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November 6, 2009

What is the budget for your new website? Embrace the ‘B’ word!

By Ross Gerring

When we’re quoting or estimating for the design and development of a new website, one of the most important things for us to know is your approximate budget for the project. Indeed, if a prospective website developer isn’t asking for an indication of your budget prior to quoting, there’s a distinct risk he will end up wasting your time and his.

Confession: in the early days of Itomic, I didn’t like to ask the budget question in sales meetings. Maybe it’s the overly-polite Englishman in me. I mean, it involves talking about money when you’ve only just met a person, which seems a bit “in your face” rude. The result of not asking the budget question was wasted time and money (mostly mine). Typically it was because I over-estimated (well, over-guessed) the budgetary expectations of a client. I’d spend hours, sometimes days, putting together a magnificent proposal including all the dreams and aspirations of the client that we’d discussed, with a price to match, only to find out that even half the price I’d estimated was outside the client’s comfort zone.

“Ah, but if I tell you the budget then you’re just going to price something to this budget!”. Do you know what? Very broadly speaking, this is true. But it’s not, or shouldn’t be, about inflating a price to match a budget. It’s actually about two things:

  1. Showing what can and can’t be accommodated into the site (in terms of design, functions, features, etc.) for the stated budget. In other words, in most meetings (and in life!) what people would like and what they can afford are two different things. Most people who’d like to sell products online would like a site like Amazon’s, but they’re probably not going to tolerate the multi-million dollar price tag. So there’s an element of compromise: “ok, so you can’t afford a site like Amazon, but what you CAN achieve for your budget is this…”.
  2. Gold-plated or bargain basement version. It’s not just about how much can be fitted into a budget for any given functional specification. It’s also about the price & quality of the components we choose to use in the project. Example: Paypal is a cheap, cheerful, and low-cost way of adding purchasing capabilities to a website. However it has its functional and usability limitations, not least of which is that a prospective purchaser (at time of writing) has to leave your website, go to Paypal, then return to your site, in order to complete the purchase. The more professional and more expensive option is to use a payment gateway that operates behind the scenes. So if we’re working to a very tight budget (and/or tight timeframes), then we may recommend to use just Paypal. But if the budget is more generous we’d recommend the more pricey, professional option instead, or as well as, Paypal. There are lots of other examples of economic versus more expensive (but higher quality or more feature-rich) choices we can make when constructing a website, such as in the areas of newsletters, discussion forums, photos/videos, online surveys, etc. To use a non-web metaphor: if you want to get a house built to a certain budget, then you might have to go with a tin roof instead of a slate roof as the option that still gives you a roof (very important!), isn’t your ideal choice, but basically does the job and perhaps means you can spend more on other areas.

So what should your website budget be? This is of course impossible to give a one-size-fits-all answer since every individual person and company situation is different. If you’re looking for some guidance about how much an Itomic website costs and why, have a read of Itomic’s How much is a website article.

Assuming you’re a normal company looking to make profits then every decision about spending money often comes back to ROI: return on investment. In other words, you allocate more funds to projects that you believe will return a superior ROI than other projects, or investment opportunities. For example: if you’ve got $20k to spend on marketing and you think that a great website that is on display to the world 24/7 will provide a superior ROI than the same spend than an equivalently priced advert in the Yellow Pages, or a TV advertising campaign, then it’s clear where all or most of your marketing spend should go.

Notice we use the word “investment” and not “expense” when it comes to expenditure on a website. After you’ve paid for your new website, you expect the returns to flow back to your company for many years to come.

Finally, it’s crucial to understand that there are likely to be some ongoing costs associated with the maintenance and support of your website after “live” date. Such costs can vary dramatically between different website providers. So when considering your website budget, make sure to discuss the Total Cost of Ownership (TCO), and not just the initial outlay. We’ve got an article in the pipeline dedicated to the subject of ongoing costs of website ownership. Watch this space!