How To Calculate The Value And Worth Of SEO

How to calculate the value and worth of SEO

How Much Is SEO Worth?

One of the most difficult questions a SEO professional can be faced with is when a new customer wants to understand how much SEO is worth. A fellow SEO friend of mine likes to say “How much is free traffic worth to you?”. Which puts a little comedy into the equation :). Most of this answer depends on what the client does with the traffic. In any case, we created a simple conservative formula to help small businesses and SEO professionals understand the value of SEO.

Here is the general formula we use to calculate SEO worth for a client:

The calculation relies on the marketing principle that it takes 17 marketing touches (impressions) to convert someone into a paying customer. A touch is any time a prospect sees your brand name, an ad, a website, or gets a referral about your business.

We are going to assume 1 newly acquired website visitor = 1 marketing touch

We are also going to assume that 1 customer will generally do business with you for about a year. This can be modified to your liking, but considering people move, try a competitor, natural attrition etc. – we figure this may be a good rule of thumb for this calculation.

The next part of the equation requires the client to tell you what the average annual revenue contribution 1 customer brings to the business.

The equation becomes:

1 Website Visit = (Average Annual Revenue Contribution of a Customer) / 17

Here is an example. I eat at this BBQ joint next to my office throughout the year. I calculated that my average annual contribution to this store front was around $99. (Basically I spend $99/year eating there). Divide that number by 17 and the value of one website visitor is worth $5.86.

Now I know what you are saying. “Does the average customer spend $99/year there?”. In my case I would venture to say that I do eat there more frequently than the average customer. However, I always eat from their value menu, which keeps the cost down considerably. I’m going to assume that my annual average ticket does not vary much from the other customers. Again, the client should supply this value for you to make the analysis more accurate.

So, if we increase their website traffic by 1000 more visitors a month, we have created $5,086 worth of future business opportunity for them. Pretty handy eh?

One response to “How To Calculate The Value And Worth Of SEO”

  1. You can’t argue with numbers. It’s surprising how many people are afraid to invest a few hundred dollars into SEO but continue to spend thousands on AdWords each month with little return. This is why its so crucial to bring it back to ROI for them in a
    way they can easily understand.

1 Comment on How To Calculate The Value And Worth Of SEO