What is a fair price for a website

What is a fair price for a website?

by Allery Scotts Ltd

What really is the price of a website? A detailed enquiry given to a dozen Web authoring companies will lead to top-end estimates 20 times greater than the lowest, with little relationship between the levels of service and quality offered. In general, the larger the company the more it is likely to charge.

What you are after is good work, so the size of the company is not important. If a smaller company can provide the required service, why go to a big one? The Web develops so rapidly that the experience of even the largest company is probably no greater than that of a small one. The construction and development of a website, even a very large one, does not require many staff. In fact, too many people working on a website is usually a recipe for disaster.

Development of a website does not require huge resources. All that is needed is good copywriting, graphics and coding, and a modest computer. True, the necessary skills are high value, but they are just as likely to be found among smaller firms.

Clearly, there is chaos in the marketplace, at least with regard to prices and services. Eventually order will doubtless emerge, but it would do so a lot more quickly if some consensus developed about what is a "fair price".

Assessing basic website costs

One way to assess what is fair is to look at some metrics – numbers derived from real examples of website work.

A competent HTML author should be able to turn out an average of about one finished page an hour, given a proper brief, layout or storyboard. Between five and six images can be processed – scanned, converted and re-sized – an hour, and about four webpages can be audited. So a "fair" expectation would be that a website of 32 pages with 30 images would take about five person-days to write, decorate with scanned artwork, put up and also audit.

Workers in the Web business expect, and get, between £25 and £50 an hour, and some skills can command much higher rates. And that is just take-home pay. The company which employs them will have to put at least 50 per cent on top when charging out their services, just to cover the overheads involved in the whole business of employment.

The Web keeps on advancing of course, and that means there has to be some time set aside for research and development. Less than one day a week per person and the company will risk falling behind, so R&D has to be paid for out of work done in the other four days, in effect producing a 20 per cent loading on any "paying" hours.

So, paying staff at, say £33 an hour to do 40 hours of work means the client has to be charged £2376, just for the company to break even. And all we have produced is a very ordinary site, with some pictures, some text and not a lot else. Add on a moderate profit margin and the bill for our very average site is around the £3000 mark.

This price does not allow for any original graphics. Graphic origination is much more laborious than marking up HTML, and a good designer rarely works for less than £50 an hour (as a take-home rate). It can easily take an entire day to produce a single item, so to include two days of graphic design and rather more complex programming would give a total of around £5000.

Improving your site

So far we have assumed that there is an overall design for the site. If there is no such plan (generally a storyboard or flowchart) one will have to be developed, and preferably it should be "scalable", so that it can be expanded at some later date without requiring a complete rebuild.

A good website designer has to be able to visualise the structure of the entire site in one go, complete with all the linkages, and at the same time be able to "empathise" with potential visitors, anticipating their views of the site. The aim is to produce a scheme that is easy to use, clear, understandable and comprehensive. Not everyone can do this – in fact, it is a rather rare skill and people who are good at it can command very high salaries indeed. Allow at least another £1000 for planning and overall design.

The cost of our website is now hovering around the £6000 mark. The outcome is well designed, useful, comprehensive and clear – but perhaps a little dull. To add some excitement and life to it, you will need some JavaScript (a program that allows sophisticated special effects), maybe some animations, sounds or music, perhaps even video. The sky is really the limit for such improvements, but we will add to our theoretical site an animated menu, a site map, an interactive polling device (all JavaScript) and a single animation to use at various points in the site. A total of two days of JavaScripting and a day of animation work, in all costing about £2500.

Comparing costs with other media

Our average website is now above average but only a little, and it is costing in the region of £8500. It is scalable, it does what we want it to, and it has enough bells and whistles to hold up its head in public. But is that a "fair" price? One way of answering that question is to compare the website with other media.

What would you get if you spent £8500 on a catalogue? Or on a mailshot, radio or television advert? The same £8500 would buy:

direct mail – a four-colour four page leaflet, accompanying letter and reply form, in an envelope, mailed out to about 3500 people
advertising – 30 small advertisements at about £250 a time
radio – 80 cheap slots (the graveyard shift) or about eight prime time slots
TV – about 10 seconds of non prime time, once only. Prime time, about a second.
In that context, £8500 spent on a website is actually very good value for money. The site will last much longer than other types of advertising, it will reach a bigger audience, and it will almost certainly generate more business than any of the other examples described. And if you have been following the numbers, you will see that no one has been making unreasonable profits at any stage, and no one has been paid excessively well.

So far this has been a theoretical exercise. The reality is that, with a few exceptions, most companies are not yet ready to put that kind of money into their first website. Talking to a number of Web designers, it seems that the "average" company envisages spending £2000– £3000 on its first site.

A cheap site – which is badly written, unreliable, unstable and inefficient – is a total waste of money. It will not impress customers, it will not even be usable by about 30 per cent of all potential visitors, and very probably it will not generate any business. But then, you do get what you pay for. The truth is that the Web is cost effective, but not particularly cheap. As a general guide, companies should invest in their websites about the same amount of money as they would invest in any other single medium.

One way to calculate the proper level of investment in website development is to add up your total annual expenditure on:

catalogues and brochures
print advertising
point-of-sale and posters
direct mail
telesales/telemarketing
radio advertising
Then divide this sum by the number of media that you are using. So, a company that spends £10,000 on catalogues/brochures, plus £20,000 on mailshots and £25,000 on advertising, has a total media bill of £55,000. It is using three media – and really it should consider investing about £20,000 on its website.

What would the company get for £20,000 that it would not get for £8,500? Quite a lot – maybe a couple of foreign language versions of the site, or some really fancy visuals, in video or virtual reality. It could improve its coverage to over 95 per cent of Web users by providing a non-frame version of the site to catch all the people still stuck using AOL's browser (several million of them, so not to be sniffed at) and gain much kudos besides by providing a special version of the site for visually-impaired users.

Or it could integrate a live database of products, complete with credit card acceptance and online ordering, and still have enough money left over for the inclusion of some animations.

In other words, a £20,000 website is a much bigger deal than our slightly-above-average £8,500 one. It has the same kind of impact that the other media efforts would have, and can reasonably be expected to generate sufficient returns to do more than simply pay for itself, and thus justify its existence. The £8500 site should at least break even, but the cheap £2000- £3000 version is just a starting point, and in itself is unlikely to produce much return.

Allery Scotts are Internet consultants. A longer version of this feature, and many others, appears on their e-business website.

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