It should go without saying that search engine optimization should be part of your online marketing efforts. If you choose to outsource your SEO campaign to a qualified service provider, you should know that there are options available to you outside of flat-rate pricing alone. I have personally seen a modest increase in the number of SEO firms offering performance-based pricing to their clients of late. While most serious SEO's will not consider performance-based SEO, it doesn't hurt to ask.
The challenge to selecting a vendor in the performance based SEO space however is that you are more than just a client; companies (for all intents and purposes) become a partner of the SEO vendor. If you're ready for that, read on below.
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While pricing of this nature may sound attractive to you as a website owner looking for SEO services, there are many problems with the performance based model. SEO is not a one-time effort, but instead requires the consistent development of content, and an equal dedication to having others notice your efforts and recognize them through linking, partnering, etc. The time it often takes to achieve high rankings on popular search engines within competitive industries dissuades many SEO's from even thinking about such a payment model. For those SEO's that do engage clients in this manner, they frequently tread lightly and often require a monthly retainer and then and only then schedule performance-based incentives with the client based on rankings for a list of pre-defined keywords.
Another way to work with SEO's on a performance based model is for clients to pay for actions taken (leads, clicks, etc.) that were generated by the SEO's efforts. I've seen this done successfully in a few different instances. The problem however is that once the SEO stops "optimizing," traffic seems to fall off. Some performance based SEO's offer a "percentage of profit" model which may keep them engaged. Personally, I would highly advise against this type of relationship as they could tend to become strained and as you can imagine, negatively impact your bottom line. If you've got the guts and want the glory however (and don't mind partnering), this has the greatest amount of potential.