You’ve done it. After weeks of networking and outreach, a promising lead lands in your inbox. They’re a perfect fit, their budget is healthy, and they’re eager to add SEO to their marketing mix.
Then comes the inevitable question: “So, can you send over a proposal with your pricing?”
For many agency leaders, this is where confidence turns to confusion. Do you calculate your costs, add a standard markup, and hope for the best? Or do you anchor your price to the results you plan to deliver?
This decision isn’t just about a number on an invoice; it’s a strategic choice that shapes your agency’s positioning, profitability, and potential for growth. With a reported 57% of businesses planning to increase their SEO spending, getting your pricing right has never been more critical.
Let’s break down the two dominant philosophies for reselling SEO—cost-plus and value-based—to help you land on a model that fuels your agency’s success.
THE DEFAULT SETTING: UNDERSTANDING COST-PLUS PRICING
Cost-plus pricing is as straightforward as it sounds: it’s the most direct way to price a service and a common starting point for most agencies.
The Formula: Your Costs + Your Desired Profit Margin = The Client’s Price
Let’s say you’re reselling SEO services. Your costs might include:
- The fee you pay your fulfillment partner or freelancer
- The cost of software tools like rank trackers and audit software
- An allocation for your team’s project management time
You bundle these costs, add a margin (say, 40%), and present the final number to the client.
Why Agencies Gravitate Toward Cost-Plus
It’s easy to see the appeal. Cost-plus is simple, predictable, and feels safe. You know your costs are covered, and you can easily justify the price if a client asks for a breakdown. For agencies just starting to offer SEO, it provides a clear, repeatable process.
The Hidden Risks of Playing It Safe
While simple, the cost-plus model has significant downsides that can limit your agency’s growth.
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It Commoditizes Your Service: When you price based on costs, you’re competing on inputs, not outcomes. This lumps you in with every other agency doing the same thing, often leading to a “race to the bottom” where the lowest price wins. Research highlights that for many agencies, pricing is a major hurdle, with 21.9% stating that pricing their services competitively is their biggest challenge.
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It Caps Your Profitability: Since your revenue is directly tied to your expenses, the only way to make more money is to increase your margin or cut your costs. This model makes it incredibly difficult to scale your agency’s SEO services, as your profitability can’t grow exponentially with the value you create.
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It Disconnects Price from Results: A client doesn’t ultimately care about your costs; they care about what your work does for their business. Cost-plus pricing ignores the client’s return on investment (ROI), creating a conversation about your expenses instead of their growth.
Imagine a plumber who charges based on the cost of their wrench plus a markup. You’d rather pay for the result—the fixed pipe—not their overhead. The same logic applies to SEO.
THE STRATEGIC SHIFT: EMBRACING VALUE-BASED PRICING
Value-based pricing flips the script. Instead of looking inward at your costs, you look outward at the economic value your service provides to the client.
The Philosophy: The Client’s Perceived Value & Potential ROI → The Client’s Price
This model anchors your fee to the tangible business outcomes you generate, such as:
- Increased revenue from organic traffic
- Higher lead generation and improved conversion rates
- Reduced customer acquisition costs compared to paid channels
How Value-Based Pricing Works in Practice
Let’s say you’re pitching an e-commerce client that generates $2 million in annual revenue. Through your discovery process, you identify an SEO strategy that could realistically increase their organic revenue by 10% in the first year.
That’s a $200,000 uplift for their business.
Suddenly, a $5,000-per-month SEO retainer ($60,000/year) doesn’t sound like a cost—it sounds like an incredible investment with a clear ROI. You’re no longer a vendor they’re paying; you’re a growth partner they can’t afford to lose. This is how you escape the pricing challenges that plague nearly a quarter of agencies.
The Power of Pricing for Partnership
Adopting a value-based model transforms your agency in several key ways:
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Positions You as a Strategic Partner: You immediately elevate the conversation from tasks and deliverables to revenue and growth. This builds deeper trust and makes your service stickier.
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Unlocks Higher Profit Margins: Your price is tied to the value you create, not your internal costs. If you can deliver a $200,000 outcome efficiently, your profit margin can be significantly higher than a standard 40% markup. This is especially true if you work with an efficient fulfillment team or are choosing a white-label SEO partner that handles execution at scale.
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Attracts Better Clients: Clients who understand and appreciate value are often the best partners. They are focused on results, respect your expertise, and are less likely to micromanage the process.
HOW TO CHOOSE THE RIGHT MODEL FOR YOUR AGENCY
The best pricing model isn’t one-size-fits-all. It depends on your agency’s maturity, your ideal client profile, and your long-term goals.
When to Consider Cost-Plus:
- You’re New to SEO: If you’re just starting to resell SEO, cost-plus can be a safe way to get started, learn the ropes, and ensure profitability on your first few clients.
- Your Clients Are Small: For very small local businesses with limited budgets, a simple, predictable monthly fee based on a clear scope of work might be more appropriate.
- The Scope is Purely Task-Based: If a client simply wants a specific number of blog posts optimized or a technical audit completed, cost-plus can make sense.
When to Strive for Value-Based:
- You Want to Scale Profitably: If your goal is significant growth, you must disconnect your revenue from your costs. Value-based pricing is the only way to do this effectively.
- Your Clients Are Growth-Oriented: Businesses in e-commerce, SaaS, or lead generation are ideal candidates, as the impact of SEO on their bottom line is highly measurable.
- You Offer Strategic Expertise: If you’re providing comprehensive SEO strategy—not just executing tasks—your price should reflect that high-level expertise.
The data is clear: agencies that successfully demonstrate ROI retain clients and grow faster. While one study found that 74.7% of agencies believe demonstrating ROI is more important than ever, many struggle to connect their pricing to it. A value-based model solves this by building ROI into the very foundation of the commercial relationship.
FREQUENTLY ASKED QUESTIONS (FAQ)
Q1: How do I calculate the ‘value’ for a client if they don’t have clear revenue data?
Value isn’t always direct revenue. For a lead-generation client, you can calculate the value of a qualified lead. Ask them: ‘What is your average lead-to-close rate, and what is the average lifetime value of a new customer?’ If a new customer is worth $5,000 and you can bring them 10 qualified new leads per month, the potential value is enormous.
Q2: Isn’t cost-plus pricing safer? What if I don’t deliver the promised value?
Value-based pricing is based on credible forecasting, not an ironclad guarantee. The key is a thorough discovery process where you and the client agree on realistic goals. Your proposal should outline the potential upside while setting clear expectations about the variables in SEO. Confidence in value-based pricing comes from having a reliable process and a solid execution team behind you.
Q3: Can I use a hybrid approach?
Absolutely. Many agencies start with a foundational retainer (a cost-plus model covering core activities) and add a performance component on top (a value-based bonus for hitting specific KPIs like revenue or lead targets). This can be a great way to transition your agency and your clients toward value-based thinking.
Q4: What if a client pushes back and just wants an hourly rate or a simple package price?
This is a red flag that the client may see SEO as a commodity, not an investment. Use it as an opportunity to educate them. Reframe the conversation by asking, ‘Instead of focusing on the cost of our time, let’s talk about what success looks like for you. If we could achieve [specific business outcome], what would that be worth to your company?’ If they still insist on the lowest price, they may not be the right fit for a growth-focused partnership.
FROM VENDOR TO PARTNER: YOUR PRICING IS YOUR STRATEGY
Choosing your pricing model is more than a financial decision—it’s a declaration of your agency’s identity.
Cost-plus pricing positions you as a vendor, a safe pair of hands to execute a list of tasks. Value-based pricing elevates you to a partner, a strategic expert invested in driving measurable growth.
While the safety of cost-plus is tempting, the agencies that thrive in the long run are those brave enough to anchor their worth to the value they create. Start by understanding your client’s goals, build a business case for ROI, and you won’t just win better projects—you’ll build a more profitable and resilient agency.
