This blog post was inspired by friends at CitySearch, or City Grid Media. The other day one of their sales reps called me to pitch us on a CPC campaign for our Tattoo Removal business, Blink Tattoo Removal. The sales rep mentioned that they take the average national CPC form Google, Yahoo, & Bing inorder to generate their CPC rates. Not a bad idea! They continued to tell me that they were charging $5 per click for the keyword Tattoo Removal.
During the call I checked my Adwords account and I was only paying $2 per click for this keyword in the Seattle market. But then I checked our account in Los Angeles and noticed that we were paying $8 per click for the same keyword. No surprise here, Google Trends says that LA is one of the top 5 markets in the USA for tattoo removal, and Seattle is not even on the map!
Follow me on this one.
- If the CPC in Seattle for Tattoo Removal is $2, then 100 clicks costs $200, at a 5% conversion the value per lead is $40. Our pricing, in Seattle, for tattoo removal services should reflect this.
- In LA, if the CPC is $7, 100 clicks cost $700, at a 5% conversion the value per lead is $140. The pricing in LA for tattoo removal should reflect the higher demand
In order to justify a $40 cost per lead in Seattle the lifetime value of a tattoo removal patient must be around $1000 to $1,500. In LA, in order to justify the cost of $140 per lead the value of the tattoo removal patient must be 3X that of Seattle: $3,000 to $4,5000.
This is crystal clear for me. The thing that gets me is that Tattoo Removal clinics in LA are charging $49 per sq inch for service, this is the same as Seattle. If the demand in the CPC market in LA drove the price up 3X that of Seattle, why have the prices not followed?
I’m interested to know your thoughts on this one as well. If the market is demanding a high CPC, why has this not effected the pricing by the service providers?