How much should a website cost?

Twice this week I have been asked the same question: what should I pay for a website? Twice this week I have given the same answer: that’s the wrong question…!

The reason it is the wrong question is that it is treating the website as though it were a “one-off” cost, rather like printing a brochure. However, there are some stark facts about websites that emerge from a variety of studies.

It turns out, for instance, that almost 90% of all purchases – products and services – start online. Yet 85% of all items are bought offline, in the real world. Even though trillions of pounds are spent online, that’s only about 15% of what we buy. For almost everything we buy in the real world, we start that purchasing journey online.

You have done this yourself. You want to buy a new car, so you visit several websites before going to the dealer. You are thinking of changing your accountant, so you look at several online before going to meet them. Or you want to get an office cleaner, so you check out the options online before asking a couple of companies to come in and pitch for your business. If you think about it, almost everything you buy these days involves the Internet in some way.

What this means for many companies is that their website is a “sales prevention tool”. You can only tell how much money you earned from your website; you cannot work out how much business walked away because they didn’t like what they viewed about you online. In other words, no matter what business you are in, your website is crucial in ensuring you gain trade. Therefore treating a website as a “one-off”, rather like an item of printing, is to entirely miss the point about the value and place of your website in your entire operation.

Even so, you still need to understand costs and budget appropriately, of course. However, the cost of your website needs to include content creation, search engine marketing, social media management and so on. These are all costs related to your website; they are not separate items because they should be leading potential business back to your website. 

The price of designing the website itself can vary, of course. Indeed, you can get free websites, or you can spend more than £1m on a site. And that’s why people ask me the question about “how much should a website cost?” They are trying to work out where the “typical” price falls. Do they need to budget £500, or £50,000? With such enormous variations in pricing, it is too complicated to work out what to spend.

That works in favour of web designers, of course. If companies do not know what the “right price” is, then there is the possibility that web development firms can charge what they like. The result is that people may be charged £5,000 for a website when all they needed was something costing £500. Therein lies the basis of the question I was asked this week.

The solution to the conundrum is to ask a different question: what income do I want my website to generate? Start at the other end of the financial equation. What profit do you want your website to make? How many items do you want to sell from your website? Think from the “outputs” side of the equation, not the “inputs” side.

Let’s imagine you are a firm of management consultants. You want your website to produce 12 projects a year at an average income of £10,000 each. That’s one project a month. Typically, only 1% of people who visit a website take action, and of them only 1% buy. So, to get one person a month to buy at £10,000 our management consultants need 10,000 qualified visitors per month or around 350 people per day. To get that number of visitors, they will need a couple of pieces of fresh content each day and about 25 social media posts. Plus they will need constant search engine keyword reviews. They’ll also need regular downloadable items, such as “White Papers” to stimulate enough interest to gain the 1% of people they need. However, the website itself only needs to be a simple content site, so the cost of that can be low – the content expenses though will be high.

In contrast, if you are a local market trader and you want to expand online, you want to make an extra £5,000 a month from selling items that cost around £10 each. That’s 500 sales a month which means you need to attract roughly 500,000 visitors. That requires lots of search engine marketing work, perhaps even “pay per click” activity and an online shop that delivers what people want in an instant. Here, the costs of the website involve a shopping cart, an e-commerce database and the ability to connect to SEO tactics easily. Content production costs will be low. 

These two examples show that you can’t ask what the price of a website is. In the first instance for the management consultants, you might only need £500. In the second example, you’d be lucky if you managed to make it work for less than £5,000. So, if I answered the question by saying “£500” and you were the second kind of company, you would not achieve your financial aim. And if you were the first company and I said “£5,000” you also would not achieve your financial aim as you would have overspent.

This is why it is so important to work out what is the value of your website in your business. How much income do you intend deriving from it? That means even if your website costs £20m to develop it won’t matter if you are aiming to generate £21m of income. 

The price of your website is of little relevance. It is what it produces that matters. So, have you worked out what income you want to generate from your website and how you are going to use the Internet to derive that income? Only by doing that can you work out what you need to spend on the website itself. Far too many companies say “we need a new website, let’s see what we can get for £2,000”. They can get a lovely site for that, but much of it might end up being “sales prevention”, which they will never know. The cost of the website is not relevant; the value it produces is the crucial thing to concentrate on because the website is wholly central and fundamental to your business – even if you do not realise it.

17279

Get blog posts like this each week

Sign up to receive my weekly blog digest every Monday

Graham Jones
Graham Jones is an Internet Psychologist who studies the way people use the online world, in particular how people engage with businesses. He uses this knowledge to help companies improve their online connections to their customers and potential customers and offers consultancy, workshops, masterclasses and webinars. He also speaks regularly at conferences and business events. Graham is an award-winning writer and the author of 32 books, several of which are about various aspects of the Internet. For more information connect with me on Google+
Graham Jones

@grahamjones

Graham Jones is an Internet Psychologist, professional speaker and author of 32 books who helps businesses understand the online behaviour of their customers
How to stand out online when everyone and their dog has a website https://t.co/ONQyUhxunr - 27 mins ago
Graham Jones

Leave a Comment

Cover page of free report

Weekly Online Business Advice

FREE

Get FREE advice to boost your online business EVERY

Saturday morning

And get this free booklet too

This site uses cookies

This website uses cookies to improve your experience with the site and to enable some functions to operates. Google Analytics is also used on this site. Please either accept or reject Google Analytics Cookies on this site.