Need more patients fast?
Want to keep the competition from stealing patients away?
Desperate for a quick boost to revenue?
If any of those describe you, you might want to consider Pay Per Click (PPC) advertising.
Medical practice PPC advertising campaigns are one of the most effective ways to grow your medical practice quickly.
The ROI on PPC campaigns can be massive, so it’s no wonder that PPC campaigns are a favorite tactic for physicians to grow their practices.
But if there’s one common question that comes up when discussing medical practice PPC, it’s this: how much should medical practice PPC cost?
How Much Should Medical Practice PPC Cost?
Various Pricing Models Explained
As with any advertising channel, there are some costs associated with PPC campaigns. The most obvious cost is ad spend – you have to actually spend money to get your ads in front of people, after all.
But there are other costs associated with PPC campaigns as well. For example, many physicians choose to outsource the creation and management of their PPC campaigns to a healthcare marketing agency.
Many practices can’t – or don’t want to – handle the management of their campaigns themselves. They want the best results possible, of course – so that means hiring a consultant or agency.
- But how can they know they’re getting a good deal?
- How much should it cost?
When it comes to medical practice PPC campaigns, there are several common pricing models, which we’ll explore in more detail below.
Pricing Model #1: Unlimited Flat Fee
This pricing model for PPC management is a flat fee that does not change, regardless of ad spend.
This pricing model is not very common (for obvious reasons), but we still see it occasionally.
The main reason that agencies do not charge an unlimited flat fee is because of incentives: as you spend more on ads, the work the agency has to do…but under this pricing model, they don’t get paid more for it.
This unlimited flat fee may seem good at first, but there can be some downsides.
Often times, agencies built on this pricing model are all about volume. The name of the game is churn and burn. These agencies make their money by increasing the quantity of clients they have under management, but they don’t have to actually produce good results.
As long as their sales process brings in more new clients than they lose from poor management, they’ll grow. So while this pricing model may seem appealing at first, be wary of agencies that price their PPC management services this way.
Pricing Model #2: Tiered Pricing
The tiered pricing model for PPC management is far more common.
Under this model, there are several “levels” of management fees, all of which depend on ad spend. It makes sense: The more you spend on ads, the more work will be required to produce good results…and in turn, the larger your management fee will be.
Here’s an example of how this pricing model works:
|Ad Spend||Management Fee|
|$2,500 – $5,000/month||$599/month|
This pricing model aligns incentives much better than an unlimited flat rate. What’s more, it’s fairly easy to control your ad spend (and therefore, your management fee) under this pricing model. Not only can you get great advertising results for your practice, but your finance department will love you for it.
Pricing Model #3: Flat Fee + Percentage of Ad Spend
This pricing model is perhaps the most common in the PPC management world.
Rather than merely charging a flat fee for management services, some agencies prefer to bill their services as a flat fee plus a percentage of ad spend.
Just like the tiered pricing model, the more you spend on ads, the larger your management fee will be.
The key difference is that your management fee will vary a bit more from month-to-month.
Rather than one flat fee that can be controlled by keeping your monthly ad spend under a certain level, your management fee under this pricing model will increase with each additional dollar you spend. This can make it a little harder to accurately budget for PPC campaigns.
Most agencies charge somewhere between 5-10% of ad spend on top of their monthly fee. Some agencies even reduce their percentage as ad spend increases.
For instance, an agency might charge a flat fee of $499 plus 10% of ad spend up to $5,000/month.
For ad spend between $5,000-$10,000/month, that fee might be reduced to 8%, and for ad spend above $10,000, the fee might be reduced to 5%.
Here’s what that would look like for various levels of ad spend:
- Ad spend of $2,500/month: $749 management fee ($499 base + $250 variable)
- Ad spend of $5,000/month: $999 management fee ($499 base + $500 variable)
- Ad spend of $7,500/month: $1,099 management fee ($499 base + $600 variable)
- Ad spend of $15,000/month: $1,249 management fee ($499 base + $750 variable)
Pricing Model #4: Hourly Rate
The final pricing model for PPC management services is a classic: charging an hourly rate. This pricing model is typically favored by freelancers and smaller agencies.
As with any pricing model, there are some benefits and some trade-offs.
On one hand, you get exactly what you pay for, because you’re paying by the hour.
On the other hand, there is very little visibility. What work is being done? And how much will you be billed next month?
There’s also a problem with incentives: consultants are incentivized to maximize their billable hours, which can lead to inefficiencies and an increase in the amount of work that “needs” to be done.
That means that the more successful your campaigns are, the more you will be charged – definitely something to think about if you want to outsource your practice advertising.
Pros and Cons of Popular PPC Management Pricing Models
As with anything, there are pros and cons. Let’s explore some of the pros and cons of popular PPC management pricing models below:
|Name||Predictability||Ease of Budgeting||Benefits||Drawbacks|
|Unlimited Flat Fee||Very predictable||Easy to budget||Very predictable||Agency has less of an incentive to manage campaigns well once ad spend increases|
|Tiered Pricing||Fairly predictable||Fairly easy to budget||Know what you’re getting||Costs can increase as ad spend increases (if you’re not careful)|
|Flat Fee + % of Ad Spend||Fairly unpredictable||Hard to budget||Lower management fees at lower ad spend levels||Penalized for success|
|Hourly Rate||Fairly unpredictable||Very hard to budget||Can potentially keep costs low (depending on hourly rate)||Very little visibility into what work is being done – and how much you’ll be billed[/wps_table]|
Our Favorite Medical Practice PPC Pricing Model
When you look at the pros and cons of medical practice PPC pricing models, a clear winner emerges.
- Unlimited Flat Fee might seem good at first, but agencies have less of an incentive to actively manage your campaigns for best results when you start spending more. The amount of work required increases, but they aren’t compensated more for it.
- Percentage of Ad Spend may seem ok, too, but your practice is penalized for success.With each additional dollar you spend on ads that get you more patients, your management costs increase as well – even if it doesn’t take the marketing agency more work to deliver those results.
- An Hourly Rate may seem more straightforward, but you’re never quite sure what you’re going to get…and is the work being done really necessary, or is it just busywork designed to inflate billable hours?
Because of these factors, our recommendation is to look for a healthcare marketing agency that offers a tiered pricing model.
Yes, your costs will increase at higher levels of ad spend, but they are easier to predict, control, and budget for. You aren’t necessarily penalized for spending more – if your budgets remain consistent from month to month, your management fee will be, too.
What’s more, agencies usually price these tiered services in such a way that only increase costs when the amount of work required increases, so you actually get what you’re paying for – and you know what you’re getting.
You can also rest assured that the quality of the management will be good, too, because incentives are aligned (as opposed to unlimited flat fee-based models).
If a tiered pricing model isn’t offered by your agency of choice, we would recommend going with a flat fee + percentage of ad spend. Yes, your costs will increase as your campaigns are more successful, but incentives under this pricing model are generally aligned, so there’s reason to believe the agency will continue actively managing your campaigns well.