How much to budget for SEO?

How much should I budget for SEO? Lot of businesses struggle with this question. Answer depends on what you want to achieve and where you presently stand against your competition. Below, I have listed out an approach that you can follow to arrive at a feasible budget. 

But, before going there, I want to caution you against two errors that people frequently make.    

Don’t start SEO with expectations of instant results 

Many people make the mistake of expecting instant results by comparing SEO with pay per click (ppc) campaigns. While PPC campaigns can show results in less than a week’s time, SEO may take anywhere from 3 to 6 months. First month goes in strategizing, planning and auditing. From second month, implementation begins, but it takes time for Google to recognize your efforts. It is only from the third month that you will start seeing some result. 

It’s important to note that SEO is a long-term game and one should start with enough budget to last for designated time, else you carry a considerable risk of running out of steam too soon. 

Look at SEO as a short to medium term investment rather than an overnight one. 

Don’t end up buying inferior services in pursuit of cost saving

Few professionals will promise you results in unbelievably low budget. My advice is stay away from them. It is possible that tactics they are using are not approved by webmaster guidelines. Google heavily penalizes such websites and makes them practically invisible on web. You don’t want to end up there. 

Approach for setting SEO budget

Note: With SEO, “one size fits all” approach does not work. 

What suits you might not suit someone else. In fact, what suited you last year might not suit you today. Work required to achieve your goal will depend on your business’s current position and future goals. Budget required will have to commensurate with that work.  

To get a fair idea of volume of work needed, ask yourself the following questions:

• How good is your content? Does it add value to your target customer?

Content plays an important role in driving organic traffic. If content is not good enough, SEO team will have to work towards adding unique and high-quality content. 

• How stiff is the competition for targeted keywords? Do you want your content to appear in Google featured snippet?

If your goal is to rank for a keyword that is being targeted by hundred other businesses, then hours of effort required to get you on top will be significant. 

• How soon you want success?

If answer to this question is “at the earliest”, then be prepared for spending more. To get quick results, team will have to do more in less time. They will have to generate quality content, create genuine backlinks, fix unresponsive site design and other issues. All this will have to be done in limited time you provide. 

• How is your website performance on Google ranking factors?

Google ranks your business on 200+ ranking parameters such as URL structure, page speed, user experience, mobile responsiveness, user engagement etc. If your website is not doing well on these factors, then lot needs to be done to get desired results.

• Do you want local traffic, or you are aiming for customers to come from across geographies?

Efforts required to get traffic from across the nation/world are very different from those required for driving local traffic. Accordingly, prices vary. 

In addition, your answer to How much is competition spending on SEO efforts, For how long your business has been online, How much organic traffic do you get now? will help SEO agency assess your position in the market. 

Use Return on Investment (ROI) metric to determine budget limits

Define what return means to you. Is it additional sales, more views, leads, downloads, subscriptions, etc? Give a commercial value to this return and calculate ROI. 

Example of ROI calculation– Imagine you hire SEO service costing Rs 40,000 a month. Organic traffic on your website jumps by 5% from existing 1,00,000 visits per month. That’s 5000 unique visits a month. Out of 5000, 500 (10%) people make a purchase and become your lifetime customers. 

Now, calculate average profit you earn from a customer. If each customer gives you an average profit of Rs 500 over lifetime, then 500 x 500 = 2.5 lakh rupees of profit from new customers. 

ROI = Profit over lifetime from 500 customers / Money spent on SEO in a month = 2,50,000/40,000 = 6.25 That’s roughly, 6 times the return on your investment!

Once you recognize that raising budget beyond a level will make ROI unattractive, set that level as budget limit. Output of this exercise will come handy while negotiating quotes with SEO service provider. 

How much does SEO service cost?

Reputed SEO agencies in India will typically charge you between Rs 25,000 a month for a local business targeting niche audience to 4 lakhs rupees a month for a brand targeting nationwide audience. Hourly rate can range from Rs 4000 to Rs 12000 per hour, depending on expertise level. 

Summing it up

1. SEO won’t yield immediate results. Set budget for at least 6 months of work  
2. Hire reputed professionals and follow Google webmaster guidelines
3. Check if the professionals have achieved growth for other clients or received some awards or recognitions.
4. Budget will depend on what you want to achieve and where your business stands against competition
5. Do an assessment of volume of work required to achieve results
6. Use Return on Investment (ROI) metric to determine budget limit

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