often has lower margins. You should still aim for a 40 to 50 percent margin as a good guideline. That said, not every service you offer will make a 50 percent or higher margin—nor do they need to.
Beyond margins: How to make reseller SEO packages more profitable
You’ve crunched the numbers, and now you know your costs and your margins for SEO packages. If these bundles include SEO services, then the margins might be lower than you hoped. High margins don't always translate into big profits, though. A $100 SEO package that costs $50 to deliver only nets your business $50 in profit each month.
How can you improve your profits and still get white-label SEO services pricing right? These tips will help.
Margins are not the be-all, end-all
The first thing to remember is that margins are not everything. A 40-percent margin on a $500 package still nets you $200 a month—a larger amount than your $100 DIY package.
Even though the DIY package has the better margin, the reality is you need to sell 3x as much to realize the same profit as selling one $500 package.
Margins are useful for helping you set a floor for your white-label SEO pricing. They can also help you determine whether a solution is a good fit for your clientele and your business. Setting a target margin is not a bad plan, but it is not the last word in profitability.
Upselling can boost revenue streams
Next, you’ll want to think about upselling your clients. Since you’re already serving their account, it doesn’t cost much more to “add on” to what they’re already getting. If someone is buying some SEO tools, what does it cost you to add more tools and functionality to their bundle? What about services like web design, copywriting, or SEO content creation?
Upselling can improve the profit margins on a client account. In turn, your business realizes more profit.
Think about adding value for your clients
You might worry about "upselling" your clients too much. A better way to think about it is adding value for your clients. How can you provide more for them?
Adding another service or tool to their bundle is often the answer. Adding value can be as simple as offering them better reporting or data analysis. Clients who need more will usually be happy to add on to their accounts.
Remember that most clients will pay more to move from a DIY to a DIWM or even DIFM service. Getting help or having someone complete SEO tasks is very valuable to them. If they already trust you, they’ll be more than happy to take the opportunities you’re providing—especially if it means better results.
Adding value is a great way to boost revenue streams, since it makes clients more likely to stick with you. Clients who have a good relationship tend to spend more and buy more on a more frequent basis (Forbes). They tell their friends too. That alone can bolster your revenue.
Set your business on a course for growth with correct white-label SEO pricing
Determining profit margins and setting a target margin can help you find the “sweet spot” for white-label SEO pricing. Knowing your margins also ensures you turn a profit on the SEO tools and services you offer to your clients.
If you want to improve agency profitability, though, you need to look beyond the margins. The right tools and services, paired with value-added offerings, can be the difference between "getting by" and phenomenal growth.