Several business owners have been at this exact spot, saying to themselves, “It’s going to cost HOW much?!” They have just received a quote from a development firm for their new website and it starts with six and ends with three zeros. The immediate thought is, “But this website isn’t that complicated! I’m just a small business; I’m not trying to be Amazon.” It can be a frustrating and very opaque experience having a website quoted.
I hope this article will give business owners a sense of how much a website should cost for their business by taking into account all of the avenues available today. The first question is: “Well, is $6,000 really how much it costs or are they just trying to rip me off?” The answer? It depends. I know, I know, that sounds like a cop-out, but it really does depend on multiple factors. With that said, I’ll take an in-depth look at this topic and discuss tips to let a business owner understand the cost of developing a website.
Websites have never been more important for businesses than they are today. They’ve also never been more available. The industry of web development is massively competitive, with the existing large development firms competing with smaller startup firms that have seen a widening gap in the market (I’ll raise my hand as an entrepreneur in that space); the ultra low-cost, custom-built solutions from very large hosting companies; and the plethora of self-builder services. I’ll look at all of these different services and suggest practical price points for website development from each one.
Large Development Firms
Large development firms are generally the most difficult to nail down a price range. Their willingness to work with businesses of various sizes will almost always depend on market conditions. If times are good, they will pursue larger contracts over smaller contracts, obviously. If times are not so good, they will be more willing to develop projects for smaller companies. A quick Google for “web design firms” will return dozens of candidates to develop a project, all of which have a “request a quote” button on their webpage.
Keep in mind that, generally, the larger the firm, the higher the overhead, and the higher the “hourly” rate. In any technical field, project managers will set an hourly rate on a project and then estimate the hours, incorporating what is known as a “manager’s reserve”, or a bucket of extra time. In addition, it is generally necessary to have an hourly rate in excess of $100 and more often in excess of $200 to pay the staff, keep the lights on, and make a healthy profit.
Black Tag Design is based in Northern Virginia, just outside of Washington D.C., so I decided to do some research on average pay for various positions within a web development and design firm in the D.C. area. See the chart below for what I found (keep in mind this isn’t exactly scientific, but it’s useful).
The chart shows $42 for every man-hour, on average, just to pay team members. That doesn’t include the additional costs for the company to employ that person. According to some metrics, it can cost more than 2.5 times an employee’s base salary to employ that person (http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-cost.html). OUCH! That drives the company’s hourly rate up to about $105 per hour JUST TO PAY THEIR PEOPLE! Now, this number is far from scientific and may be high (or low), but it’s at least a rough starting point. Other factors will come into play, including the distribution of hours on a given project. Generally, junior team members will be tasked with some of the more time-consuming and menial work, thus lowering costs. Business owners looking to have a website developed have, most-likely, experienced similar operational costs.
Where does this leave the business owner? A development project will range anywhere from approximately 40 man-hours on the lowest end, up to thousands of hours for enterprise-level solutions. This is why it’s so hard to give an estimate of what a large firm will charge. If they are struggling for business and want to work on a smaller project, a business owner should expect to pay a minimum $200/hour for 40 hours to work with that development firm. Generally, if times aren’t bad, large firms are only interested in contracts that will be greater than $10,000.
Conclusion: Expect a range from $8,000 to A lot more than $8,000 (I’m looking at you, ACA Website)
Smaller Development Firms
One of the newer additions to the development space is the small development firm trying to fill the gap between the “they built my website for free!” (as seen on TV) developers of the world and the constricted cost structure of the larger firms. I’ll speak of this space from the perspective of my company, Black Tag Design. This space is becoming extremely competitive for the larger firms because of the flexibility that these small development firm business models allow. Generally, small business owners are engaged and active in all aspects of their business. For this reason, a lot of these small development firms are employing a more collaborative approach to development; I call it a hybrid development model.
Ooh, fancy- hybrid- it sounds exotic. What does it mean? Many times, larger firms are a 100% handled solution, including: photography, copywriting, design, and development. This gives them complete control over the project, but it also increases their development hours. By collaborating with business owners, smaller firms are able to ask the client to provide photography and copy to reduce their hourly load. Obviously, this only works if the client is willing to put in some work gathering photography and copy for the project. That equals savings right from the start. Any client who has had an interview with me knows that two of the questions I always ask are, “Do you have well-written marketing material,” and, “Do you have any high-quality photography?” Those are important questions that can account for 10-15 hours of time on the most basic of websites.
Let’s look at the costs to develop with these firms. Generally, they have fewer staff and lower overhead, allowing them, hypothetically, to operate at around $150/hour. That’s a significant reduction in the hourly cost. Using the collaborative development concept, a client who is willing to contribute copy and photography to the project will reduce hours by 25-35%. Looking at the basic case from the large development firm example, 40 hours is now reduced to 25-30, and basic cost is reduced from $200 to $150. The final project total is approximately $4000.
Conclusion: Expect somewhere in the $4000 range.
A note for both the large firm example and the small firm example:
The figures listed above don’t take into account spreading costs into an extended contract. This is a common occurrence in the industry. If the contract is structured well, it can be a really great benefit for the client. As an example, one of our basic web development contracts at Black Tag Design is $2000 plus $100/month for 24 months for basic maintenance. Total contract value? $4400. That falls within the range listed above and offers extended service for a $400 premium. Now, in the litigious society that we live in, I have to say that this is not a price guarantee and your project may not fall within this range, this was just presented as an example of how companies will spread cost over time.
As Seen on TV Custom Built Solutions
These as-seen-on-TV solutions have been expanding rapidly in the last few years. With the ease of outsourcing information, these firms can offer a ton of services for a fairly low cost. There is a litany of ways that these companies could lower their costs, including outsourcing, economy of scale, or tightly controlled design templates for their engineers to use. These services have some great benefits, but also some big downfalls.
I recently called one of the bigger players in this space, web.com, on a fact-finding mission. I’m going to detail out everything that I learned in my 10-minute phone call. Please note that I am in no way affiliated with web.com or any of its companies and that this is strictly my opinion.
I called web.com and said I was a writer named Brad, interested in getting a website developed for my new book (I had to be something, right?). I spoke with a representative who had a very polished presentation of their services. The services included development, web optimization, site map submissions, local registry submissions, and marketing assistance. The sheer volume of the places that web.com was going to submit my site (Yelp, Google Places, etc.) was, in my mind, one of the greatest benefits of their service.
The representative then told me the website would be developed for free and if I liked it, they would host it and continue to support it for $114.95/month. I was told that, because I had called them in reference to one of their TV ads, they would waive their design fee. Out of curiosity, I asked what the design fee normally was, and the response was $2500. Now, I have a sneaking suspicion that very few people ever pay that $2500, but we’ll include it in our analysis just for completeness’ sake. I asked what the termination fee was and the response was that there is no termination fee, but that if I wanted to keep my website it would cost $1000 to buy it outright and that they would continue to provide marketing for $91.95/month.
I cannot comment on the quality of the product that a service like this creates, as I have never personally had a website developed by them, and as far as I can tell, they have no “portfolio” to browse. However, I can say that the level of interaction and service that this style of development affords is far below what a dedicated firm can provide. For some companies, this could be a great solution, for others, it may be found lacking.
Conclusion: $0-$2500 and $115/month
I’ll start by just getting it off my chest…these build-it-yourself solutions are sophisticated and slick. Companies like SquareSpace, Wix, and, to a lesser degree, GoDaddy, have made some really nice builders. They present the biggest challenge to firms like mine. Some of them present very clean user interfaces, nice templates to work from, and attractive cost structures, usually between $10 and $30 per month. I’m going to break these down and tell you all about my competition!
Build-it-yourself programs are an advent of modern web technologies that have a much more “native” interface. What do I mean by that? They behave like an app on your smartphone or a piece of software on your computer. A lot of these systems are drag-and-drop assemblies that allow you to create, to a basic degree, almost any layout that you can imagine. And that PRICE! ($30 per month for the full monty). There are some obvious perks to these services, but they do have limitations.
These services can only build very basic websites. By their nature, they have been built to serve the highest number of people in the easiest way possible. “Easy” also means “constrained.” One of the biggest downfalls of these drag-and-drop solutions is the lack of flexibility to do exactly what you want. To some, this isn’t an issue, while to others, it’s a problem. This isn’t the biggest problem with the self-builders, however. The biggest problem isn’t really a problem with the builder, at all- it’s a problem with the user.
What is an hour of your time worth? $20? $50? $150? $400 (if you’re a good lawyer, I might need one after that web.com section)? Not knowing this figure is one of the biggest problems with the self-builders and business transactions in general. We’ve all seen that commercial for a printing company which will remain unnamed, “I own my own business, if I see something I can do myself…I’m going to do it!” That’s the worst advice I’ve ever heard, and it most definitely applies here. If you’re not from a design background and don’t have high quality photo editing software, access to graphic design software, and a fairly in-depth understanding of the internet in general, expect to spend 40 hours or more on a self-builder creating your site (if you’re a perfectionist, like me). Expect to spend anywhere from 20-75 dollars a piece for stock photography, if you don’t have any. What does that add up to?
Let’s assume you value your time at around $75 an hour and you’ll need five stock photographs for your site at around $40 a piece. That’s $3000 worth of time and $200 in photos. $3200 and you’re just getting off the ground. Now, that may seem a little bit high, and maybe it is for you, but if you’re not aware of what your hourly rate is, these builders can be a magical experience or a money pit. It’s also worth noting that most of these services don’t let you take the website outside of their environment. Once you build a website on their service, it stays on their service.
Conclusion: This is entirely up to you. Understanding what your time is worth will be the biggest factor in forming a conclusion on these self builders.
I wrote this article to help educate business owners on one of my most commonly asked question – the true cost of a website. I’ve tried to be as unbiased as possible, but I’m going to have my bias, I obviously think my company is the best in the space for small business. There are so many solutions out there that it’s impossible to say which one is best for any given client. My advice? Spend an hour, look at two or three firms (one or two plus Black Tag Design, obviously), and ask for a rough quote by email. Think about what your time is worth and look at some of the website self-builders. Two hours of research can make a huge difference in your business and how your business grows.