How Much is a Site Worth?
Every web designer that I know (and I know quite a few) is frequently asked “how much does a website cost?”. The question is a complicated one since it depends on many factors. I like the analogous question “how much does a car cost?”. The answer depends on whether the vehicle you want is a brand new Ferrari or a 1972 Robin Reliant. Website costs vary just as much, and some people will build you a website for £400 and others will charge you hundreds of thousands, if not millions of pounds depending on who you hire and the specifications of the brief.
When I first started working as a freelance web designer, about 10 years ago, I was extremely naive. It was only several years later that I realised just how much I had undervalued my own position as a web professional. I was building websites for just £500 each and earning less than the minimum wage. To be fair, I wasn’t very good initially – and counter to popular opinion it takes a long time to become a professional web designer. Regardless, it didn’t seem right that after spending over 6 years in further and higher education that I should be earning less than a bin man. (No disrespect to the bin men, they are the smart ones for they didn’t spend a decade training how to do their jobs before receiving their first pay cheque.)
What was the point of all of that work, and even worst, the tens of thousands of pounds of debt I had acquired paying for this so very expensive education. Even as a lone freelancer and with my then minimal overheads my earnings did not cover my bills and I supplemented my income with a (better paying) part time job. It didn’t occur to me that I was actually worth more than £5 per hour, after all I loved building websites. In time as I become more experienced in the art of running a business I gradually put my prices up to cover my expenses and make a marginal profit in-line with the local competition. I was eventually able to rent an office and take on staff whilst continuing to offer a constantly improving service at a reasonable price.
Those early learning years are long gone, but just recently painful old memories came to surface. A couple of months back I was rather surprised by what a potential client said to my partner in a meeting. She was told that the client wanted a 5-10 page website and a logo designed all within the set budget of £300. When asked where he had got that particular figure from he stated that it just seemed about right. Essentially, that was what a website was worth to him, it’s intrinsic value. Regrettably we had to turn the client down, explaining that although we do work on smaller sites sometimes, the logo design alone would cost more than his entire budget. Incidentally, a logo is more than just a graphic, it is the basis for a whole company’s corporate image. It should have some innate value placed upon it. Regardless, we are able to offer quality logo design at a very competitive price, which is slightly more than our would be client considered was the value of a website.
What do people other people think?
This got me thinking. What value do people that do not understand the process of web design place on a website? To find out, I posted this question as a poll on my Facebook page and asked everyone I knew that did not work in the web design industry. The results were fascinating, if not a little alarming.
I asked the following question:
“How much does it cost to build an updateable (text and images) 10 page website with logo. I would appreciate it if you could list how long it would take to build as well.”
The question is purposefully vague (and besides Facebook doesn’t allow you to use more than a couple of sentences!) since I was hoping to measure people’s overall perceptions of value rather than get bogged down with technicalities. To a web designer the question is also rather open to interpretation – I did not state whether the content would be updated via a custom built content management or by using cheaper third party components. I don’t claim this poll is particularly scientific, however it does shed some insight into how my friends at least value websites.
The answers ranged for just £8 to £4000 with a mean average cost of £737. Over half of the people that answered valued the cost of such a website under £500. Furthermore, 85% estimated below what we would charge for such a website. Even more interesting than the actual results were people’s comments. Here are some that nicely demonstrate how people value a website.
“I think £100-£200, and if I had Dreamweaver I’d knock up the basic design in a day or so and take perhaps a week or two to refine the look with images, text and sounds. ”
“I chose £200-£500 assuming I’m allowed to use ready made scripts to do the updatable part rather than writing the code from hand. Also, it can be done cheaper, just depends how much you want to be paid. If I was down on my luck I’d do it for £50.”
“I’m really not sure what would be involved Harry, but for something simple I would have thought about 8 – 16 hours work? £200-500 in total and around £100 for the logo. This is purely a guess though. ”
“I have literally no idea how long it would take. I imagine it would involve an incredible amount of work so I am guessing £1500-2500 based on the fact your website wouldn’t be the only one the designer was working on it would be a while. ”
This last one is actually the most accurate, and if we were to quote on such a project we would probably quote around the £2000-2500 mark. Reassuringly, this person seems to understand that there is a lot of work involved. In terms of our pricing, we are about average in the city we are based – some people are slightly cheaper and some are more expensive. Also, I think we are probably about average for a medium sized web company based in a large town or small city. In our city, I know of one company that would charge £250 for the hosting, £50 for the domain name and £75 for the initial consultation, already maxing out the budget of the client that we had to turn down – even before any actual web development work has been undertaken. A larger company in a bigger city such as Birmingham or London would charge 2 or 3 times more and in contrast you could probably get a freelancer at the start of their career to develop such a site for around half of our rate since they would have few overheads and a keen interest in building up their portfolio. A student would cost even less.
You get what you pay for at the end of the day.
About our costing
It is very interesting to note that everyone of my friends that gave an explanation with their vote calculated the price purely in terms of work per hour. No one put any value on the website itself, or worried about overheads such as staffing and software licensing. I certainly didn’t see anyone factoring in decades of training into the equation. It seems the main perquisite is owning a copy of Dreamweaver (which incidentally costs hundreds of pounds).
To give you a real idea of how we come to the figure mentioned above, the following factors must be considered as they are preformed by all decent web design companies (although of course, prices would vary company to company – I have just used averages).
- Initial phone consultation
- 1-2 hours research and planning
- Initial face to face consultation
- 2-3 hours further research and planning in preparation to the brief/proposal
- Brief/proposal to be written up and posted with contract
- Hosting, domain name and email set up at around a cost of £100-200
- Content provision/sourcing
- Possible hire of photographer at £350-500 per day
- Initial designs on logo and website
- 2-4 rounds of revisions for logo and web design
(2-3 weeks hire of web and logo designers at around £20-75 per hour each) - Development of Content Management System
(1-2 weeks hire of web developer (programmer) £20-75 per hour) - 2-3 days testing
- Launch
Additionally, every company has to pay for offices, accountancy fees, broadband, computers, software, heating, staff wages, phone costs, call minding services, transport etc. Looking at the above list it amazes me that people generally value a website considerably lower than it’s raw costs, not even counting any intrinsic value. Maybe this is because websites are not tangible things and they are not widely understood, however since everyone uses the internet daily, everybody feels they should know the value. It is certainly interesting to note than many people don’t blink at a plumber charging £300 to fix a broken pipe, whereas they may expect a whole team of trained web designers to work for over a month for less than £500 (admittedly, this is normally, but not always on more than one project at a time).
Is this a little unfair?
Perhaps it is a bit much to expect people that have never worked in this industry to understand the costs involved in creating a website. Indeed, most of the work done is never even seen by the client or end user – the vast majority of the work done any any website was done in the proceeding years while the designer trained and practised his or her craft! Perhaps also it takes years of working in the business to realise that there is a lot more to a website than merely “design and build”. I wonder how accurate I would be estimating the costs involved in something I have never worked on before. I doubt very much that I would expect an experienced architect to design me a house for £200, and part of me wonders would my Facebook friends give this job more value than a website because a house is tangible.
Conclusion
To be honest, it doesn’t really matter what the average person in the street or on Facebook thinks about the value of a website as far as our business is concerned. However, I am concerned that there is a wider problem here. We are all so reliant on technology such as the internet, yet only a very few people (once called geeks) seem to understand this technologies’ worth. They have this understanding because they are part of the technology drive, a demand ultimately caused by the average guy in the street who does not understand it fully.
As I say, this does not really affect us significantly though – it merely interests me. Typically potential clients that have found us already know the approximate cost of a website. We tend to work with already established owners of businesses, most of whom have already hired web designers in the past. As a provider of a bespoke services, we are lucky in the fact that we can choose the clients we work with, and we like to think that most of them value us as much as we do them.
I would love to hear your comments on this matter.
Chris
on June 14th, 2011
Great blog entry. The more a piece of commercial creative work can be broken down into time scales, materials and expertise the more it validates itself to the client. The more the client can get involved in seeing the physical process unfold. Once all of this can be seen in a non-abstracted way, with no smoke and mirrors the clients will be much happier with the service. If you can also prove to new clients how much previous clients’ revenue has expanded since completing a website for them, surely it should be a no-brainer for the new clients. All is then as quantifiable as it can be.
Davy
on June 15th, 2011
The thing is it totally depends on how much time you’re going to put in, what quality they’re willing to accept and what additional things they require from you (the original question made no mention of hosting costs or photography costs or domain name costs. Just buliding a website.)
If somebody sent me the text for the ten pages I could make a basic template and send it back to them in a day. As for a logo, it totally depends on what they’re willing to pay. It’s easy to make a logo in 20 minutes. It just won’t be very good. But if the person has a £300 budget then clearly they’re not paying for quality.
Consultations and the like are of course going to add to the cost but I wouldn’t call that building a website, my quote was purely for the time it’d take to build the site
In practice I remember making one 5 page site, I emailed them a couple of times to send me the content I needed and clarify some details. I then built the site with a reasonable logo (considering what they were using until then) in about 5 hours tops. Then it was just a matter of asking if they had a host of their own or if they wanted me to sort that out for them at a cost of X extra a year.
Now I had no office, or income tax returns to file and it was an unusually undemanding job, but I still ended up making like £15 an hour and only charging £100 for the site. Not indicative of all jobs, but I think it shows it’s not so crazy for the uninitiated person to think about £300 “feels right” especially if they haven’t considered the extra costs you mentioned (which I didn’t when I heard the question originally).
Nice, well written article btw!
Voodoochilli
on June 16th, 2011
Thank you both for your comments.
Davy, yes my question was deliberately vague. If you asked a professional web designer the same question they would consider photography and hosting costs as well as many others that I haven’t listed since they are fully aware of all of the costs. The whole point of asking non web designers was to see if they were aware of the real costs. It is interesting that everyone I asked only considered time as the only chargeable cost involved. I think my main point here regarding costings is that the biggest single factor to affect the cost of a website, is not the raw costs and time, but rather the experience of the team creating it. You could argue there are raw costs involved in that, however my point is that this experiences has value in it’s own right.
As Davy says, it is possible to make a logo in 20 minutes, however, most likely it won’t be very good. Any logo designer worth his salt doesn’t “knock something up” in 20 minutes, but rather would spend a considerable amount of time researching the client’s needs, competition etc., etc. even before actually sketching on paper or creating anything on a computer. Incidentally, £300 is cheap for a logo. We charge £350 and only if it’s part of a larger website build. We probably wouldn’t consider the job worth doing on it’s own because of the initial costs of running any project (meetings with client, travel expensive, research, phone consultations, meetings with designer etc etc). As mentioned in my article, the logo is far more than a few pixels, it is the basis for a company’s entire corporate image. When you sell it to the client, you are not only selling the work involved you are selling the rights to it’s use and reuse. Just look at the new Olympics logo which cost £400,000 – and it’s been confused with to Lisa Simpson doing something…! A good analogy is a celebrity photograph – it might only cost a few hundred pounds in raw costs to create a photo of David and Victoria Beckham doing something important (actually more like a couple of grand, although no doubt the paparazzi have lower costs), however when it is being sold to Hello Magazine the chief editor doesn’t say “Well, I have a camera on my phone and it only takes a second to press the little button”. He or she knows it’s intrinsic value and pays for it accordingly as well as the fact that the photographer is most likely better at photography. The quality of this value maybe be a variable factor depending on the skills of the photographer and the cost of the equipment, but the vast majority of it’s value is down to the subject itself and it’s innate value to the person buying it. I know this is a weird concept to get ones head around and it makes more sense to just equate value as time = money, but it is far more complex than that.
I completely understand why web designers starting out work for very little, they have no choice in the matter. They need a way of improving their skills and building up a portfolio and this is sometimes a great way of a start-up company getting a very cheap, and sometimes surprisingly decent website. It is very hit and miss though. My first few websites were done complexly free of charge. However, having now built well over 100 websites and having a firmer grasp on the costs involved I know exactly how much we must charge to make a profit. We still build some websites for essentially free – we offer a 50% discount (up to £1000) to registered charities, and what little they pay us merely covers our costs. Having charities on our portfolio is value in itself and it gives us a nice warm feeling in our tummies!
After doing this bit of research I do think I have a better understanding of why people think the way they do about costs, and this is particularly down to the kind people that took the time to reply to my poll with comments. Someone that does not work in the web design industry simply cannot have a full grasp of the costs unless they have hired web designers already. I suspect this is not something that will change any time soon, however, as I said in my article, it is not something that we have to worry about immediately and most of our clients are well aware of the cost’s involved (we rarely get turned down after a pitch due to costs, and in fact often win a pitch against several over designers because we are the best value for money).
Also, here are some interesting links I have found that may be interesting to others.
http://www.logodesignlove.com/how-much-does-logo-design-cost (in the comments people have listed how much they charge for logo designs)
http://www.jpink.co.uk/blog/2010/05/05/how-much-should-a-logo-cost/ (Interesting article about logo costs)
http://www.voodoochilli.com/costs.php (Our own costing page)
Grant
on August 3rd, 2011
Interesting read – thanks.
I’ve been interested in this topic too. Mainly due to wanting to stay in touch with how the web design/marketing industry is changing with regard to what service charges are acceptable these days. I’m sure we all know the value of what we help people achieve with their web presence, but is finding the clients that value it accurately like finding a needle in a haystack these days? Has an influx of more companies in our industry changed what we are allowed to charge for our services due to too many people ‘dropping their pants’ at the first sign of competition and immediately undervaluing what they do, which is just poor salesmanship?
I’ve been in other industries where margin made on commodity products has been very healthy one minute and disappeared within 12 months due to everyone ‘jumping on the bandwagon’. Or is the current climate keeping people more cautious? it sure is more challenging currently.
It seems to me that personality is the key; personality of the people within a business that you might work with. It would be a trial and error process of reluctantly turning away the personality type that thinks we’re worth £300, until you find the personality type that has an accurate value of what we do.
I’ve still not decided whether or not there is any value in trying really hard to change people’s perceptions of what web design/log/marketing services should be worth either. Once £300 is in their mind, what percentage of people will really listen and accept that its way under value? I’ve engaged in conversation in the past with getting a grasp on what the potential clients product or service sells for. And how many they expect the new website to help convert. On a regular basis what the client will make from their enquiries will dwarf £300, and could even be viewed as a bit of an insult to expect to invest £300 and get a million percent ROI.
As you point out, I guess the geographical location is a factor too in what you can charge.
Good point made about breaking down the costs too, to expel any mystery in how the cost came together.
Cheers,
Grant