There are three kinds of lies: lies, damned lies, and statistics - Disreli
We get presented with graphs and statistics every day. "Most SEOs think keywords in the title tag is an important ranking factor." "Spending on search to rise by $10b". Ever get that feeling that what you're being presented with sounds plausible, but the conclusion just doesn't make sense?
Here are a few common ways people try to pull the wool over your eyes with statistics. Some you'll be familiar with. If you've got more, add 'em to the comments :)
1. Built In Bias
The sample data supports an obvious agenda. For example, a company is hardly likely to show a graph that shows their product has produced negative results. Try to determine the bias of the person or organisation presenting the data - "what would they want me to hear"? then ask yourself: "what data are they not showing me?"
2. The Average
The media loves to state "the average", then neglect to tell you which average they are talking about.
For example, the average house price for an area could both be 500K and 200K, depending on what type of average is being used. They could be referring to either the mean, the median or the mode. They often mix these up, depending on what conclusion they want you to reach.
3. Inadequate Sample Size
20% of web designers make over $1M. That may be true if the sample size consisted of ten highest earning people in the industry, and two people just happen to have had a great year. But what if the sample size is all those who practice web design for a living? The outcome may be somewhat different.
4. Meaningless Differences
A difference is only a difference if it makes a difference. Potential employee Jill may have an IQ of 120, and potential employee Jack may have an IQ of 118, but does that really mean anything? What if Jill has an attitude problem, and Jack is a great conversationalist? Who would be the better hire?
5. Oh My God!
Al Gore loves this one. The graph that shows some astonishing change in the status quo. The impression is one of significant movement and is meant to shock an audience.
However, if the chart appears in a different context - say, over a longer time period - the rise may not look all that unusual. You often see this in stock price quotes. You could also change the measurement into smaller units, thus making any movement in the graph look even more impressive.
6. What You Infer Is Up To You
If you can't prove what you want to prove, prove something else and pretend they are the same thing. Often used in the alternative medicine industry. They may not be able to prove that their natural products cure cancer, but they can say that the plant extract has been used by some remote tribe, and they have a proven historical low incidence of cancer.
7. Post Hoc
A study found students who smoked got lower grades. The fallacy of one thing not following the other i.e. smoking doesn't cause bad grades. Frequently, other factors are left out i.e. the students who smoked also tended to be party animals. Look out for correlations that happen by chance.
8. Data Precision
Quoting specific numbers, especially including decimals points, can look authoritative. "Real estate values up 4.95%" Why would someone be so precise if they didn't know their stuff? The numbers can be wild guesses, but accuracy gives an air of authority.
General Tips For Spotting The Lies
Ask "who says so?" Are they likely to be biased? If experts are cited, check to see if those experts actually agree with the conclusions. Often, they do not.
Ask "How do they know"? Is the sample size really large enough, or relevant enough, to draw conclusions?
Look To See If They Change The Subject. Look for a change between the raw data and the conclusion. Does one follow the other? For example, more reported incidences of crime do not necessarily mean there is more crime occurring.
Ask "Does this make sense?" - are they trying to blind you with numbers? If the conclusion just sounds wrong, look for a disconnect between the data and the conclusion
If you want to delve deeper in to How To Lie With Statistics, grab the little book of the same name. It's getting a bit dated now - it was written in 1954 - but the advice and examples are great :)
Jordan Hueseman, 25, accrued roughly $100,000 in student loans at the University of Denver earning a bachelor's degree in international business and a master's in business administration. On the job hunt, he found his graduate degree sometimes hindered more than it helped.
“At one point, I applied to Whole Foods, hoping they might see some potential for me to move to some type of management position,” Hueseman said. “The e-mail I received from them said I was far too overqualified for any of their hourly positions and as such would not be considered for a position.”
Hueseman said that after one job application, he was told he should leave his degrees off his resume.
As bad as that is, student loan debt typically can't be discharged via bankruptcy. Introducing the for-profit element to the federally guaranteed loans also gives you major price distortions:
A student interested in a massage therapy certificate costing $14,000 at a for-profit college was told that the program was a good value. However the same certificate from a local community college cost $520.
Imagine buying an iPod for $6,703.84. That is how much one would cost at the above ratio. Even the die hard Apple fans wouldn't be buyers at that price. And yet the availability of credit (which only has to be paid back later) tied with the words of a recruiter/salesman closes such a deal every single day of the year.
You have to love marketing!
Many try their hardest to pay their debts. Some can't. The debts are then bought up for pennies on the Dollar & then they harassed to pay them. Some who can't make the payments end up being put in jail:
It's not a crime to owe money, and debtors' prisons were abolished in the United States in the 19th century. But people are routinely being thrown in jail for failing to pay debts.
The debts -- often five or six years old -- are purchased from companies like cellphone providers and credit card issuers, and cost a few cents on the dollar. Using automated dialing equipment and teams of lawyers, the debt-buyer firms try to collect the debt, plus interest and fees. A firm aims to collect at least twice what it paid for the debt to cover costs. Anything beyond that is profit.
Bail is often being set at exactly how much debt you have.
Of course, a few years later, when it was turn for the bankrupt banks to go out of business due to widespread intentional mortgage fraud and accounting control fraud, they pushed a bill through congress offering them a bailout - threatening marshall law and tanks in the street if they didn't get it.
The bailouts and legalizing accounting fraud (allowing banks to claim bogusly inflated asset values) were done with the alleged purpose of helping the banks restore their balance sheets. However those banks have started paying record bonuses again & a more cynical look at the sequence describes it as:
In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better.
The new president claimed to be in favor of transparency, and as part of the bill promoting it gave us this:
The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from "surveillance, risk assessments, or other regulatory and oversight activities." Given that the SEC is a regulatory body, the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot.
Here is the thing about business and personal investment. So often what we think we need is to invest money when what we really need to invest is time and effort. If you work twice as long as most people do, learn furiously, are willing to put yourself out there, and you know your market then you can overcome a lack of capital to build momentum.
Are there short cuts? Absolutely. But the most obvious ones which seem like they have the least upfront risk are typically not the best ones. There was a thread recently in our forums about forging a certain type of partnership, and John Andrews shared a great take on how that can work out. I shared a similar story as well. A $50,000+ life lesson without having to experience the pain.
About a month ago there was a thread where someone thought they *had* to have something which cost $100,000. Members of the forums dug up a great alternative which was only $1,700. Now he is in an incredible position without all that debt!
It is easy to think that debt is the key to growth, but "When the Student is Ready, the Teacher will appear" is a better way to think about growth. If you have to take on a lot of debt to do something then it might not be a great idea.
Debt works to limit you. It consumes your thought cycles, adds uncertainty, and pull attention away from what you do best. It raises your stress and is a major cause of divorce. Rand's story of building up a half million of debt is a good story of why it should be avoided. And he didn't start getting very successful until the debts were being paid off so he could focus on growing his business.
Given open source content management services like Wordpress, free themes, 99Designs, cheap web hosting, tons of market research data from keyword tools, etc. a person can get started for only a few hundred Dollars. Presuming you start by attacking your market from an informational angle, there is no need to take on huge leverage to get a project started.
Money can be a great lever. And if you have a lot of it certainly it makes sense to use it to your advantage. But the compounding interest on debt is also a lever working against you. It is what forces us to have recessions.
Can you succeed with the use of debt? Sure. But debt is a claim on future labor (with interest). The net impact on most people is probably more harmful than it is good. Particularly because if you spend more than you are making today then tomorrow you need to
cut your expenses to within your income
cut your expenses below your income to have money for interest on the loans
cut your expenses further to have capital to pay off the principal of the loan
And you have to do that in anincreasinglygamedmarket where the rug can be pulled out from under you at any time. You don't control international balance of payments issues, but you certainly feel its impact in job security & the unemployment numbers. At any time forces beyond your control can pull the plug, rewrite the terms, or impact your market in ways that put you in a sour situation. If you have no debt and a bit of savings they can only screw you a bit. If you are loaded up on debt there are some risks you can't take. They own you.
"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it." — Albert Einstein
"There was 5 exabytes of information created between the dawn of civilization through 2003," Schmidt said, "but that much information is now created every 2 days, and the pace is increasing...People aren't ready for the technology revolution that's going to happen to them."
These multi-level marketing schemes aren't limited to home parties for sex toys, BBQ accessories, and household cleaners, of course. They are rife on the internet. If you've spent any time in internet marketing circles, you'll have seen hundreds, no doubt.
Worst business ever.
What Is Multi Level Marketing?
Multilevel marketing is where the salesperson sells items on commission - with a twist. The real "opportunity" - supposedly - is to be had recruiting a downline. A downline consists of other commission-only salespeople who try to recruit other commission-only salespeople. And so on. Some may even sell a few products!
Apparently you're not allowed to refer to the triangular-shaped Egyptian icon anymore....
The Problem With Any Marketing Opportunity
One major problem with MLM, or any market opportunity, be it affiliate or otherwise, is the size of the market.
All markets are limited. All markets are limited because the number of people is finite. Some markets are significantly more limited than others. For example, the number of people who have $2K, or whatever, to spend on, say, a rapid-mass-cash-code-instant-money-generator is quite small.
That isn't to say there isn't money to be made, however the more people trying to flick products, or recruit a downline, and the more people trying to rank well in the SERPS, the less chance a paying customer will arrive via any one site. Claims about making a lot of easy money on-selling such products, therefore, should be taken with a large grain of salt.
Evaluating Market Size And Potential
Over-hyped marketing opportunities often fail because they attempt to sell commodity product into very saturated markets. Or, there may be very little demand for the end product. If there was a lot of demand, surely they'd invest money in experienced salespeople in order to grab market share ahead of competitors.
So how do you size up a market, MLM or otherwise?
If there was an easy way, well....life would be too easy :) Really, it all comes down to some educated guesswork.
Here's one simple way of thinking about it:
Market size = the number of buyers in the market x quantity of product purchased buyers in the market per year x price per unit
You could get a rough idea of the number of buyers by looking at search volume against keywords you deem to have some level of buyer intent. Estimating the quantity they buy depends very much on the product. Does it need to be replaced often? i.e. a battery. Or is it a one-off? i.e. A house? When multiplied by the cost, you can estimate the potential size of a market.
There are a number of methods you can use. Some more complex than others. All involve guesswork. However, it's important to have a rough idea when deciding where to best focus your efforts.
I could find out the size of the car market in the US using the above equation, but that doesn't mean I could successfully enter that market. I would also have to evaluate my abilities, the level of competition, and the level of investment required.
This is often the mistake rookie affiliates/multi/level marketers make. They get suckered by the potential numbers, without stopping to think if those numbers make any sense. Even if they do, then does that mean the marketer can successfully enter that market?
Really, the marketing approach - be it MLM or otherwise - is irrelevant. The key questions to ask when considering any market are fundamental ones: how big is the market, how many competitors are there, and how can I compete?
Anyone who has been an SEO consultant knows that SEO is often bolted-on as an after-thought.
Which is, of course, the worst way of doing SEO.
Part of the problem is that SEO is often thought of, by clients, as a fix. It is a fix applied to solve the unforeseen problem of not showing up in search engine result pages.
Whilst some businesses get it, we know most never will. But this fact is to your considerable advantage if you build and run your own sites :)
Relevant Traffic Is Everything
We know that a site without traffic is like a billboard in the desert. If no one sees it, it doesn't matter how pretty it is, it is useless.
A site without relevant traffic is a cost, not a benefit. Traffic that "just passes through" presents a major opportunity cost. What did that traffic really want to see, and why aren't I providing it?
Someone else will be.
We know that search is the ultimate internet marketing research tool. Search is marketing nirvana. Visitors tell us what they want, using a keyword query, and all we need to do is match that query up with our site.
Most people, outside search, still do not get this.
But we do.
Integrating SEO At Every Step
One thing some SEOs may not get is that SEO needs is an integral part of business strategy.
SEO is not just about positioning a site in the search rankings, it's about positioning a site in the market.
For example, it is pointless getting a #1 ranking for "cheap t-shirts" if a site sells designer t-shirts. Whilst this may result in a few rogue purchases, the site will constantly lose out to sites that offer cheap t-shirts.
Because the visitors will reformulate their search queries until they find the service that is most relevant to them. From a business point of view, it may be better to run two sites - one offering cheap t-shirts, and one offering designer shirts.
That's what being relevant really means. Being relevant to a target market.
An SEO strategy should look like this:
Identify the target market
Conduct a competitive analysis
Create a business plan that shows how you will compete in that market
Create a brand identity related to those keyword terms
Create a search-friendly site
SEO flows naturally out of the demands of the target market.
Just as business strategy is something we must do each day, so too is SEO. Integrate SEO into all you do. Even sending out a bill is an opportunity to ask someone to engage with your site. And hopefully link to it.
Ask your friends, associates, suppliers and customers to link to you. Do the same for them. Create a personal link network of like-minded people and grow that network wider and wider. Think of it as a circle of trust.
Your keyword referral stats are pure gold. Find the keyword terms people have used to find you. Use them as ideas for new page topics. Integrate their language into your copy. Repeat. Grow organically based on the demands of visitors. It's just a case of "listening" to them. And responding with new pages.
Join related clubs, forums and organisations. Find out the top sites in your niche that accept advertising, and advertise on them. Write articles for them. Contribute to discussions. Go to wherever your potential visitors are.
Every page should link to another page on your site in a strategic, meaningful way. Think of any page you write as the start of a funnel that leads to other areas of your site. You want to subtly direct people to the page or action where they'll engage with you. For this to work, you need to have a clear business directive in mind. What is it you want people to do? Every page is a step leading to that point.
Be newsworthy. And remarkable. What do you do that's really interesting? Social media thrives on, and rewards, the different - the thing that is new. Same-ness - not so much.
It's bad enough having to compete with Google's engineers.
But to win the search game, you need to out-compete your competition, too!
Back in the dark, distant past - around the turn of the century - there was an "us" vs "them" mentality in search. "Us" being webmasters, and "them" being search engines.
Back then, in those simple times, in-the-know webmasters gathered in dark forums to discuss and share cunning strategies to crack the algorithms. There was a time when the postings of the secretive GoogleGuy were a big deal. Imagine - a search engine rep actually fraternizing with the enemy! How strange was that!
Times have changed.
These days, webmasters are more likely to work with the search engines, in the form of Adwords and Adsense. GoogleGuy is now the non-mysterious Matt Cutts, who helpfully announces indexing changes before they happen, even if he is still rather vague on detail.
Unfortunately, the collective "us" - webmasters - do not share the same level of camaraderie we once did. As search marketing is now above radar, competition levels have become fierce.
It's more dog eat dog.
Winning The Search War Against Your Competitors
Once we've figured out what Google wants, or we think we know what Google wants, we then need to out-compete everyone else who thinks they've figured it out, too.
Typically, webmasters reverse-engineer competing sites. Who is linking to them? What pages are linked? How old are the links? What keyword terms are they targeting? What are their most popular keywords? What Adwords are they running? What meta keyword tags are they using"? ;)
Good questions - apart from the last one, obviously - and a legitimate strategy for emulating high ranking sites. Tools like SEMRush provide a valuable insight into what our competitors are doing. BTW: Not pimping, I've been using SEMRush a lot recently, and I think it's a great tool :)
However, there's more to it. We also need to look at some other, non-technical factors that reveal something much more lucrative and interesting.
The goal of a competitor analysis is to develop a profile of the nature of strategy changes each competitor might make, each competitor's possible response to the range of likely strategic moves other firms could make, and each competitor's likely reaction to industry changes and environmental shifts that might take place. Competitive intelligence should have a single-minded objective -- to develop the strategies and tactics necessary to transfer market share profitably and consistently from specific competitors to the company.
The essential question underlying competitive analysis is this: "why do some web businesses do a lot better than others?"
In terms of search, we not only need to look at the technical aspects of the sites positioned above us, but we also need to analyse the markets in which they exist, what our competitors goals are, their pricing and products, and even obscure details, such as who they are hiring and firing, and why.
As you can see, it's not just about getting ranked higher for a certain keyword term. It's about getting ranked higher in terms of overall business performance. It's about seeing what market they capture, and where that market is heading in the future. Once you've figured out that, you might be able to discover new keyword streams that your competitors have missed, and may never think of.
Ok, so how?
How To Undertake Competitive Analysis
It would be nice if you could call up your competitors and ask them exactly what they're doing, and where they are heading. But we all know that's not going to happen.
We have to do a little investigative digging.
The problem is we don't want to do too much digging, as it is time consuming and can be expensive. Thankfully, a lot of the answers we need are sitting right in front of us.
Ask these questions:
What is the nature of competition?
Where does the competitor compete?
Who does the competitor compete against?
How does the competitor compete?
The nature of the competition is the overall market, and market forces. Take a look at Google Trends, trendwatching sites and other market research tools to figure out where their market is now, and where it heading. Does the market require significant resources? Why are these competitors in these markets? What related markets have they avoided, and why?
A concrete example. A few years ago, many SEOs competed as service agencies. Market trends showed that a lot of SEO was moving in-house, particularly at the top end. As SEO moved in-house, demand rose for training. A lot of SEOs are now engaged in training.
Ask yourself where your market will be in five years time.
Where does the competitor compete?For example, are they limited to a certain geography? Culture? Language? Do they have an offline presence?
Who does the competitor compete against? Make a list of the, say, top ten competitors in a niche. Compare and contrast their approaches and offerings. Compare their use of language and their relative place in the market. Who is entrenched? Who is up-and-coming? Who has the most market share, and why? Can you grab some of this share?
How does the competitor compete. What are the specifics of the products and services they are offering. Lower prices? High service levels? Do they provide information that can't be obtained elsewhere? Do they have longevity? Money, staff and resources? Are they building brand?
Whilst we could go into great depth, the value of even a basic competitive analysis is considerable.
By doing so, we can adjust our own offering, like altering price and service levels or by targeting a specific niche. We may slice a new niche in order to avoid direct competition with a highly resourced, entrenched market leader. We might make a list of all the things we need to do to match and overtake that fast rising new challenger. We then position against keywords aligned with the competitive realities we face.
There's much more to search competition that algo watching, keywords and links. And many more diverse ways to compete, too :)
Web crawlers aren't particularly good at making judgments about the truthiness of digital matter, and the wisdom of the crowd can't keep up with the river of data streaming online. Schmidt gave the magazine publishers hope for their future. Brands, he said, are the way to rise above the cesspool...
Schmidt was talking to magazine executives who were concerned about competition they faced from low-cost publishers, like you and me :)
Whilst we can't know exactly what aspects Google's algorithms will reward, it's not difficult to see brand factors becoming increasingly influential in search results, both directly and indirectly. Schmidt may be talking about a level of authority that the brand possesses, so is therefore trusted as an "editor", but there may be something else going on, too.
It might also be a question of clear subject/topic focus.
Establish A Brand
If your site has a very clear focus, in terms of brand identity, a number of search and social media benefits naturally follow. On-topic linking, context, and more. I'll discuss this shortly.
A brand is more than a name, graphic or logo. A brand is everything you do, from the way your position yourself in the market, to how you answer your emails. Brand is the total sum experience you offer. It's also a collection of keyword terms people naturally associate with you and your site.
Whilst it is expensive to create a national or international brand, you can create well-known brands in niches. Consider SEOBook, Webmasterworld.com and SEOMoz. Those brand identities are clear, and I'm sure that a number of unique qualities for each brand springs to mind when those names are mentioned.
Ways To Establish A Brand
Philip Kotler, Professor of International Marketing at the Kellogg School of Management, identified the steps to developing a brand. Amongst those steps were:
Develop The Value Proposition
Choose A Broad Positioning For The Product
This sounds like marketing guff, but what does it mean in practice?
The Value Proposition
No one can be good at everything - there isn't enough time and resources - so what is the one thing you are really good at? Is this a value people are willing to pay for?
Kotler identifies three alternatives:
the product differentiator
the low cost leader
Which one are you?
It's possible that a business can be all three, but such generalist businesses tend to be outgunned by businesses that are superior in one way. For example, Versace *could* do cheap items, but it would compromise their focus and confuse their brand identity, which equates to luxury.
Here's how to translate these brand ideas into an SEO advantage.
The value proposition is based on the demand you identity. For example, if a business owner found keyword demand for the phrase "SEO services in Los Angeles", then the value proposition is:
A locally focused SEO service provider
The business owner would be suited to providing "SEO services in Los Angeles", presumably by virtue of their location, contacts, focus and experience.
The broad positioning would be "niche". A catchphrase/byline may emphasize regionality, locality and accessibility for clients located in Los Angeles. The terminology used in the copy should reflect this niche approach - again, use words and phrases associated with both the service and the locality. When people link to such a site, they would naturally use terms that reflect locaility, because it's an intrinsic part of the brand identity the owner has established. When people talk about this business on Twitter/Facebook etc, they will hopefully use the terms consistent with the brand identity. Whenever people talk about your site in a certain way, Google will surely follow.
All the ducks are lined up. Business focus, keyword text, link text and the frame of reference in which people can talk about the business. Simple, right? But how many sites lack this type of focus, and thus miss out on keyword associations?
Brand can also be about personality. Danny Sullivan may know a lot about general tech, but to most people, Danny is "the search guy". He gets keyword-rich links, without having to ask. Aaron is "the SEOBook guy". It's hard to not link to Aaron without using the term SEO. Whenever people talk about them, people will naturally use search terminology in the same breath - in their keyword copy, link text and so on, which all flows through into SEO advantages. This benefits flows from having a tight brand identity.
The alternative is to be all things to all people, and this doesn't work so well in 2010, either online or off. There's just too much noise.
Building a brand is about building a a clear and established identity, and in terms of SEO, it's about being associated with a specific list of keyword terms relating to that identity.
Could you sum up your brand identity as a list of keyword terms?
Ever wondered how to price your SEO services? Your products? Have you set your prices at a point where you can get the best possible returns?
Pricing seems simple, but there's a bit of an art to getting it right.
In this article we'll take a look at different ways to price, a few strategies to use, and why you might want to avoid charging everyone the same price.
Why Pricing Strategy Matters
Obviously, if we get our pricing wrong, we'll miss out on business.
In order to increase profits, we could devise new services and products. However, by adjusting our existing pricing strategy on goods or services we already provide, we can squeeze out extra revenue with little effort.
To get greater returns from pricing, companies typically find ways to charge different prices to different customers.
Cost Plus Pricing
Cost-plus pricing is a common pricing method. Pricing of a good or service is determined by working out the total production cost, then add a profit margin. There's nothing wrong with this method - cost-plus pricing is widely used - however it does present a few problems.
One problem is that cost-plus pricing doesn't take into account the role of competitors. If we offer a SEO service at $15,000, arrived at by the cost-plus method, but our competitors offer the same service for $10,000 then our pricing clearly won't work. We must price in accordance with the market.
Cost-plus pricing doesn't take into account fluctuating demand. If demand for your products/services suddenly goes through the roof - say because you've been interviewed on nationwide television - they become scarce, and price should rise to reflect this scarcity.
Another problem is that it doesn't take value, as perceived by the customer, into account.
Imagine that you've created a widget that enables a machine to work at twice the output it did before. The value to the customer is considerable, as they can now double their output with little extra investment. The total cost of building the widget may be low. Cost-plus pricing would typically underprice such a widget. Value based pricing would charge in line with the total value it creates for the customer i.e. the increased value of their output.
In terms of SEO, are you charging enough for your services if you charge a few thousand dollars, whilst your clients make millions? Thinking of pricing in terms of value provided to your customer is a key to increasing profits.
Let's look at a method to accurately calculate a price for your goods or services.
Are there any substitutes for your product?
If so, how are they priced?
Step 2: Characteristics Relative to Competitors
What features do you offer that your competitors do not, and vice versa?
Do you customers value these features enough to pay extra for them?
Do customers value other characteristics, such as brand, established service levels, reputation, locality etc?
Step 3: Income
Can your customers afford your prices?
Are they less able to afford your prices than they once were?
Are there times of the year they can afford it, and other times where their purchasing power is constrained?
Step 4. Price/Strength Of Demand For Related Products
What are the associated overheads of owning your product? For example, if you sold cars, there are other costs involved that make up the total cost of ownership, including running costs, insurance and maintenance.
Step 5 - Market Environment
Has your product suddenly become high profile?
Has demand increased/decreased considerably in a short period of time?
This type of approach takes into account a number of variables when setting price, namely affordability, value, market conditions, and competition.
Some Issues With Value Pricing
Pricing, without taking into account overall business strategy, is a mistake.
For example, say there is a natural disaster where people lose their homes. A hotel may jack up the rates to ridiculous levels because it knows demand will surge, however the long-term value of the brand may be damaged if the hotel gets a reputation for price gouging.
Some companies may want to price at a level that gains them clients, but not revenue. For example, in order to build a reputation in the market, new SEO agencies sometimes provide services at a discount, or free, in order to get a few big name clients on their books.
Let's take a look at a few common pricing methods in practical terms.
The Law Of Three: If you go into a shop to buy a washing machine, you'll likely be faced with a range of models. Nothing odd about this, of course. The shop is trying to cover all bases.
However, there is often something more subtle going on. Most people will buy middle of the range. The middle of the range feels "safest". So, a shop will often have a ludicrously expensive model, and a very cheap model. The actual model they want to sell you is the priced in the middle of those two extremes. If the shop didn't offer a ridiculously expensive model as a basis for comparison, the middle option becomes the expensive option, and you're more likely to set your sights lower.
When you offer SEO services, try doing the same. Offer a bells and whilstles version that is highly priced, a mid option, and a cheap option. Typically, your customers will select the middle option. If you only offer two options, people typically choose the cheapest.
Auctions: Perhaps not applicable to SEO, but if you're selling products, the auction system can be a great way to achieve better prices. Entire books have been written about the psychological effects of auctions, but it all boils down to the fact that people place different values on products based on their own needs. Those who want the product the most, pay the most.
Versioning - Offer slightly different versions of the same thing. See Apple and their iPad pricing. The cost of production of each model is probably near identical across the range, but by offering different versions, they can figure out who is prepared to pay more.
Versioning can often be more extreme when setting a wide price range. Conferences tend to offer coupons off retail price for early attendees, but so long as the full price has been seen publicly by some folks, this lends a perception of value that can be used in subsequent marketing & packaging. Some companies might run an in-person conference which charges thousands of dollars, and then afterwards, sell you a download version of it for a few hundred dollars, all the while anchoring on the "fact" that you just saved $1,000+ with your purchase. The "crucial" networking & intimacy benefits which were used to promote the in-person event soon disappear and the concepts of value and convenience (instant download, no travel required, etc.) are brought to the fore.
Segmented Pricing - Perhaps your buyers can't pay the entire cost up front, but they can buy using other arrangements, like a monthly fee. Some clients might prefer bundle offers where everything is done for them, whilst others want to mix and match parts of your service. Offer different options so your client can fit their budget to your offering.
Differential Pricing - Offering coupons can grab those buyers who are very price sensitive, or looking to buy only if they perceive a genuine bargain. Your other customers won't bother with coupons, so you can successfully run two different pricing strategies, one discount and one full price, by using coupons.
Markdowns - Obvious, but powerful. You advertise the usual price, but a line through it, and offer it at a reduced price. What's not so obvious is when markdowns should be used. Markdowns don't work so well on luxury items, as this can compromise their exclusivity value. Not much point owning a high-end garment is everyone has one.
Notice that luxury items either don't display their price, or, if they do, it's typically stated in rounded figures i.e. $1500. Budget items price in dollars and cents i.e. $39.95 or slightly under the next increment i.e. $99 as opposed to $100. The format of the price signals exclusivity, or lack thereof.
But Is This Fair?
Offering one price to one group, and another price to others may seem unfair. This is something you'll need to weigh up for yourself.
However, keep in mind that if the differing price points reflect different levels of value, then the customer is deciding what they value most. If they want the full service, they should expect to pay full-service prices. If they want the lowest price, they may be prepared to wait or sacrifice some features. The customer decides what they value, and votes with their cash.
"People that pay for things never complain. It's the guy you give something to that you can't please." ~Will Rogers
and I think it is true on so many levels. If you want real feedback from someone ask them to put their money where their mouth is. Few will, and so most free feedback is garbage.
But when you pay for something you are giving a much stronger/cleaner signal, which is easy to trust & value.
What a lot of SEO professionals don't realize is that when they rent text links many of them are paying for their own demise. If you go through a central link broker that operates at scale you are telling them:
what areas your business is focused on
what keywords are important to you
what links you are buying
how much you think you will make from the marketing
That is fine if you are a huge company with tons of other quality signals which can't be replicated. But if you are a smaller company, what happens when that link broker is also a web publisher? Hmm... xyz is spending $5,000 a month with us to promote that site...well they must be making some good money off it - lets clone it. ;)
The equivalent to trusting most your link buying to a single link broker would be doing a public export of all your bids and conversion data for PPC. You wouldn't stay profitable very long with that strategy, and if you share your link purchase data with some of the shadier (and more well known) link brokers you can expect the same result.
A friend of mine recently mentioned buying some links and then seeing a number of sites pop up which seemed suspiciously associated with people who work behind the scenes at their link broker. Oooops!
Buying links from a central network is not only risky from a Google risk management perspective, but also from a "thanks for the data, fool" perspective.
"I just have one question. Are the Overture results on top an April Fool's Day joke, or is that for real? ;) "
Since then Google has put ads above their organic search results, done selective self-serving within their "organic" results, and built a business that is pulling in over $20 billion a year. It turns out aggressively carpet-bombing the web with ads is no joke. :D
The lack of community and camaraderie within the SEO industry both remarkable & unsurprising give that the SEO industry is a bit of a canary in the coal mine in terms of adopting new best practices (or worst practices, in some cases).
Just yesterday I read a blog post listing me amongst a list of resources where everything recommended had a link - except for our site. The lack of link was so bizarrely out of place that they literally had to explain why they didn't link to our site. Crazy stuff, especially from an SEO "professional" who claims to like and value your work!
As attention becomes more scarce, many people are willing to do anything to get a bit of it.
This triple occurrence of Optimization by Proxy creates a self-reinforcing cycle where the made-for-adsense website owners are rewarded with cold hard cash for their efforts. What's worse, this cash flow has been effectively subtracted from the potential gains of legitimate content producers. One can say that the existence of Google search/adsense/adwords makes all this commerce possible in the first place, but this does not make the downward spiral of inefficiency disappear.
What is even more strange about the above quoted article is that a Google search-quality engineer submitted it to Hacker News using "Sufficiently advanced spam is indistinguishable from content" as the title & wrote the following:
All of the fascinating things about signals are confidential for all of the reasons listed in the article, and Google has been sued so many times by sites that think they should rank better than they do that I can't really give examples.
I think it's safe to say though that there are a lot of people worried about and thinking hard about what the web is turning into and how to rank it appropriately.
Most of the content is no longer written by devoted hobbyists, people no longer link as often to things they like, and much of the content on the front pages of reddit, digg (and sometimes even hackernews) was put there by people trying to make your search results worse.
Given that Google pays for the creation of content and is the most profitable distribution channel for many webmasters, few businesses have anywhere near Google's influence on "what the web is turning into."
The smaller the corpus of voters there are the fewer people you need to influence to manipulate the search results. And so stuff like this becomes popular:
But if you have a live and flourishing link graph then efforts of spammy delight won't be able to compete anywhere near as well against the best sites. The problem is the best sites often remain in obscurity & even when they spread through social networks most of those links use nofollow.
The powerful element of links is that they give search an informational bias. Most other forms of user feedback (even awareness) are to some degree driven by ad budget, which would give the results a commercial bias that would cut Google's AdWords revenues.
Years ago on porn search Matt Cutts stated "One thing to consider is that our rankings (because of PageRank and the link structure of the web) often lean more toward information sites. You usually have to look a little more deliberately to find porn on Google." And last year a Google search engineer on Reddit stated: "Incredibly, we take an active role in ignoring porn search. As in, we neither care nor not care about whether our changes affect the search for porn. I'm quite impressed myself at how good it is given this, and sometimes I wonder how much better it could be..."
Yes any new webmaster can quickly rank any trashy content in Google - not on their own site - but on one owned and controlled by a Google arbitrage partner like Demand Media.
Google engineers focused on making their own jobs easier (by making links harder to get) rather than encouraging and promoting the advancement of the corpus of content & links/votes they rely on. The fundamental question for search is if the ecosystem is healthier with many micro-parasites or fewer macro-parasites. I always promote diversity as a good thing, but capitalism typically promotes homogenization to increase yields. That will work for Google right up until...
some of the large arbitrage players form their own ad network, or sign an exclusive deal with Bing
quality publishers pull out of search and people prefer to ask their own communities what is good rather than searching to find bland 3rd grade answers wrapped in AdSense
...at which point Google will start promoting other sites & building a new model. Or they will become irrelevant.
But Google is not required to go through that pain.
They could undo the years of FUD that destroyed the link graph by stating the importance of outbound links, and then putting a bit of weight on it. It is something that was hinted at in the past, but the focus on making links harder to get has undermined the utility of using links as *the* measuring stick for quality because "people no longer link as often to things they like."
Facebook's new system for connecting together the web seems to have a serious privacy hole, a web developer has discovered.
"It seemed that anyone could get this list. Today, I spent a while checking to make sure I wasn't crazy," he wrote on his blog. "I didn't opt in for this. I even tried setting all my privacy settings for maximum privacy. But Facebook is still exposing the list of events I've attended, and maybe your event."