SEO agency’s profit margins: Survey data & Free calculator included
Maybe your agency is growing, but what about its profits? Many agency owners assume everything is fine as long as there’s money in the bank. But with rising costs and shifting client expectations, profit margins can quietly shrink, sometimes dangerously.
We teamed up with The OMG Center to explore how agencies manage profitability, what’s working well, and what isn’t. Below are some survey insights and a free calculator to help you gauge how profitable your agency currently is.
Disclaimer: A total of 115 agencies participated in our survey. While this sample size isn’t massive, it offers practical, real-world insights into how agencies manage their day-to-day profitability.
A brief overview of the survey participants: Agencies from various regions responded:
- 28 from North America
- 23 from the UK & Ireland
- 39 from Europe (ex. UK & Ireland)
- 7 from Asia
- 8 from Australia & New Zealand
- 6 from the Middle East & Africa
- 4 from South America
Most of the agencies we surveyed (88 out of 115) were small or mid-sized (1-15 employees) and offered SEO services, plus other marketing services like PPC, SMM, content marketing, web development, design, and email marketing. Most agencies combine monthly retainers with hourly billing and project-based pricing.
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Healthy margins are achievable:
84 out of 115 agencies report profit margins of 11% or higher, with 58 achieving excellent margins of 21%+.
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Regional profit margins:
Agencies in North America and the UK & Ireland show the highest profitability, with 21% or more profit margins for 13 out of 27 agencies in North America and 13 out of 23 agencies in the UK & Ireland. In terms of middle-range performance, 10 out of 28 North American agencies and 5 out of 23 UK & Ireland agencies maintain margins of 11-20%. In Europe, 8 out of 39 agencies fall into the 11-20% range. However, Europe has a higher proportion of agencies (8 out of 39) unsure about their margins, indicating financial instability or not so great tracking.
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Agency size and profitability:
Since our large agency sample is limited (12 vs. 88 smaller agencies), it’s hard to make definitive claims about size-to-profitability relationships. 76 of the 88 smaller agencies (1-15 employees) reported margins of 11% or more, compared to 8 out of 12 larger agencies (15+ employees). The overall trend suggests that agency size doesn’t always determine its profitability. This may happen because smaller agencies often have lower overhead, greater flexibility, and niche specialization advantages.
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Service bundling could drive high profitability:
Despite our limited sample of 10 SEO-only agencies versus 105 multichannel ones, our findings show strong margins for both types, with 8 out of 10 SEO-only and 76 out of 105 multichannel agencies reporting 11%+ profits. Agencies offering multiple services, like SEO, PPC, content, or social media, tend to have higher margins over time, as a diverse service mix helps them capture more of clients’ budgets, unlock upsell opportunities, and create more stable revenue streams.
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Tracking profitability matters:
Over 100 agencies are tracking their profit margins on some level, but only about half (69 out of 115) are doing so regularly and in detail. This shows moderate financial awareness with room to grow. The remaining 15 agencies not tracking profitability risk making uninformed decisions around pricing, hiring, service offerings, and growth.
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Monthly retainers drive stability:
Monthly retainers are the most common and one of the most profitable models. Among the 90 agencies using retainers, 71 report healthy margins (11%+), with 51 achieving top-tier profits (21%+). Additionally, we observed that the most successful agencies (with 21%+ margins) often combine monthly retainers with other pricing models (e.g., project-based fees, hourly billing). This indicates that a diversified pricing strategy may enhance profitability.
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Scope creep is the #1 challenge:
59 agencies struggle with clients expecting work beyond what was agreed, making it the most common profitability challenge. Pricing concerns from clients go next, with 47 agencies facing this challenge. Justifying value to clients is a struggle for 35 agencies, while the same number report competing on price with other agencies. The other 17 agencies report challenges with tracking profitability.
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Resource gaps are spotted:
69 agencies lack access to industry benchmarks. 39 agencies are looking for free profitability calculation tools, while 34 agencies would benefit from expert-led training. Financial advisors specializing in agencies appeal to 25 agencies.
What’s the problem with profit margins?
According to our survey results, 101 agencies track their profit margins, but 32 of them often overlook the details behind margins. However, these details are essential. Here’s some background and context around it to help with framing the issue.
What are profit margins?
Profit margins are the percentage of revenue profit left after subtracting all your business expenses. It is the difference between what clients pay you and what you spend to deliver services (including taxes, salaries, tools, software subscriptions, and other operational expenses). Strong profit margins indicate a financially healthy agency with growth potential, and the ability to sustain turbulent business periods and create long-term business stability.
There are two types of profit margins that you should be tracking:
- Gross profit margin: This is the revenue left after paying direct costs, including payments to team members, freelancers, and specialized SEO tools. It represents your profit before operational expenses.
- Net profit margin:
- Before tax: This is your profit after subtracting all direct and indirect costs, including operational expenses like office space, software subscriptions, marketing costs, and other business overhead. This is your profit before corporate tax.
- After tax: This is your final profit after deducting country-specific taxes from your net profit, giving you the final after-tax amount.
Gross profit margins help you measure the profitability of individual items. Net profit margins are better for assessing overall profitability.
What is a good SEO agency profit margin?
Think of it as a benchmark to help you feel confident about the long-term continuity and growth of your business. Overall, 84 out of 115 survey participants report that the average after-tax net profit margin typically ranges between 11-21%+. Of those, 8 are large agencies, while 76 are small and mid-sized. These numbers are generally seen as healthy within the SEO space.
Let’s also compare it with the general industry benchmarks (common targets to aim for):
- Gross Profit Margin (~50%): This indicates that you manage your direct costs well, and can generate a strong return on the services you provide.
- Net Profit Margin (~15-30%): This reflects your overall profitability after all expenses. Anything above 30% indicates exceptional financial performance.
These figures can vary based on your specific circumstances, business ambitions, size, and other factors. The main idea is to figure out what’s driving your financial performance. By monitoring your margins over time and comparing them to industry benchmarks, you can make more informed strategic decisions.
Agency profitability calculator by The OMG Center and SE Ranking
Now that you understand what healthy profit margins look like in the SEO industry, the next step is to know where your agency stands. If you were to calculate profitability by hand, you’d need a complex spreadsheet to track each client’s billable hours, tool costs, and overhead. Most agency owners don’t have time for that when juggling deliverables and client emergencies. This likely explains why one in three agencies report they lack access to free tools for profitability assessment.
That’s why we did the heavy lifting for you. Together with OMG Center, we created a ready-built calculator for SEO agencies. Use it to gauge where your agency stands financially and make informed decisions moving forward. It will only take about two minutes of your time.
How to use the calculator:
- Set your currency and country: Choose your currency and country, and the tool will automatically apply the correct tax rate (this option is available in the full calculator version).
- Enter your revenue: Add your income from retainer, project, and affiliate sources.
- Input your operational expenses: Fill in direct costs like staffing, payments to contractors, and tools used directly for client work. Include the operational expenses you pay for marketing, internal software, training, business travel, etc.
- Get instant insights: The calculator will show your gross and net profits, including after-tax calculations.
Why profit margins are harder to maintain than ever
After calculating your profit margins, if they’re below the industry benchmark, several factors could be at play, including generative AI advancements, growing market saturation, and constant algorithm changes. However, the underlying reasons are often more complex. Our survey respondents identified these key pricing challenges:
- Pricing concerns from clients. 47 out of 115 survey participants deal with clients calling costs into question. This puts agencies in a real bind. Agencies need to raise their rates because of higher costs, more complex service packages, inflation, and growing competition. But when they do, they risk losing clients. Our latest pricing survey found 70% of SEO agencies have either already increased their prices or plan to this year. The math is simple but blunt: when clients won’t pay more but your costs keep rising, your profit margin gets squeezed from both sides.
- Clients expect more than agreed. Agencies often run into scope creep where clients gradually ask for extra work without adjusting the budget. A couple of revision requests from your clients often snowballs into substantial unpaid work that wasn’t factored into the original pricing. As SEO becomes more complex with content, technical, and now AI considerations, deliverables tend to expand while the price tag doesn’t always follow. This silent margin killer affects nearly every one out of every two agencies we surveyed.
- Unclear profitability. 17 out of 115 agencies have difficulty tracking true profit margins on client work. With SEO project complexity, like fluctuating scopes, different pricing models, and ongoing work, it’s tough to accurately measure margins. Without knowing the real numbers, you might prioritize clients that cost you money but focus too little on the ones that help your bottom line.
- Competing on price with other agencies. We found that 35 out of 115 agencies monitor competitors’ rates closely and adjust their own pricing to stay competitive. With the SEO market expected to grow by 18% in 2025, this has created an increasingly competitive landscape. Agencies often feel pressured to match or beat lower prices offered by competitors, especially as new players, freelancers, and AI tools enter the market. While this strategy helps them stay in the game, it also puts margins at risk, making it harder to maintain profitability without sacrificing quality or service.
- Hard-to-prove value. We discovered that 35 out of 115 agencies find it difficult to clearly demonstrate their work’s ROI. Unlike PPC with its immediate metrics, SEO benefits can take months to show results and are often hard to separate from other marketing efforts. When clients can’t clearly see how your work impacts their bottom line, they’re less likely to accept your current rates.
How to boost profits for your SEO agency
With these challenges and resource gaps in mind, it’s clear that most SEO agencies are navigating profitability largely on their own. With 89 agencies reporting a lack of support resources, there’s a clear need for practical solutions. The following tips directly address these needs:
Fast profit boosters
Evaluate and adjust your pricing model
Regularly compare your prices to the time and resources you’re spending to get an accurate measure of your profit margins. While there’s no fixed schedule for adjustments, it’s common for SEO agencies to review their rates annually or when significant market or operational changes occur.
For example, our survey of 260 SEO agencies found that 61% plan to expand their services to include AI-driven optimization. All these changes cost money—new tools, training, expertise—and your pricing needs to reflect that to keep your margins healthy.
Automate where possible
Most agencies waste 12-15 hours weekly on tasks that could be automated. Start by tracking your team’s time for two weeks to see where the hours are going. Look for the usual suspects: manual reporting, too many revision rounds, etc. Once you spot these time-wasters, bring in tools to fix them.
Here are a few real-world examples:
- Heavyweight Digital, a UK-based agency, was spending 2-3 hours on each client report. They implemented SE Ranking’s Looker Studio integration for automated reporting, used the Rank Tracking tool for real-time keyword monitoring, and leveraged the Competitive Research tool to quickly identify optimization opportunities. This tool bundle reduced their reporting time by 35% and increased project efficiency without adding costs.
Here’s the full success story: How Heavyweight Digital agency cut reporting time by 35% with SE Ranking’s Looker Studio Integration
- Similarly, Valpo Web Design & Marketing Agency leveraged SE Ranking’s Report Builder to report on clients’ rankings across multiple locations. They set up automated monthly reports that take just 30 minutes for initial configuration. Another agency, Doominio.com, used the Report Builder’s customization options along with keyword ranking reports and competitor insights to meet specific client requirements, including EU-funded projects that demand detailed reporting.
Here’s the full success story: How SE Ranking’s Report Builder transforms agency reporting and builds client trust
These real-world examples show how automating manual processes can directly boost your margins. Those extra hours go straight to strategy work instead of spreadsheets, improving both client results and your bottom line.
Optimize your SoW (Statement of Work) document
Since your Statement of Work (SoW) is the foundation for every client relationship and project, getting it right is key. If your SoW isn’t optimized, you risk scope creep, misunderstandings, and service devaluation, which directly impacts your bottom line. Here’s how to optimize it:
- Outline exactly what you’re delivering, when it’s due, and the expected outcomes. Be specific. Vague terms like “improve SEO” can lead to ambiguity and expectations you can’t meet. For example, “Increase organic traffic by 20% in 6 months” is much clearer and measurable.
- Clearly state what is not included in the project and would incur additional costs. For example, you could add an “Out of Scope” section to prevent clients from asking for extra work beyond the agreed upon scope without additional payment.
- Set up a formal process for handling unexpected requests, including associated fees. This is essential because clients often change their minds or ask for new services midway through a project.
Long-term profitability growth strategies
Outsource non-core tasks
Identify tasks that don’t require your agency’s core expertise and consider outsourcing them. This frees up your team to focus on high-value work that directly impacts client results and revenue. For SEO agencies, tasks like administrative work, link outreach, content writing, and social media management are ideal for outsourcing.
Also, keep in mind that you should target repetitive tasks with consistent processes that are easy to document. Create clear SOPs to maintain quality and ensure outsourced work aligns with your agency’s standards.
Diversify service offerings
Expanding your service offerings beyond traditional SEO, such as adding PPC management, content marketing, web design, or conversion rate optimization, can help you attract a wider client base and increase your average revenue per client.
We even found that 93% of agencies bundle SEO with additional services like PPC, SMM, web design, and website maintenance. And our latest survey found that 52 out of 105 multichannel agencies reported profit margins above 21%. This suggests that offering multiple services alongside SEO can lead to higher profits for agencies.
Build predictable revenue models
53% of agencies prefer monthly retainers, and 80% have them as one of their go-to pricing models. The key benefit here is the predictable cash flow that retainers provide. But many agencies keep things flexible by offering hourly or project-based pricing to fit the diverse needs of their clients. This creates a balanced mix that gives you stable income while still letting you adapt to different client situations. A good approach is to start new clients with a project to prove your value, then move them to a monthly retainer once they trust your work.
Scale agency operations with SE Ranking’s toolkit
Small adjustments in pricing, delivery, and packaging can significantly boost profits over time. The strategies we’ve shared are easy to implement with SE Ranking, which equips your agency with robust tools to automate, manage, and scale.
We offer:
- A complete toolset for automating all major SEO tasks, including keyword and competitor research, website audits, backlink analysis, keyword and AIO tracking, AI-powered content tools, local SEO features, and more.
- Access to accurate data, powerful AI insights, extensive datasets, and generous data limits in every plan.
- The Agency Pack, featuring unlimited white-label reports with AI summaries, extra client seats, the Lead Generator widget, an exclusive spot in the Agency Catalog, and more.
- 30 projects and 3 team seats for Pro, and unlimited projects and 5 team seats for Business subscriptions.
- Free data migration for annual subscriptions.
- A 14-day free trial and up to 20% savings on annual plans.
