I get it.
Your latest lead emailed you back and yet again you lost the contract to someone cheaper and offering more.
You ran the numbers. Again. You can’t figure out how they’re doing it and it’s frustrating. You can’t seem to make a profit but your competitor keeps plugging away offering deal after deal. How do they do it? Are they making money? What are you doing wrong?
Note: we wrote essentially the same post for business owners so they know the Problems with Cheap SEO Packages. We need to educate as well as try to do better ourselves.
How & Why Competitors Offer Cheap SEO
Our competitors are doing their best to win every contract away from us. They will do whatever it takes to make that happen. But how can you offer at cost or below cost packages? These are the most common explanations:
Limited, infrequently offered packages.
Agencies offer these sort of rates infrequently and to a very narrowly defined class of client. They can then advertise with full honesty that they offer packages as “low as $99.” That package may be severely limited and just barely qualify as an SEO package.
Operate below cost to hurt you as much as they hurt themselves.
A strong, large agency may operate below costs to win a client away from you. It hurts you and they can absorb the blow. A large local agency started offering “pay on performance” SEO and many others have followed the trend. They can’t afford the gamble and the big agency can. If it fails, it fails. If the smaller agencies fail, they go away. It’s ruthless and smart business but comes with risk.
Lack of business understanding.
You ran the numbers and you don’t see how it can work. Maybe it can’t. Your competitors may not be as smart or business-savvy as you are giving them credit for being. Maybe it’s not working. Don’t follow your competitors straight off a cliff.
When I was busily running a photo studio I re-ran my numbers one day. It turned out that almost half my products were losing me money. Oops. I immediately fixed that but if my competitors were price-shopping me they would’ve wondered how (and why) I would undercut by so much. Because I was ignorant. It happens. Don’t blindly follow their pricing structure.
Can You Offer Affordable SEO Packages?
When you are being forced to compete with exceptionally cheap SEO packages you may need to create a competing offer. What are your options?
Limit your scope.
Agencies often work far outside of the project scope to keep a client happy. These extras often eat into your potential profit. If you want to reduce costs and keep profits higher keep these outside projects and freebies to a minimum.
Limiting your SEO packages can also mean limiting what you offer in the first place. If you’re offering optimisation and tracking for 50 keywords, cut it back to 30 where you can still give value for your clients. If you’re offering eight new blog posts a month try offering five.
Don’t bundle products together.
Our natural tendency is to oversell our products by bundling them and making McValue-SEO from it. You want the full audit, onsite optimisation, outreach, link building, content creation, local citations, map setup & auditing, rank & analytics tracking, goal setup and some fries with that? Sure, $295/mo. Unless you can’t afford that, then it’s $250.
No. Just stop. Offer the basics for a basic price. Offer upgrades for an upgraded price. It really sounds simple but if you can get back to this way of pricing you won’t give away the industrial-sized farm for nothing.
Be honest – not all clients are made for you.
Sometimes clients just want a package we are unable to provide. Stop being afraid to say “no” when it’s appropriate. When your new SEO lead wants to rank for “business cards” for $400, you’re done. It’s over. Educate them if you can and politely decline that sort of work. Offer alternatives if you can but then politely decline that sort of work.
Not all leads will be profitable. If you book the ones that aren’t, you’re going to lose money. You want to know the secret to making money? Don’t purposely lose it.
We call those offering similar services in the same market competitors but they are not, really. We aren’t competing with other businesses because our goals, needs and challenges are not the same. We are not playing by a clear set of rules and there is never a true “winner.” Businesses come and go but someone is always playing the game.
Stop competing on price and create value for your customers. If you aren’t profitable you are one of those businesses that “go” so ensure you’re maintaining a minimum level of profit before you start trying to undercut the competition.
Remember, setting and maintaining a project scope is the most cost-effective way to offer a limited product while maintaining a profit margin.