How Much a Website Costs, or Why it Is Necessary to Negotiate

Have you ever been in a situation when you asked a company about the price, and it was higher than you expected? I guess the answer is obvious – yes, it has happened to you and probably more than once. What did you do then? I suppose you started looking for another cheaper contractor. In fact, this was in vain... and this is what we are going to discuss.

Website development is not different. It is not easy to find a good contractor. And it is harder to find a good contractor who will work with a small budget. Clients are searching for a company with a well-earned reputation and a good portfolio but having received a business proposal more expensive than expected they begin to lower their expectations and consider other option. As a consequence, they accept a cheaper proposal with uncertain outcomes.

Profits talk

The website cost is not a constant. The cost greatly depends on an hourly rate for developers and less on the cost of consumable materials. The website cost can be divided into three parts and expressed with the following formula:

Website cost=operating cost+administrative cost+profit.

• Operating cost includes the compensation of employees who worked on the project (managers, designers, front-end and back-end developers, QA engineers, etc).
• Administrative cost includes the compensation of executives and other staff who don't deal directly with the project. This category also includes rental cost, depreciation, maintenance of the equipment and even taxes.
• Profit is a financial benefit which the company expects to gain from the project.

In each company, the correlation between these three components depends on many factors: company size, brand popularity, professional level of the staff, etc. As a rule, the profit is not less than a half of the total cost, but it can vary considerably either upward or downward. In most cases, operating and administrative cost are relatively stable and are not subject to considerable change while the profit can be exposed to external influence. Seasonality, a level of current workload, a political and economic situation in a region, prospects of the project or the client – all these things have an influence on the profit the company expects and can gain. Now, are you getting next to the idea?

The fixed cost of a website does not exist! Everything depends on the current situation and you ability to make deals.

A small profit is better than a zero profit and definitely better than a loss. Even a teenager understands it, and so company management does. If you have a limited budget but the company, whose services you are interested in, charges the project at higher sums than you can afford, it doesn't mean that the company will not work for a more modest sum. But you haven't even tried to ask. Any business may have a period of the low workload when they have available resources. For instance, designers have completed their part of a project and given it over to front-end developers. Several big projects are being negotiated or at the early stage of development and so far can't be passed to designers. It all results in a gap during which a designer can be involved in the project with low profitability. Any good manager will confirm that a downtime is worse than income deficiency.

More doesn't mean better

Next time when the company sends you a business proposal with a high sum, just try to tell them what your maximum budget is. Experienced managers know where and when they can meet their clients halfway regarding price.

After the estimation, the cost of the upcoming project includes some risks that may occur in the development process.

The project will probably turn out to be more complicated than expected or some of the key developers may get sick, and the launch date will probably be put off. Any company wants to prevent any sanctions or conflicts with clients. However, if you have succeeded to convince the company of your reliability and committed this to writing, this will encourage them to compromise on the money matter. Very often the clients are unaware that they increase the cost by adding unnecessary functions. In this case, the developer may suggest cutting off some functions that don't affect the project objectives and can be realized later.

For example, if you launch an online store, its main task is to sell some goods. Consumers expect from the e-commerce site the convenient functionality of search and making orders while the function of formatting and exporting a comprehensive report can be put off till later when the site have some data to report and when the client has extra money.

Nobody guarantees that your request will cut the cost in half, but certainly you will come to an agreement. Scottish Professor Gavin Kennedy, the author of Everything Is Negotiable, says that there's always a chance to meet a stubborn donkey, but it's more important to stop being a timid sheep.

Always try to negotiate! Have successful and profitable projects!