How much would you charge per click?

[Catfish]

I am about to strike a deal with a company to drive traffic to their website through my own website. The story is they are to stupid to SEO-optimize their own website in order to rank in Google for the right keywords, and they fail to do something about it by themselves. They just don't want to invest like 10k$ for SEO to get an extra xxk hits to their site. (It's a 2000 bed holiday hotel).
So, I offer them a deal - I do that on my own website, set up a couple of pages for the keywords that I think are relevant, and charge them for the click-throughs.
My guess is that they will have a conversion rate of 0,5-1%, a conversion being a booking for one week at the hotel, average revenue for the hotel between 500$ and 1500$ per week, depending on the time of the season.

That said, how much would you charge per click here?

[MPC]

< evil plot>
I'm no expert, but here's an idea (assuming the hotel has not clue about PPC campains). Look at google's PPC pricing for those targeted keywords. Buy those yourself pointing them to a redirect page. Send them directly to the hotel's site which would mean 100% of the clicks you bought make it to the hotel's site. If you pay $0.02 per click, charge the hotel $0.04. Double your money with each click.
< /evil plot>

[Randy Ray]

A typical hotel commission for a travel agent is 10% or so. So assume that each reservation is worth $50-$150 each and work backward to find a cost per click. Then ask for twice that and see what they come back with.

[doovde]

A typical hotel commission for a travel agent is 10% or so. So assume that each reservation is worth $50-$150 each and work backward to find a cost per click. Then ask for twice that and see what they come back with.

I'm liking this thinking!

[Catfish]

< evil plot>
I'm no expert, but here's an idea (assuming the hotel has not clue about PPC campains). Look at google's PPC pricing for those targeted keywords. Buy those yourself pointing them to a redirect page. Send them directly to the hotel's site which would mean 100% of the clicks you bought make it to the hotel's site. If you pay $0.02 per click, charge the hotel $0.04. Double your money with each click.
< /evil plot>

That is something I didnt think about, but I will certainly consider it. I like the way you think OPC .And they are totally clueless when it comes to online marketing indeed. They do not even have their own online booking engine on the website, so I could just as well handle that for them, process those online bookings for a commission, put an affiliate link for flight booking with thomascook.com on my site, and make a ton of money.
But even with genuine traffic for keywords like family hotel, sport hotel, golf resort etc. it shouldn't be too difficult to rank high in Google, and the Google keyword tools say x00.000 searches for some keywords.

[Catfish]

A typical hotel commission for a travel agent is 10% or so. So assume that each reservation is worth $50-$150 each and work backward to find a cost per click. Then ask for twice that and see what they come back with.

The unknown factor will be the conversion rate.
My first thought was 0,5% conversion rate, 1 conversion worth an average of $80, so 200 clicks = $80, which would be $0,40 per click. But I thought that must be way too high.
On the other hand, as of today, my website gets app. 10k hits per year for keywords like tennis hotel, tennis training camp, etc.
Effectively, the number of additional guests coming for tennis after I set up the website was like 300 more guests per year. So that's technically a conversion rate of 3%. Not sure whether those 300 guests came in through the website only, because I used some print media for marketing as well, so if I cut that in half, I still have a conversion rate of 1,5%.
But in this industry I guess that with more hits for keywords that get less and less specific, the conversion rate will be lower at the end.

So I guess that, taking Randy's advice, I'll go for something like $0,20 per click, see the reaction and go from there.

[Mr-AJ]

0,5 Euro (!) is a usuael CPC rate for those areas. I know a lot of companies that would be happy to work with 0,4 and 0,2 is still lower. But you have to send quality traffic that should be the most important factor.

[Catfish]

0,5 Euro (!) is a usuael CPC rate for those areas. I know a lot of companies that would be happy to work with 0,4 and 0,2 is still lower. But you have to send quality traffic that should be the most important factor.

Hmm so maybe 0,20 € is a bit low. But as I said, the quality of the traffic will be mixed, because I will create a lot of SEO'd subpages for all kinds of activities offered by the hotel, all keywords combined with the terms hotel, resort. The conversion rate will vary greatly depending on which kind of activity
On the upside of things, once there is traffic and bookings are coming in, terms can always be renegotiated depending on the quality.
Or, since we have sales offices in the UK, Germany and Russia, I could integrate something like a booking engine or request form which sends requests and bookings to the sales offices, cc to me and charge extra for those contacts, or charge a 10% commission for any actual booking?