Issue #5 – How Much Should I Spend on My Web Team?
One of the most common questions we receive here at SEOversite is “how much should I be spending online?” Not surprisingly, nor to the liking of our clientele, the answer starts with “it depends.” For elective surgeons, for example (like plastics, ENTs, Orthodontists, Cosmetic Dentists, IVF specialists, and Ophthalmologists), the average might be $1,500-$4,000/month. Attorneys and insurance agents independently might average $800-$1,800/month. Yet, the reality is the averages mean little as we have attorneys spending over $50,000/month just on pay-per-click in the personal injury arena as well as doctors in small towns spending just a few hundred a month. Our clientele alone have spends ranging between $800 and $50,000 monthly. So there are averages, but then there are a plethora of exceptions.
To cut through the confusion and drill down on a methodology to determine a proper monthly budget for online spending for your business, below we have, in essence, written out a mathematical “proof” showing how you can determine whether you are receiving a fair rate, being gouged, or are being sold “25 cent lobster.”
Understanding Average Pay Rate
First, let’s look at why we often tell clients who are spending too little, why we know, without even looking at their analytics, that their web team is failing. It starts with numbers and logic. Here are the realities of the current market for SEO, web design, and similar talent:
- Entry Level – finding a person to work in the SEO or web design world with just 1-2 years of experience, usually with no degree, still results, even in smaller markets, in paying a $40-$50,000/year or $20-25/hour salary. Why? The unemployment rate in the USA is currently 5.3% (the lowest in 6 years) and among the unemployed, most are not tech-savvy so it is not an “employer’s market.” Because of this, and a major reason you, as you read this, have a very high likelihood of not being too pleased with your current web team (are we reading your mind?), is that, unfortunately, a majority of a web team’s employees have little or no experience.
- Mid-level – most mid-level managers, hands-on coders, and SEO experts can easily command 60-100 thousand dollars annually. This equates to $30-$50/hour.
- Senior Level – most web teams will employ one or more high-level “web gurus” who bring expertise, project management, years of experience, and more to the team. In the current market, while a steal can be found occasionally, most people in these roles earn between 100 and 300 thousand dollars a year or $50 to $150/hour.
If we blend this rate and weigh it heavily towards low-level, often low-quality work, we can reasonably assume at least an average rate of $35/hour. We are also assuming you are checking with your web team to ensure they are not outsourcing work overseas to South America or India where the quality of work is rarely on par with the United States.
The Math Does Not Lie
Let’s continue this math and work backward. We will pretend a web team says they can perform SEO (link building, press releases, directory submissions, onsite SEO like header tags and metadata, write a blog or two, make site updates like adding content or photos or testimonials, plus do some of your social media, template a monthly email blast, and meet with you monthly to discuss results after taking time to compile analytics and reports). We will also assume they say they can do all of this for $1000/month. As a small business owner you feel this price sounds right, feels comfortable, and while you hoped you could keep costs to $750, you are open to as high as $1,250. So what do you get for the money? Again, let’s do the math:
-$1000/month divided by $35/hour = a max of 28 hours per month they can work on your site.
-This equates to 7 hours or so per week.
-Yet, this only works if the web team makes no money and has no expenses. Guess what? They do. We must factor in:
- Each employee costs about 20% more (Fica, Futa, Suta, health insurance) ($35/hour now becomes $42/hour in real terms)
- Purchasing and updating computers, software, servers, and infrastructure
- Advertising online, offline, building and maintaining their own websites, performing their own SEO, attending conferences, dealing with lawsuits and contracts, paying for professional liability insurance, and more.
- And don’t forget, the owner(s) might want to make a living of at least as much as their highest-paid employee, which might be low six figures to a few million per year – yes, many are earning much more than the business owners they serve.
-So if you take a web company with 48 clients paying an average of $1,000/month generating $480,000 in revenue and let’s assume they have add-ons and special services they upsell to generate another $120,000 for a total of $600,000 in revenue and then subtract expenses:
- $120,000 for a VP level leader
- $160,000 for 2 Directors or Project Managers (who are supposed to manage 48 projects simultaneously, fingers crossed)
- $180,000 for 4 low-level workers making $40,000/year plus taxes and benefits
- $40,000 for rent
- $20,000 a year for technology, computers, and upgrades
- $15,000 per year for insurance
- $20,000 for travel and conferences, meals and entertainment
- $30,000 for SEO, website upkeep, PPC and other advertising, as well as providing referral kickbacks to colleagues which is industry standard
- $10,000 for miscellaneous expenses
- This results in $595,000 in expenses in a very lean business, leaving $5,000 in income for the owner of the company, assuming those “$120,000 in add-ons” exist, otherwise leaving a loss of $115,000 per year.
-Surely, there are some assumptions being made here. But even if these numbers were off by 20% you can see why there is pressure for the ownership to decrease employee counts to save profit, while employees are the folks who do all of the necessary work to get your website results.
-And based on this number of employees working full time we have only 280 hours per week. Let’s pretend they spend 60% of their time on existing clients and 40% developing new business or doing internal work. That leaves about 170 hours per week for 40 clients or about 4 hours per week.
So we see the numbers line up. Somewhere in the 3-4 hour per week range is about the most you can get of real work for that $1,000 assuming the ownership earns no profit or they run an anemic business without proper staffing. Out of these 12 hours or so per month they have dedicated to you, 2 hours go to a meeting with you and compiling reports, 2 hours go to minor site updates and changes you request, and now just 2 hours per week remain for your site focused on true technological work to improve online presence – maybe 3 and maybe just 1, but 2 hours is a good estimate. So for every 2 real hours of technology investment, you can likely expect to invest no less than a grand a month. Is this a good or terrible deal?
Making Smart Decisions
The goal of this newsletter is not to answer that question. In some cases, for small businesses like a one or two-person law firm, a small doctor’s practice or insurance agency, or a local real estate agency, it actually may be quite possible to get a nice result and make your money back several fold by paying $1,000 per month for online marketing if those hours are efficiently utilized. Of course, for a large group practice with three websites, or a larger company driving 80% of revenue through internet resources, this would be far too little. Also note that so far, we have not even mentioned Google AdWords (aka pay-per-click) advertising, driving online ratings and reviews, content writing, and more, but our point is made: While you do not wish to overspend and most companies do overcharge and under deliver (the question of whether a web team even does the 2 hours per week of work we talk about here is a topic for another newsletter and you may not like the answer in many cases), there is no such thing as 25 cent lobster, and if you find it, you want to stay away.
SEOversite offers complimentary services as well as paid full-service options. If you are considering selecting an online vendor, before you choose, contact us. Our goal is not to have you pick us as we are an oversight company (SEOversite, not SEOdoitall), but rather to help you “match” properly with the right team for your business and budget and know you’ll get honest work for honest pay. In the last month, we have started $15,000 website builds, onboarded a $1,000/month SEO team, and started a $23,000/month pay-per-click campaign for different clients, plus helped several clients select an online review company and online chat providers. We hope you’ll reach out to ask questions and begin the conversation with the “Guardian Angel Watching Over Your Online Presence.”