Joe Ryder, (a)g

I thought I might expand what I talked about a few days ago in terms of average web site cost. While the average was correct, there should be some discussion on what that means for an average hourly cost.

Hourly costs are much less transparent, as the hourly cost is not just a set price in most cases. That was different years ago, but clients are not as flexible to pay someone by the hour and let a project drag on and on, creeping project scope and hiking up the price.

When framing something in an hourly rate, you should talk to an industry analyst for exact comparisons. I will attempt to fill those shoes now to save you some time.

Official rates for the web industry in 2004, based on a major study by a company that escapes me at the moment, showed hourly rates for web design to be an average of $112 per hour. That seems relatively high, but you have to consider that firms have much more than a single person’s salary to consider. I had concluded back then that the firm who conducted the research had talked to corporate web service firms primarily. A better average should include freelancers and very small firms, with the current climate of economic recession taken into account as well.

In ways I can see, and many other experienced designers may be aware of, the $1000 to $2000 basic site that is hand-coded would work out to about $50 per hour. That would be either a week of half-time schedule or two weeks of quarter-time schedule (meaning either 4 hours or 2 hours per day of work on this project, respectively, in conjunction with other work those days), a total of 20 to 40 hours of labor. This is relatively low compared to the average in 2004, but again this is considering firms that are relatively small.

That $1000 cost could be only a few hours for established companies that are not using open source software but have a template framework they use to organize the layout and enter the text and image copy. In that situation you are paying for the use of the template framework, the expertise of the company and time in their likely busy schedule. Templated site designers, because the sites themselves are less work, tend to have more time to sell, relying on volume rather than quality of client.

This push towards volume sales rather than large accounts is inevitable in this economic climate. It also suggests that business owners want something quick and easy, even if they are working with a designer.

So what does that mean for supply and demand of hourly rates?

1. Consumers want the best web site they can get for their money, if paying at all. (Low hourly rate potential: $20)
2. Consumers need to get online, and will do so eventually. (High hourly rate potential: $120+)
3. Consumers demand ease of use, customization and communication with their designer. (Mid-range hourly rate potential: ~$60)

I suggest $120 per hour as a starting point for high rate potential because freelancers could still get away with charging that much if they do it smart, but ultimately the mid-range hourly rate potential will win out because it meets demand. I should put in there under demand that communication with designers are demanded without consultation fee; we live in a customer service world and to have a free conversation with a professional is expected, though not always offered by businesses. So you reduce your time spent making money a bit, but you don’t sell yourself short because that only leaves you with precious time to design.

This also corresponds to the rush for designers with open source software as a template framework. I promise I will go over why that is important soon.

I say this in a general sense with one specific topic I’d like to discuss that is the premise to this post.

In general, direct sales agents are loose cannons. In many circumstances, there is a code of conduct but no real follow-through on sales agent behavior unless there is a complaint. This should be obvious, but no complaints mean, in a quantitative frame of mind, no problems. As complaints come in, one will start to count them and say, “Wait a minute. What’s going on here? I send this guy out to represent me and all I get is negativity from prospects? This is horrible. I’m letting him go.” Perhaps you should have considered the pros and cons before you used an agent.

Sales agents have their place in business. We all need distributors, smooth-talkers, spin salesmen, suppliers and an overall face to our products and services. If your face doesn’t cut it (translation: if you can’t sell your own business), it’s time to consider hiring someone who can, at a reasonable commission, of course.

However, there are sharks out there. The same charisma and other character traits that make good salespeople are the ones that create greed and deceit. You might hear them referred to as con-artists, head-hunters, or just sharks. But these are the people who can sell anything, even if it’s not so legitimate.

The most important thing to remember is that a sales agent cannot guarantee you, the company they are promoting, anything, from sales figures to market share quotes. But almost equally important is that the sales process is not a matter of questionable practices let alone fraud.

Case in point: There is an organization (term used loosely; explained later) that has been promoting craft bazaars, bridal shows, clothing sales and other events in preparation for community programs such as food baskets and holiday help. This is an organization local to Vancouver, WA, but for the sake of analysis only, not slander, I will keep the company’s name concealed, instead referred to as Company D. If you happen to know this company by its details herein, I had nothing to do with drawing the lines of recognition to them.

Company D is a “benefactor company”, so it says on its web site and many of its advertisements. The exact definition of a benefactor company is unknown, but the use of this term, taken literally, means that this company is a donor of something. It does not mean it is non-profit. It could mean that it has a business model that donates much or all of its proceeds to charity, operating as a non-profit but with the flexibility of a for-profit. It may also mean that there are aspects of the company that benefit the community, and this is the definition I suspect is being used here.

First fault in Company D is that it is not able to be located in DBA or business license searches in the state of Washington. At the very least, Company D should have a filing for its name. But it does not, even though there is a CEO and “members” listed on its web site with those titles. The business, as far as the public can determine, does not technically exist other than at the hand of the organizers. Business licenses are, for the most part, very simple to enact. They are also fairly low cost in Washington State. This oversight of a simple legitimizing document draws questions about the organization itself and those who run it.

Company D offers food baskets to those in need, but its web site and email newsletters (my wife gets these emails constantly despite no acknowledgement of subscription) depict sorted affairs in the distribution of these items. There is priority on the food basket list for those who sign up for Mary Kay, Sentsy and other direct sales programs, as long as you sign up under the CEO!!! In itself, this seems like profiteering on the economy.

Then consider their clients, all low-to-no-income families desperate for help, willing to consider anything that might make them money to get by. What better people to sign up for MLMs and direct sales? And people who aren’t interested could surely change their mind down the road, so why not use the information gathered to send them “event reminders” that focus much if their content on the benefits of signing up under the CEO? No matter if anyone ever gave their permission to be contacted by this company for any reason.

Even if a sales agent was hired under the CEO, made a few hundred dollars and never worked in the program again, the top tier agent makes its commission and, in a anti-sugar-coating frame of the situation, doesn’t care what happens to you after that. After hundreds of desperate people, even commission below $100 per person is in the tens or hundreds of thousands of dollars in revenue.

This culminates into the latest email sent by Company D, from which I quote: “We can no longer help those who will not help themselves or help [Company D]. [...] You must be willing to sign up for one of these direct sale programs in order to qualify for Easter/Christmas assistance from [Company D]. We are a HANDS UP not HANDS OUT organization.” It goes on to explain the costs in signing up, here being a kit paid in full by the “company” if signing with Mary Kay, $100 for Scentsy kit or $149 for Pampered Chef kit.

A requirement to sign up for an MLM to receive a handout? Seeing as how the CEO gets a fat wad of cash from that which may or may not be tied to the income of the company, how does that legitimize the company’s intentions?

Beyond that, the event bazaars and shows have spaces sold to the same list as the food basket recipients!!! These people have not been qualified as needing a booth, but the booths are even focused on work-from-home, direct sales agents like Mary Kay and Avon. And, let’s face it, you come to the Portland Bridal Show looking for amazing stuff, not the same stuff your friends are trying to sell you from their own catalogs. My wife, an Avon consultant, has already had emails about this company and the lack of sales return compared to the cost of the booth.

This is a gleaming example of the deceit that can grow in direct sales. Again, I will not outright point a finger at these people and call them scam artists, but my radar is up. At the very least, they are guilty of operating a business without a license. Could they be evading taxes as well? Perhaps their “difficulty with meeting demand” is in reality a bait-and-switch operation to give less than was expected to push the direct sales recruiting.

These are wild accusations, but not inconceivable. And what if this company was YOUR SALES AGENT??? What if this really was a scam and was ruining your brand by promising high hopes to the desperate but not preparing them for the work involved?

The question I ask you to ask yourself: “Can these salespeople carry my brand, maintain its integrity and improve its appeal?” If you can answer yes, then by all means use them to turn a profit. If there is any question in your mind otherwise, even if it is a small one, do your research before getting involved.

This is a question I get a lot, usually in the prospecting of new clients but sometimes even with current clients who have a new project to tackle. The answer is hard to capture as most work in designing web sites is an hourly value, even if there is a total project bid or number of pages designed. It is the easiest way to price out web sites: the estimated time involved applied to an hourly fee. Some people price it out as an average amount of hours per day to adjust the delivery date. There are plenty of approaches that work, but generally there is an hourly cost involved somewhere.

My approach is dynamic for my work load. I first take my average hourly cost, which is $30 per hour, and evaluate the work to be done in terms of effort. Sometimes I discount my hourly fee because, up front, there is low effort involved. Then I consider the time involved and set a tentative deadline. That affects effort, such as projects that need to be delivered within 24 hours. I do set an average number of hours per day, anywhere from four to eight. I then prioritize based on my current workload with other projects. Is this a project that needs my immediate attention or do I have a pressing deadline that cannot be missed? Priority will affect the effort involved, and therefore the cost drivers for the other factors.

Basically, the effort involved is the biggest driver of cost. Here’s a quantitative equation to explain:

Cost = (Fee * Effort) * (Timeline * Effort) + Priority

(* is multiplication)

Taking that all into consideration, let’s attack the question based on a consensus of other sources. Doing a Google search for “average cost web design” came up with some good examples.

720MEDIA posted in 2008 an average cost of a small web site at between $500 and $1500, which accounted for a 3 to 10 page web site with simple SEO setup; a 10-25 page site, which is typical for mid-sized businesses, is $1500 to $2500. A July 2009 article on EzineArticles.com, written by Lawrence C. Scott, an independent designer, set a typical e-commerce web site at around $4000 (which is a “web firm price”; I don’t agree with his average of $750 for a freelancer, which drastically undervalues the effectiveness of freelance designers). The Small Business Support Network writes that a starting cost of a small business web site would be between $750 and $1000 on average, with annual costs at $250 for maintenance design. A 2001 discussion on Sitepoint is a good contrast, discussing good small business starter sites being anywhere from $200 to a few thousand. Further contrast is an example of a site designed on NetObjects Fusion a couple years back posted on Yahoo! Answers, which puts that site’s cost at $6200, something I would assume to be an e-commerce custom build or other database-driven solution.

By far, the best ballpark estimator I’ve seen is on DesignQuote.net.

So what does this say? Seems there is a blur of cost estimates all over the place. This means our discussion about effort, time and priority are closer to the truth than we thought. The consensus averages basic, static sites at about $1000 to $2000, considering it would be coded by hand (not using open source software, specifically). You can find it lower or higher, depending on how fast you want it, how much time the designer has to do it and the effort for that designer to do it. Perhaps you find a great designer who can throw out a basic web site in a day with minimal effort; he 0r she may charge considerably less than the average. Same for a student who is trying to build a portfolio and is willing to work on the cheap. In comparison, a startup firm who is focused on revenue and may still see basic web sites as considerable effort in their schedule could be closer or higher than the average.

You get what you pay for. That’s the bottom line. This is not Wal-Mart, with web sites on store shelves like toasters. They have that, though: it’s called “website-in-a-box”, those software packages that cost an average of $69.99 that claim to allow you to create a professional web site in minutes with little effort. Those sites are very limited, very generic and, in both visitor and designer opinions, low-grade edging on unprofessional. You won’t make money with that kind of site now. Consumers are getting smarter, and more hungry for companies bent on capturing their attention.

Later, we will discuss how open source software, the biggest trend in the last decade, is improving cost going forward.