N.B.: There is now an updated version of this guide: How much should SEO cost?

Nearly every business today must decide how much to spend on search engine optimization (SEO). This isn’t an if question. Robust online marketing is imperative for survival in a web-driven world.

The question every business professional must ask is, “How much will we spend on SEO?” Keep reading for all the information you’ll need to make that decision, plus some helpful tips on how SEO agencies work so you can be successful as you forge a crucial partnership with an online marketing firm.

SEO Payment Models

To understand the dollars and cents discussed below, you must understand payment models used by agencies. SEO agencies typically offer four main forms of services and payment:

Monthly retainer: In this model, clients pay a set fee each month in exchange for an agreed-upon array of services. The monthly retainer is the most common payment model, because it provides the greatest ROI. Monthly retainer arrangements usually include regular analytics reports, on-site content improvements, press releases, link building, keyword research, and optimization.

In this model, clients pay a set fee each month in exchange for an agreed-upon array of services. The monthly retainer is the most common payment model, because it provides the greatest ROI. Monthly retainer arrangements usually include regular analytics reports, on-site content improvements, press releases, link building, keyword research, and optimization. Contract services at fixed prices: Nearly all SEO agencies sell contract services. Often, before a client is ready to engage a monthly retainer, they will select contract services that they want to have completed. The services that an SEO agency offers are often advertised on their site, along with a price. A typical example of this is an SEO website audit which can help determine existing strengths and weaknesses in the client’s online presence, competitive analysis, as well as keywords that have the highest potential to return positive ROI.

Nearly all SEO agencies sell contract services. Often, before a client is ready to engage a monthly retainer, they will select contract services that they want to have completed. The services that an SEO agency offers are often advertised on their site, along with a price. A typical example of this is an SEO website audit which can help determine existing strengths and weaknesses in the client’s online presence, competitive analysis, as well as keywords that have the highest potential to return positive ROI. Project-based pricing: Project fees are similar to contract services with the exception that they are custom projects created specifically for a client. Pricing varies according to the project. For example, a local cupcake shop may ask an SEO agency to help them with their local online marketing. The client decides that they want the agency to establish their social media accounts. The cupcake business and the SEO agency will decide on the scope and cost of the project.

Project fees are similar to contract services with the exception that they are custom projects created specifically for a client. Pricing varies according to the project. For example, a local cupcake shop may ask an SEO agency to help them with their local online marketing. The client decides that they want the agency to establish their social media accounts. The cupcake business and the SEO agency will decide on the scope and cost of the project. Hourly consulting: This familiar consulting model is an hourly fee in exchange for services or information.

Most SEO agencies use all of these payment models. Likewise, clients may work with an agency using more than one model. For example, a client may choose to enter into a monthly retainer, purchase a contract service, and engage in a special project with the agency, thus entering into three of the payment models.

Typical SEO Costs

So, what should you expect to pay? Here’s a survey of the range of the costs according to the payment models described above.

Monthly retainer: $750-5,000 per month. Within this range, the amount that a client pays depends on the size of their business and the extent of services provided by the agency. On the lower end of this spectrum are small SEO agencies that offer a limited range of services. On the upper range are businesses with greater needs working with full-service SEO agencies. Most businesses pay between $2,500 and $5,000 for a monthly retainer.

Within this range, the amount that a client pays depends on the size of their business and the extent of services provided by the agency. On the lower end of this spectrum are small SEO agencies that offer a limited range of services. On the upper range are businesses with greater needs working with full-service SEO agencies. Most businesses pay between $2,500 and $5,000 for a monthly retainer. Contract services at fixed prices: price variable. Businesses that are just testing the waters in SEO usually choose a contract service as an entry point. Typical contract services include things like SEO copywriting ($0.15-$0.50/word), site content audit ($500-$7,500), link profile audit ($500-$7,500), and social media site setup ($500-$3,000).

Businesses that are just testing the waters in SEO usually choose a contract service as an entry point. Typical contract services include things like SEO copywriting ($0.15-$0.50/word), site content audit ($500-$7,500), link profile audit ($500-$7,500), and social media site setup ($500-$3,000). Project-based pricing: price variable. Since there are a variety of projects, there is a wide range of prices. Most projects cost from $1,000 to $30,000.

Since there are a variety of projects, there is a wide range of prices. Most projects cost from $1,000 to $30,000. Hourly consulting rate: $100-300/hr. SEO consultants, whether individuals or agencies, usually charge between $100 and $300 per hour.

(Some of these figures are taken from a 2011 SEOmoz survey of 500 consultants and agencies.)

Things You Should Be Suspicious of

Any discussion of SEO agencies and pricing isn’t complete without a few warnings. To help you guard against indiscriminate SEO agencies with unethical business practices, read and heed. Be suspicious of the following promises:

Guarantees. SEO firms generally can’t provide guarantees due to the constantly changing nature of the industry.

SEO firms generally can’t provide guarantees due to the constantly changing nature of the industry. Instant results. True, some SEO tactics can get “instant results” by gaming the system. Be warned that these can hurt you in the long run. Instant results often involve SEO practices that are against webmaster guidelines put out by search engines. Invariably, Google seeks out these techniques and penalizes them, resulting in lost rankings that can take months to recover.

True, some SEO tactics can get “instant results” by gaming the system. Be warned that these can hurt you in the long run. Instant results often involve SEO practices that are against webmaster guidelines put out by search engines. Invariably, Google seeks out these techniques and penalizes them, resulting in lost rankings that can take months to recover. #1 spot on Google. If an agency promises you the number one spot on Google, it sounds great. Hopefully, you’ll be able to get it. However, it’s not something that a firm can promise to hand over to you.

If an agency promises you the number one spot on Google, it sounds great. Hopefully, you’ll be able to get it. However, it’s not something that a firm can promise to hand over to you. Costs lower than $750/month. When it comes to SEO, you aren’t shopping for the lowest price; you’re seeking the best level of service. Be wary of rock bottom prices or “unbelievable deals.”

When it comes to SEO, you aren’t shopping for the lowest price; you’re seeking the best level of service. Be wary of rock bottom prices or “unbelievable deals.” Shady link building services. Link building is a crucial part of SEO. You can’t have a highly-ranked site without inbound links. But there’s a dark side of link building. Link trust is gaining importance to appear high in the rankings. Before you enter into an arrangement with an SEO agency for link building services, ensure that their link building services are ethical, white label services. You may even wish to ask them where they may be able to gain links for a business in your industry.

Things to Keep in Mind

As you begin shopping for SEO agencies and making your decision, be mindful of the following points:

SEO takes time. A monthly retainer is best. Think of SEO as a long-term investment. Aggressive campaigns and major pushes may have their place, but the most enduring SEO results come from a long-term relationship. In SEW’s Mark Jackson wrote, “The real value of SEO efforts are, generally, not realized in the first month(s) of the effort.” It’s true. SEOs don’t wave a magic wand and get instant results. Instead, they perform extensive operations that will produce results months down the road.

Think of SEO as a long-term investment. Aggressive campaigns and major pushes may have their place, but the most enduring SEO results come from a long-term relationship. In SEW’s Mark Jackson wrote, “The real value of SEO efforts are, generally, not realized in the first month(s) of the effort.” It’s true. SEOs don’t wave a magic wand and get instant results. Instead, they perform extensive operations that will produce results months down the road. SEO changes, and your rankings will change, too. The field is full of competitors, and rankings rise and fall with the changing of algorithms and the entrance of new competitors. One-and-done SEO tricks simply don’t work. It takes constant monitoring to keep your website ranking well and performing at top-notch levels.

The field is full of competitors, and rankings rise and fall with the changing of algorithms and the entrance of new competitors. One-and-done SEO tricks simply don’t work. It takes constant monitoring to keep your website ranking well and performing at top-notch levels. Not all SEO services are created equal. Again, SEO isn’t about shopping around for the lowest prices. It’s about finding the finest agency you can. Look for an SEO agency that defines its scope of services, and takes the time to educate you.

Again, SEO isn’t about shopping around for the lowest prices. It’s about finding the finest agency you can. Look for an SEO agency that defines its scope of services, and takes the time to educate you. SEO is important. Do it. The point of your website is to increase and/or improve your business. Unless people are finding your website, it’s not even worth having one. The smart thing is to pay what it takes to keep your site findable by the people who are looking.

The point of your website is to increase and/or improve your business. Unless people are finding your website, it’s not even worth having one. The smart thing is to pay what it takes to keep your site findable by the people who are looking. Hiring an SEO agency is best. You may be thinking, “Can’t I just do this SEO thing on my own?” A tiny percentage of business owners or professionals have the skill and savvy to do their own SEO. Even so, comprehensive SEO takes way more time than most business owners can afford. Even an employee who “knows a lot about SEO,” will be hard-pressed to deliver the level of services and excellence found in a SEO agency. You’ll rarely come out on top if you try to go it alone, and you’ll never get the same level of ROI that you would with a competent SEO agency.

You Decide

For most businesses today, SEO is the highest ROI marketing effort. The benefits it provides exceed the value of other marketing approaches – direct mailing, broadcast advertising, online ads, etc.

No longer do businesses decide whether they need SEO services. Instead, they decide how much they’re going to spend. As long as they choose a quality SEO agency, their decision will lead to incredible amounts of revenue.

You can decide how much that’s worth to you.

Editor’s note: This column originally was published on May 13, 2013, and comes in at No. 5 on our countdown of the 10 most read Search Engine Watch columns of 2013. As the clock ticks down to 2014, we’re celebrating the Best of 2013 by revisiting our most popular columns, as determined by our readers. Enjoy and keep checking back!