One of the most annoying things that I see regularly are advertisements for financial advisers that can tell you the best stocks and mutual funds for you to buy, personalized just for you and your situation.  Sure, there are people out there that probably know a lot more about investments than I do (albeit not this guy), but how hard is it to pick investments for someone when you are guaranteed to make the same amount of money regardless of how those stocks actually perform?  These people have no skin in the game, so to speak, and if the investment crashes and burns, they aren't going to be living out of a cardboard box anytime soon.  Besides, if these people really were that great at picking investments, wouldn't they be reviewing stocks for their own portfolio from the comfort of their 12,000 foot beachfront home in Tahiti?  I know I would.

I look at SEO / web marketing the same way. After all, if you were really good at it, wouldn't you just build a site for yourself in a highly profitable niche, get that site to dominate, and bask in the rewards of your success, earning recurring revenue while you scope out your next niche from that same beachfront Tahitian palace?  The answer is yes.  Fortunately for many SEOs (and financial advisors), clients don't often realize this.  However, as an SEO, especially those trying to break into the industry and create a name for themselves, it is very important that you do exactly that.  As a web marketing pro, it is very important to create your own web business at some point - ideally before you ever take on any other clients.  Not only is it a great measuring stick for you to gauge your skills and abilities, but it also gives you an understanding of what business owners and prospective clients must deal with when running a business and helps you better understand their situaions.

Some of the best SEO people I know don't work for clients at all, don't contribute to blogs or forums, and don't generally share much with others in the industry.  They serve their own interests exclusively, and they serve them well.  My brother is one example of this.  He is a fantastic talent in the industry, and about a year ago he purchased a small fixer-upper website in the uber-competitive and saturated "baby gift" niche.  He made some necessary improvements to the site, watched it rise to the top of the rankings, and watched it generate an insane revenue growth over the year since he bought it.  This week, he closed on selling the site for about 90 (yes, 90!) times what he purchased it for one year ago, and now he is planning on taking some time (possibly in Tahiti) to determine a new niche to address with his next venture.  He could certainly do wonders heading up any large corporation's web marketing department, but why would he?  He could consult for clients, charging $200 / hour to help them make their sites dominate like his do, but he'd essentially be taking a pay cut. 

I also don't have many regular clients, as I've found that the time I spend working on my sites tends to create a lot more revenue than a client would typically pay for my hour of time.  I personally try to limit clients to opportunities where it makes economic sense to do so, or if I am offered to have some skin in the game personally, taking a base rate in addition to performance incentives that make the challenge a little more personal and exciting (and ultimately lucrative).  I have several sites that I own independently that do quite well right now, (and several others still in the A.D.D. domain name incubator), bringing in a nice monthly revenue stream as well as serving as an asset and primo testimonial for my SEO skills if needed someday. 

I also see a lot of new SEOs asking questions in forums about how they should price their SEO services.  The answers are always all over the board - "charge a lot so that the client knows that they are getting value," "a flat $100 / hour is a typical going rate," or even worse - "when necessary, do it cheap or pro bono to build a strong client base."  I am here to say NEVER, and I mean NEVER, do work pro-bono to try to grow your business.  The explanation is a simple review in Economics 101.  Your time has an opportunity cost associated with it.  In a simplified example, if you could spend 100 hours of your time working on a site that will generate $10,000 this year (not too difficult to do), then your time is worth $100 / hour (actually, because it is an asset and will have recurring value after this year, by calculating the time value of money you could argue that your time is worth much more than $100/hour).  This web business is a real revenue-growing asset to you with significant value, although many in the industry value web businesses at no more than 24 months worth of profit.  I personally disagree with this undervaluation, but that's a different topic for a different day.

In addition, if you really want to be a client-serving SEO firm, you have a prime testimonial to offer any potential client in your web business.  Having your own site allows you to share aspects of your success with clients that a traditional testimonial client may not allow you to share, such as revenue increases, ROI, or even traffic and conversion numbers.  Weigh this gain versus any pro-bono benefit to see that, economically speaking, you should never do work for free. Of course, you may want to build something for charity or whatever, but strategically thinking in terms of building your own business, fuggetaboutit.

If you can put your own proven e-business success case study in front of a client, you have a far better chance of closing the deal and getting the rate you are asking, which brings us back to what exactly that rate should be.  When you can measure your opportunity cost versus the rate a client would be willing to pay you, you have a good feel for how you should be spending your available time, this and tells you why a lot of good SEOs charge well over $200/hour for their services.  It is not because of quality or ROI or even just some inflated number picked out of the sky, but rather because it is not worth their time to be doing it for less.  

There is a good article on this topic at Tropical SEO written in April, where the author states that there are 6 types of productive things SEOs can do with their time:

1. Posting on forums
   
2. Posting on blogs
   
3. Working for an SEO firm on salary
   
4. SEO consulting for clients
   
5. Launch a site in a niche you are passionate about
   
6. Launch a site in a highly profitable niche

These 6 things are listed in order of long term profitability, and he gives some funny truisms about the people that do 1,2, and 3 instead of 5 or 6, one of which hit me with my recent shift to a more information sharing and conference speaking direction.

Basically, it is very important and recommended for any SEO to have an actual web business (not to be confused with a site for your SEO, which is needed as well).  Building your own web business proves your worth and is a great testimonial for you to use if you do try to attract clients, and it quite possibly may prove that you don't really want (or need) clients after all.  And if we're sitting outside of our beach house in Tahiti talking about this topic someday, I'm pretty sure we won't be sitting next to any financial advisors.