Your website is truly an investment for your business. Regardless of what you spend on it now, if it’s done right, you will get your money back and then some. After all, the right kind of website will generate leads and sales exponentially over time.
But something to consider is the fact that there is a divergence in pricing from web developer to web developer. As with any product or service, customization and quality cost more than something quick and easy. In web development, this is typically based off of the breadth of the site and your big-picture business needs.
When we create a proposal for a project, we normally go up against competitors with different business models. To put it in perspective, here’s an example of a specification: a website with a user registration and login system and a subscription-based e-commerce component, tied together by a content management system like WordPress.
Suppose we quote at $30,000. Most likely, we are competing against a firm proposing $5,000, another for $15,000, and yet another for $100,000. Clients regularly ask: "How is it possible that each proposal has such a large discrepancy?”
While there is likely a multitude of reasons, the final answer is usually determined by the provider and the product.
Keeping the above sample spec in mind, let’s explore the different types of web developers in the industry today. Generally, there are four types of web design and development agencies. Your experience with their service, quality, and output of work will widely vary.
Hiring an independent freelancer to design and build your website will often cost less, but there are a few things to think about before entering into this arrangement.
First, it’s important to acknowledge that this is probably not their only gig. Typically, they have a job full-time and they do developing on the side. If you find a freelancer that does solely development work, they tend to have either one or two clients that provide the majority of their income.
For you, as a client, this should raise red flags. The independent freelancer has trouble serving many masters at once. How important is your one-off project compared to their others? And if they work full-time in addition to their freelance work, can they truly commit to your project? Will they disclose their employer? What’s the level of transparency being offered?
In our example project, this person would probably quote around $5,000 to $7,500, usually because of their extremely low overhead and because it isn't their main source of income. Typically, they won't even base it on hours, but on a flat rate they decide is good for them. Doesn’t sound like the best formula. Go with your instinct on this one!
The Outsourced Agency
This will either be a company fully located overseas or possibly with an individual in your country supervising an offshore team. The cost would typically be somewhere in between the independent freelancer and a boutique agency, based on hours. These agencies will make many promises throughout the process and speak highly of their dedicated development team.
It’s important to note here that the workflow will be time consuming and even frustrating. In most cases, you’ll communicate with someone in a foreign country. A project manager in China or India simply isn't living in your world and may not understand your business’s needs. There are additional concerns in this scenario as well in terms of differing time zones and how well they can work within your schedule.
From a budget perspective, our example specification would be between quoted between $12,500 and $15,000. Still not particularly high because the staff is being paid low wages, with minimum overhead. Even with limited skills, the time they put in is still profitable.
The Boutique Agency
This is where an agency like us comes in. The boutique agency typically staffs 10-15 people depending on their size and the time of year (i.e., busy season). Chances are, you’ll be dealing with a set of product-centric, entrepreneurial founders or partners, and a staff that is centered around their philosophy.
It's important to note, that a boutique agency thrives on one thing: referrals. This means they have to get your project right the first time. If they screw up your project, it could easily prevent them from getting others. The stakes are much higher for a boutique agency than any other type of provider, therefore the quality of work you’ll get will also be high.
Here’s the breakdown: A large agency will always have a seat at the table to pitch, the outsourced agency will rely on aggressive marketing options, and the freelancer will seek out work in places like Craigslist. The stakes for a boutique agency are higher, so our customer service is the main priority—it benefits everyone to keep you satisfied.
When it comes to pricing, we have a formula for what goes into a project for design, development, quality assurance, and deployment. This starts you at around $25,000 and increases depending on the complexity of the project.
What determines our hourly rate is labor costs, overhead costs, customer acquisition and marketing, taxes, etc. The overhead for a boutique agency is higher than a freelancer or an outsourcer, but much lower than a large agency. At a boutique agency, you get a dedicated, experienced team and greater odds of success—at a reasonable price.
The Big Agency
The big agency has instant credibility. They don’t have to spend significant time in the sales process building trust like boutiques. However, trust is something that can easily be lost if they aren’t capable of excelling at customer service, mainly because their highly skilled talent won’t be enough if you only deal with them during the sales process.
Their system typically works like this: A senior staff member makes the sale, then delegates the work to junior staff members, and process repeats. Junior staff at these agencies have power—they made the cut to be employed by the agency, so why not trust them? But keep in mind that you may be billed at double the rate of a boutique agency for those junior team members who actually have half the practical experience. That’s not really a customer-friendly formula.
Big agencies survive on very high billing levels. Sometimes they invent new parts of the process to increase their billing. The example project would be quoted starting at $100,000—and it’s actually a steal. Since those billable hours all have to be accounted for, it will result in your project taking WAY TOO LONG.
Is a boutique the best option?
There are certainly places where boutique agencies clearly aren’t able to compete. Big Fortune 100 companies will always go to large agencies. They already have the resources to manage the relationship and the ability to scale for fulfilling requests. Occasionally, a boutique can play in that sandbox, but it’s unusual.
When it comes to a small to mid-sized company, however, those that select an outsourced agency or freelancer initially will most likely end up at a boutique agency anyway. Boutiques focus on product development and entrepreneurship so they can be of real assistance if you’re looking to build your brand from the ground up or polish it up to match any growth you may be experiencing.