How much to spend in a website?

Right, in our previous posts in our continuing series Web101 we have talked about:

1. Why do you need a website? – Have you really thought it through?
2. What should it contain? – You’re not building a site for you, but your users
3. Why you don’t need a community? – Because it’s your house, not a club house or a mall

So far, you have figured out what kind of needs you have. We all have our dream houses and during the process of getting a new house, most of us have to compromise. Naturally, like in the real world, a big wad of cash can help you further – and the same applies for websites.

Feeling depressed? No need, like we spoke in our second installment, the houses online can expand at will. So you can get started with just a room with a toilet and expand it when it becomes more relative. But how much you should pay? That is the question we will be softly fondling today.

Everything is relative in this world, where change alone endures. – Leon Trotsky

I get a lot of people asking me how much should a website cost. Naturally, this question is completely trivial as we don’t have any information available to us. So, let’s stop talking about the web for a while and concentrate on business.

First, is the site you’re creating a profession or a hobby? If it’s a hobby, you’re already used to spending money for no return and it’s a miracle you’re reading this text – no surprisingly, many companies run their websites like it’s their hobby. But let’s take it that you run a company that sells stuff.

Direct marketing has taught us many things, most importantly that clients have prices. If the stuff I sell would be something big, for example an cruise ship that costs (hundreds) of millions, that leaves me millions in profit – I would bet that getting a client would be worth a larger investment that for a company that sells $8 sandwiches.

I’ve come across hundreds of people – no matter the industry, who see the web as some kind of a horn of plenty that will bring hundreds of new clients in hours for nearly any money.

Bullshit.

The first thing you need to do, is to figure out how much a client is worth to you and how much you’re willing to spend per client.

Naturally, you won’t get every client you pitch, so you have to calculate your success rate. Let’s assume, that you can get 10% of the clients you have spent X amount of money to get. The thinking here is, that should you spend $20,000 to pitch to 4 clients worth $100,000 each with a 25% success rate or would it be less risky to spend $20,000 to pitch to 40 clients worth $10,000 each with a 10% success rate?

(For those who haven’t found a calculator in their computer yet, or have issues grasping basic math: The first option produces 1 client of our 4, resulting a profit of $80,000 ($100k client – $20k investment) while the second one produces a profit if $20k as we get 4 clients out of 40 all worth $10k each minus the expenses of $20k.)

Sure, the first option must feel like a bigger risk. Instead of spending $500 euros you are spending $5000 euros per lead to a single client, but I can guarantee that the buyer who gets 10 times more attention from you than from your competition will notice you much more – resulting in an increase in your success rate.

This is where most websites fail. They are following the trend started with search engine marketing. People expect that quantities are more important than the quality of the visitors and that’s why they don’t put their money to their clients, but instead try to build a massive machine (a housing complex if you will) that can take as much people in as possible.

So, how much should you pay for a website?

Nothing and everything.

Calculate how many clients more you can take per year. Calculate the worth of client lead. Estimate your potential success rate. Set a target and calculate how many leads you need to have to generate in order to get to your goal. Multiple the number of leads per the client lead price and you should have your marketing budget estimate.

Then you (not an agency) start to think on where your clients are. Who are your real clients? No, no, no. The CFO and the CEO are quite unlikely your real clients. They might be in your Christmas parties and fund raisers, but they’re not the ones doing the research with different options. Your clients are always many, they are a legion. You have to take all of them into consideration. You have to speak money to money people, you have to speak tech to tech people and business into business people.

This is where the web and its capabilities to personalize excels.

And that is how much your website should cost.

Related posts:

1. Why do you need a website?
2. What should your website contain?
3. Technology or Business?
4. Corporate Moral
5. Why you don’t need a community?