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What kind of website quotation to expect, and how to avoid a heart attack

What kind of website quotation to expect, and how to avoid a heart attack

Most people have no idea how much a website costs, or they think they do but don't. So when it comes to getting their website quotation they can be unprepared for it.

So how much do they cost? The best response I've seen is “the same as a car”, because it summarises so well that there is actually a huge range of price and quality. A website typically cost somewhere between $500 and $100,000, with an average somewhere around $4,500.

Explaining pricing can be really difficult for us in the industry, as a quick Google for appropriate terms will find a landscape dominated by quotes for a few hundred dollars. There are four main reasons for this:

  • On the low end, web designers often give fixed packages, kind of like a factory line, so they are able to throw out numbers like companies who provide a custom service can't.

  • Quite a few companies give their absolute minimum price (for something that would almost certainly be horribly inadequate), and put the word “from” in-front of it. I've had conversations with people who do this and they freely admit how they operate: this is really misleading to customers in my opinion.

  • A lot of customers are price sensitive above anything else, and often these are the same people who just want to make a quick decision. The SEO & adwords fuelled sales ecosystem drives this: companies optimize and advertise for people to get drawn into a sales funnel, give them a low quote for a quick low-quality service, and sell-sell-sell.

  • The people who give up-front pricing are usually the ones who consider themselves cheapest (ocProducts is an exception – we're about average in our pricing, but a desire to be open and to empower our users and customers is at our core).

Why does it cost this much more for a decent web design then?

Let's move on from the car analogy, to my other favourite analogy: construction. The really low end website is like a garden shed, and the really high end website is like a palace. The shed is cheap because it is mass-produced, small, simple, and has cheap materials. The palace is individually architected, vast, has exquisite detailing, and is made to the finest standards. That's exactly how web-sites are: once you have something a bit bigger, that does a bit more, has a much higher design fidelity, and is tuned for a particular business, it gets a lot more costly. Most people go for a happy balance of quality that puts the price around the average: a good competitive quality that reflects a strong modern brand image. To go back to the construction analogy: a clean well-furnished modern store for their business.

This is all just good business sense, applied to the ever-advancing medium that is the Internet.

Unfortunately though, there is a lot of misunderstanding, for the following reasons:
  • most things on the Internet are free to users (because Internet companies have relatively low variable costs and prioritise International dominance above getting their investment back). This makes it look like online things free to provide.
  • it's hard to really get a 'feel' for where the money is spent (like you can with a building).
  • there are so many low prices advertised (see the opening section).
  • there are a lot of DIY tools and open discussions between experienced people using them.
  • a lot of people purchasing websites don't have business experience and know how much things cost when done individually to order (the gap between these kinds of things, and the other things you normally purchase in life, is absolutely huge).
  • some really high quality tools (such as ocPortal) are free, and they do a lot, so therefore making new functionality to a similar level of sophistication must be very cheap. The reality is that these tools have had huge amounts of time and money invested in them.
  • web hosting is cheap.

How much does the website for an online business cost to make?

A lot goes unsaid about online businesses, regarding who makes money, how much stuff costs, what is successful, and so on. Companies/entrepreneurs generally don't talk about things that relate to the internals of their business if it gives hints to competitors or if it makes them look at all weak, so when you go and read the blogs of these companies, you'll get a really slanted look at their situation.

Some people invest a lot of money in their businesses (often from Venture Capital Funds) but find nowhere near the users needed to be profitable, but stay open because the investment is already made (it's not like in the real world, where you couldn't pay the rent any more). And of course, many companies really hit home and make a lot of money. My point is, it's really hard to tell an online business's costs and profitability without talking directly to the website owner or examining their financial records.

I can say this though: typically an online business invests at least five times as much in their website than an offline business that mainly has a website just to maintain an online presence.

We often get people coming to us with huge feature lists, wanting us to create the next Facebook for them. Here's a truth that needs to be told: to create something like Facebook (even with something as vast and powerful as ocPortal for a base), you are talking tens of millions of dollars on designers and engineers, and probably a lot more on infrastructure (data centres, bandwidth, and so on). There's no way around all this: the gap between any out-of-the-box CMS system and something like Facebook, in terms of the required design/branding work and in terms of achieving massive scalable architecture, can not be seen by comparing feature lists. Set your ambitions high, but you need to start simple with a more niche-focused business model, and then build up either through organic growth or through seeking external investment.

The cost of design and branding

It's definitely true that design standards have gone up immensely in recent years.

There is a very fast pace of competition, but I would say that design really accelerated with the Apple iPhone: it didn't happen immediately, but once the inspiration got through the design cycles of other companies a whole new level of quality became expected. Also to some extent it is being driven by “HTML5” (and before that, “AJAX”).

It needs to be clearly understood that there is huge cost behind these raising design standards, and this affects you particularly if you are creating an online business (where the level of fancy interaction required will likely be quite vast). Companies make huge investments to cover design requirements because unfortunately it is not not something CMSs like ocPortal can provide automatically like they can with functionality. There are two reasons for this:

  1. It's extremely costly. A good programmer can use smart techniques to create a system like ocPortal at a much more efficient cost compared to what might come out of a corporate, but smarts won't make great design cheap - it requires intricate consideration in a human (i.e. non-abstract) context for each and every specific interface element. Also, great design is hard to crowdsource, so even the community-developed CMSs can't make this happen by distributing out the costs.

  2. Great design is not a generic pluggable thing like functionality can be. It has to be done individually for each particular case, applied cohesively to create a unique and appropriate brand impression that ties a particular arrangement of elements together correctly. It's not modular, and it's not "out of the box" (things like discussion forums, or shopping carts, are an exception, as these are generics and can be designed accordingly).

Further resources

Here are some links I've collected over the years that talk about website quotation, to help you get a balanced perspective:

This was article 7 of 8 in my "Web industry Exposé" series of blog posts.

If you think it's good advice, please share this link with others. If you think I'm wrong or have something to say, please discuss below.

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