This post is part of our ongoing Digital Strategy Notes series.

In this episode of Digital Strategy Notes, John Gough, Dallin Harris, and Kyle Theisen discuss the question “How much should I spend on my website?”

From a recommended dollar figure, to why interactive services are priced the way they are, and why it’s critical to share your budget with your vendor, we explore the various facets of planning a website budget.

[bctt tweet=”‘Are we building Kia or Rolls-Royce?’ Share your budget w/ your team to help set good expectations.” username=”SkyhookInt”]

Transcript:

John:
Hi, everybody. My name is John Gough, and these are Digital Strategy Notes from Skyhook Interactive. Today I’m here with Dallin Harris, who is a principal here at Skyhook in charge of new business, and Kyle Theisen, who’s our studio manager, formerly Lead Developer, smart guy who might be able to help with some things.

Today we’re going to talk for a few minutes about this question, and it actually is not a question that we get asked very often, but it’s a question that occurs a lot to our customers and to related building a website, and it’s this: “How much money should I spend on my website?”

From my perspective, we build most of our websites on WordPress, and when WordPress got started, it was a blog platform. Mostly freelancers were building on it. They were building blogs that are relatively inexpensive websites. It’s been around for more than 10 years now, and there are Fortune 500 sites that are run on WordPress, and so with that spectrum of ability, things that you can you build on this platform or really any website. It’s a fairly natural question for a marketing manager or somebody who’s going to put a website out there to ask: how much do I need to spend? How do I know if this is the right amount? Am I being taken advantage of? If I pay too little, am I not going to get the things that I need? Let’s just spend a few minutes you guys have some insight. How does a person know how much to spend? Dallin?

Dallin:
I’m in charge of business development here at Skyhook, so I feel like I run into this question with some regularity, and I think what most customers don’t understand about a website is just how intricate it is or how many details, even if it’s a relatively simple idea. I don’t know if this is human nature or experience with software or what, and even I myself with as much experience as I have in this, oversimplify the whole thing, and also don’t have an appreciation for the range of what is possible. You may say, “It’s just a marketing website. It’s got five pages. How could the price be that different?” The answer is, it could be very different.

You could have everything from completely custom … Well, you could start at the research phase and all kinds of focus groups and studies and 10 different options to choose from and you’re shopping it around. It could be that extreme of totally custom and unique, all the way down to, “You know what? This thing’s going up tomorrow. We just need to grab a template, make a ton of assumptions, and just launch something that’s just totally basic,” and so I think that plays into this pricing conundrum.

I think another thing a lot of people don’t realize is just how expensive these resources are. You’re talking designers and developers who could be making really good money at Fortune 500 companies or who have degrees and who have experience. They’re not $8-an-hour workers. They’re paid a lot, and so an hour, it means a lot. When you say it’s five, 10 more hours, you’re talking thousands of dollars by the time the whole team gets involved in that, so those two things, the range of complexity and the fact that these people make more than you might realize, really introduces a lot of variability in the cost.

For that reason, we love it when customers share their budget with us upfront, because it helps … We don’t use it ever … I mean, we don’t ever use it to take advantage, I hope, of customers because they’ve shared that with us. It’s just such a useful tool when trying to scope something out to say, I say this a lot of times, “Are we building the Kia or the Mercedes-Benz or the Rolls-Royce?” It just gives us a data point for making a whole bunch of those assumptions so we don’t have to ask them explicitly.

Kyle:
When I think about what Dallin said, the biggest thing that I think about is, we need to know the budget, and I think the first part of that is, you need to find a developer that you trust and then share that budget with them, because if you just want, let’s say, a photo gallery, there’s a hundred questions that we can ask. You may just think, I just need a basic photo gallery, but that helps us think about, okay, now how much it should cost.

There’s a lot of things that we can do for even a basic photo gallery. An example is, you can do Pinterest and that’s a photo gallery, or you just need to display 10 pictures on your website and you don’t care anything else that people can see them, but there’s a big price range there that we need to know how much money we’re working with, and if you have specific details, that helps but we can still do a lot in between that the development team knows about that a lot of the clients don’t know those technical details, that by saying, “I have $10,” now we can start working with it. That’s a number that doesn’t mean anything, but you can put whatever budget number you want on it.

Dallin:
I like that because, and I don’t know if I even realized this before working in this industry, but just how often we use extremely subjective words in normal conversations. Someone may come to you and say, “I just need a basic website.” Okay, well, what’s basic for you? Because basic … Another factor that I think kind of plays into this is, the Internet has so many cool tools now; Google Docs is kind of a main example or you mentioned Pinterest, these pretty sophisticated amazing tools that are just drop-dead easy to use, and it’s created this standard in people’s heads that like, “That’s simple. I just want something simple like Google Docs.” It’s like, “Well, do you realize that they spent millions of dollars in engineering to make that as simple as it

Clean is … You’re hearing these words. “I just want basic. I just want clean. I just want simple. I just want easy,” and that could mean truly a huge range of different things. When you’re talking to your developer, they’re having to make a bunch of assumptions about what is cool for you or what is simple for you, and when you put a dollar on it, it just clears up a ton of that ambiguity.

John:
Effortless is the word that comes to mind. It takes a long time to make something look effortless. So how would a customer know that? Let’s say they didn’t have a developer that they trusted, or let’s say they got burned and they need to rebuild something, and they want to go out and they want to get this new thing built. They’re a little gun-shy or they just don’t know how much does this stuff cost. How do they start?

Kyle:
I think the first thing to do is find an agency, a company, a developer, whoever that may be that fits their needs, their company’s needs. Find that person or team. Once you have complete trust, that’s when you can start moving forward, so it’s find the team and then you’ll want to share that budget as I talked about. Coming up with the budget is the big question that we’re trying to answer, but it’s very hard. I think it’s different for every business.

If you’re a startup and you just need a market-ready website, that may look like $10,000 or maybe even $5,000, but if you’re a more established company and you’re looking to grow your online presence, you should probably be putting a considerable amount of money to this. Obviously, the more money we have to work with, the more we can do, but whatever budget you share with us, we’re going to give you as much as we can. So you should have some budget in mind. What that is is going to be different for every company. I think that is some relation to what you’re trying to do online.

Dallin:
Something I would add to that, when you’re starting out a project, I see projects go down one of two paths. Either it’s relatively simple and someone should be able to tell you with pretty good accuracy what this is going to cost, or it’s way, way complicated and way confusing or more in the category of something that you can’t sit down and have just a one-hour conversation with someone and expect them to get it. There’s a lot of complexity that’s difficult to communicate, and there’s even a lot of complexity that you the client may not even know yet. That’s an open-ended project, and in those cases, a lot of dev shops say, “Let’s do an agile billing, where we’ll just start billing and we’ll tell you when we’re done,” which, if trust is there, can be okay, but is understandably scary to a lot of clients.

But our approach since we tend to do more waterfall pricing is, “Let’s do a quick little project just to frame this thing, just a little 20-, 30-, 40-hour project to frame this thing. Let’s talk to the different stakeholders. Let’s nail down what does and doesn’t need to be into it, and let’s write up a project scope.” It may feel a little bit like you’re paying for someone to sell you, but the reality is, that’s a lot to ask of a potential vendor. “Hey, can you spend 40 hours helping me scope this thing out, just so I can decide whether I want to use you or not?” If you do find a vendor who’s willing to do that, they’re probably padding pretty heavily on the actual implementation cost to justify that kind of behavior, so my preference is, just keep it clean and say, “Look. I’ll pay you for your time. I need someone to sit down with me for a week, a few different someones, and help me scope this thing out.”

At the end of that process, you have a pretty good idea of what it is you need, a much more clear scope that you can then take either back to that same firm to go and give you a more exact quote on, or shop around, but separating the architecture and planning phase from the implementation phase I think is … In worst-case scenario, you spend that 20 or 30 hours and you realize this is a $200,000 project and you only had $30,000 for it, and it’s like, “Well, I’m glad we know now rather than taking that risk.”

John:
Yeah, I’ve always been a fan of that first free hour. I don’t feel bad asking somebody to spend an hour is kind of at the top end of that, but 20 or 30 minutes just sitting down and saying, “Hey, this is what I’m thinking. You’ve got some experience in this. Give me a ballpark.” It’s exactly what you would do with a pool contractor, or any professional services person who’s been in their industry knows that that’s part of the business. You sit down and you talk to people and some are less familiar with what you do, so you spend a little time educating them, and I think that people generally find that if they don’t have the experience but they do have a clear picture of what they want to get out of the engagement, then sitting down with two or three other people is enough to get a real good ballpark of what you need to spend.

Dallin:
Yeah, and I don’t mean for this to sound jaded, but it is frustrating … A lot of times we don’t know either. We don’t know how long this project’s going to take, and especially when it’s one of these more complicated projects. We could hit snags. We could encounter things we haven’t encountered before, and we’re taking a risk on every single project we take, to some extent. We try to minimize that risk.

One of the frustrations, I guess, of us being in this vendor-subcontractor kind of relationship is there’s typically some sort of a fixed price on what we’re quoting, and we’re on the hook if we go over, and I think if we were your employees, if we worked for your company, or if you had hired a team to do this and it took them two extra weeks, you just have to pay the two extra weeks. It just took two weeks longer to do it, but because it’s a subcontractor relationship, there’s this like, “Well, you said,” and I understand why, but, “You said you’d meet this budget. Now I expect you to do it,” and what that creates is the company in our case, or whoever you’re hiring, having to just (a) plan and try to avoid that risk, and (b) hedge for it. The more risk you’re passing on to your vendor, the more you should expect that they’re padding their quotes because they have to.

John:
How does risk show up? You keep saying risk. What makes a project more or less risky?

Dallin:
That is an excellent question. Number one, honestly, is the client. I’m looking at, have they had lots of other web developers in the past that have all been, quote, unquote, unable to get it done? It kind of makes me wonder if there’s something about the client that’s making that interaction difficult. How clear they are on that vision. There’s a huge difference between, “Hey, I think I kind of want something in this sort of space that sort of does this,” versus like, “I’ve seen it. I know it. I can draw it out for you. What do you want?” The clarity of vision contributes to that risk. External factors like, you may be really clear on your ask but there’s like seven other stakeholders involved and I’m not sure if someone’s going to swoop in at the 11th hour and mess this whole thing up, or kind of a general tech savviness of your organization, if I feel like I’m going to have to spend a lot of time educating various members of your team on why we’re doing things and/or supporting it after the fact. Timelines, if it’s a ridiculous timeline that is just likely to create bugs and errors and headaches and things like that.

Difficulty of the work itself, so on the low end being simple content loading, basic-type work, all the way up to, now this is intricate e-commerce stuff, but SSL certificates and need for encryption and these sorts of things, or there’s high stakes. “We can’t get this wrong. We’re accepting payments. We’re taking credit cards.” Those sorts of things I have to charge more for because the tolerance for mistakes is so much lower.

John:
If you were going to put those in a scale, what’s the most risky thing that increases cost most?

Dallin:
I feel funny saying it, but I think it’s the client. I think there’s a huge client factor, where if I know that I’m working with someone who’s smart and detailed and has a clear vision for what they want and is reasonable and easy to work with, then I’ll give them the basically unpadded view of things, but when I can see the client’s going to inject a lot of questions, that’s when I get nervous.

John:
Yeah.

Kyle:
Yeah, I think it’s uncertainty, and a lot of that is what Dallin’s talking about with the client, but I think it’s about with the details you provided. If you’re just, “I don’t know what I want, but I want this thing,” it’s not really helping us get to what you need to give you a price. You’re asking for a quote on a question mark in our mind.

John:
The question that we haven’t answered yet is the one that we asked, and that’s, how much should I spend on my website? At the end of the day, the person who’s coming to get this question answered, what do you say to him?

Dallin:
It’s hopefully understandably a very difficult question to answer for all the reasons that we’ve discussed here. I think what you need to know is that because of the way cost works in this industry, like I said, designers, developers are not cheap. An agency’s cost is anywhere from, I would say on the extreme low end, $80 an hour to $200 an hour, depending on what the skill is and what the level is, and what that translates into, once you factor in intricacy, is that most websites, call it an average $100 an hour or $110 an hour, most websites like a brochure-style website … Well, let me start at the extreme low end. A template-based website is going to be anywhere from 70 to 120 hours’ worth of work, so you’re talking $7K to $12K. You could go less than that. There are people who will do that, but there’s other problems that start to come in below that range, which we can get into in another podcast, but that’s kind of the low end.

A custom website, a really well-thought out but still similarly scoped kind of project, is going to be more in like the $15K to $25K range usually, unless it has a whole bunch of content or something like that.

Then if you get into more intricate stuff, which we don’t deal a lot with at Skyhook, but complicated e-commerce or web applications, you can go way north of that. I wouldn’t even know. The sky’s the limit, but I would not expect it below, any kind of a web application, for less than probably $70K. It’s usually more like a quarter of a million to half, I’d say. Again, that’s a total, probably an irresponsibly vague answer. That’s not the world we deal in, but hopefully that gives you at least a data point.

Kyle:
Yeah, I think that’s right. There’s a lot of details that come into sites, and something that Dallin touched on is just some of these complicated pieces within a website. If you have an event calendar and you need registration, what if you have user membership and that starts ringing up the price? So, the market-ready websites, I think they fit that range.

John:
I think that’s a good answer, and I think we’ve seen websites all across that range, not the half million yet. I think if I were to summarize some of our thoughts here today, I would say that the most essential component that you can have is find a team that you trust working with. You need to have a group of people that you believe they’re going to be able to execute on the work that you’re talking about and that you trust are going to charge you appropriately. It’s important to have some introspection and your details worked out and figure out exactly what you want to build before you go out there. Otherwise, it’s likely that people are going to come back at you with either large ranges or higher dollar amounts, because they’re assuming the risk of a project that hasn’t been worked out yet.

Then finally, and Kyle mentioned this at the beginning, but I think it’s really critical, is, sharing your budget. A good dev team can build the high end or the low end depending on how much you have to spend, and it’s less about trying to get that money from you and more about knowing where you want to land on that spectrum of quality or of speed or price, so maybe that’s the last thing that we should say is that those are the variables. You can choose two, is the famous saying. You get to choose quality or speed, quality or price, but you always have to give up that other one when you want to pick those two.

Dallin:
Yeah, a little bit of nuance I would add there, in picking the team that you can trust, it is counterintuitive especially if you’re new to web development that not all web development firms are created equal, not even close. You need to look at the size of the firm. Are you going for more of a freelancer kind of option? Are you going for more of a full-service big team? You need to look at the tech stack they’re using. You need to look at the very culture of that firm, and say, you could have two firms to do WordPress development, but these guys are a lot more fun and jovial, and these guys are a lot more serious and down to business, and either could be appropriate depending on what it is you’re trying to do. I’m not passing value judgment; I’m just saying pick the team that fits what you’re looking for and then pricing should work itself out afterwards.

John:
All right. Well, this is obviously … There’s a lot to this conversation, and it requires a lot of thought and effort on everybody’s part, but hopeful that the things we talked about today will be helpful to you in pricing your website or at least starting to work out your budget and what you want to build. Dallin, Kyle, I really appreciate your time. Thanks for being here. Thanks for listening.