How Much is SEO?

Calculating the Right SEO Investment for Your Business

Figuring out how much you can afford to spend on an SEO consultant is crucial for businesses looking to enhance their online presence and tap into new revenue streams.

However, in my experience, too many businesses struggle to assess how much they should spend on SEO consulting services.

What's important is understanding the potential revenue that can be generated from organic search. Those percentages vary by industry and niche. But if you have a sense of what others in your sector are earning, and the overall size of the revenue opportunity, you can budget responsibly.

Here's a rubric for figuring out what you can earn and what you'll probably need to spend on SEO.

Step 1: Assess Your Industry's Organic Search Revenue Potential and Competitive Spend

Different industries experience varying levels of success from organic search.

Here are the ranges of revenue generated through organic search by sector:

• eCommerce businesses - 30% to 60%
• B2B companies - 10% to 30%
• Consultants - 10% to 30%
• Lawyers - 20% to 50%
• Plumbers - 20% to 50%

The amount of available revenue in your industry not only indicates your potential gain but also suggests how much your competitors are likely investing in SEO. That means if you're planning to get into a crowded multimillion e-commerce market with entrenched competitors dominating results, you will need to invest more than a few thousand dollars a month to see returns.

When I tell them this, I lose a good deal on SEO consulting business to prospective clients. But SEO is a process. I'm interested in long-term client relationships. And I can't build long-term relationships if I sell the whole pie for the cost of a slice.

Unfortunately, plenty of other SEO consulting firms will. When a prospective client comes to me because they've been "burned" by another SEO consultant, it usually means they went with the lowest cost provider or perhaps hired a local SEO consultant to search and optimize an e-commerce store and got churned and burned.

Learning this lesson early on is foundational for realistically assessing the cost of converting revenue against SEO in your industry.

Step 2: Calculate the Potential Additional Revenue from Organic Search

Based on your industry's typical percentage, calculate the potential additional revenue you could gain from organic search.

Remember, this is a potential figure that hinges on successful SEO implementation. For example, if you're in an industry with a 30% potential from organic search and your current monthly revenue is $10M, your potential additional revenue could be $10M x 30% = $3M per month.

Industries with higher conversion rates from organic search can afford to invest more in SEO, as the return is likely to be greater.

Step 3: Dial in Your Marketing Budget as a Percentage of Customer Acquisition Costs (CAC)

The maximum Customer Acquisition Cost (CAC) is what you can afford to spend on marketing per client while achieving your desired ROI.

For example, if the Lifetime Value (LTV) of a customer is $1,000, with a profit margin of 30% and a target ROI of 5:1, the maximum CAC would be $60.

This figure helps you allocate your SEO budget effectively, ensuring that your investment aligns with the potential return.

Step 4: Allocate Your SEO Budget Based on CAC and Revenue Opportunity

Allocate your SEO budget based on the maximum CAC and the number of new customers or ecommerce conversions that you aim to acquire.

Consider the potential revenue from organic search when setting your budget. If the opportunity is significant, it's worth investing more in SEO to realize that potential.

Step 5: Understand the Relationship Between Opportunity Size and Required Investment

It's unrealistic to expect significant results in organic search with minimal investment, especially in markets already dominated by competitors.

There is a direct relationship between the size of the revenue opportunity and the required investment.

Entering a new market with substantial revenue means investing adequately in the right SEO Consultant to compete effectively and achieve desirable results.

To scope the right investment in SEO consutling, consider:

1. Your industry's potential revenue from organic search
2. The competitive landscape
3. And the maximum CAC you can afford to spend

An expert SEO consultant can unlock new revenue streams and drive significant growth for your business.

Avoid over or underinvesting, as it can lead to lost opportunity. Unless your investment in SEO aligns with the size of the opportunity in your market, you may be in for disappointment.