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Published / July 12, 2002
Web Site Pricing Information The Black Art of Determining Web-Site Costs By Richard Martin It's no secret that any teenager with a modem, a keyboard, and a little HTML code can put up a Web site; the nominal costs of carving out your own little niche in cyberspace can be as little as a few hundred bucks. In economic terms, that's not necessarily such a good thing: the Internet industry, analysts will tell you, is plagued by ease of entry. When anyone can do something, too many will. The result: clogged phone lines, innumerable amateur home pages of limited interest to anyone but the author, and great difficulties in making one's online voice heard. For those willing to pay, however, the Web-site development industry that has sprung up in the last couple of years offers a broad range of costs: from "brochureware" costing a few thousand dollars to dynamic, database-driven sites whose costs run into the millions. What a company should pay for, and expect from, its site depends on several factors, including the company's size, the level of integration with their existing business and marketing strategies, and what sort of return on investment they can expect from the Internet. There's "no science" to determining Web-site costs in the U.S., says Mike Wilds, vice-president of business development at USWeb, a Web development company based in the Bay Area with offices around the United States. "It's all still kind of a black art at this point." Raising the Bar A random survey of Web development professionals reveals that three levels of complexity, and cost, have emerged as models for companies venturing into cyberspace: NetMarketing, an online publication, conducts an annual survey of Web developers to arrive at median prices for Web sites. For a small, Level 1 site, the median price as of December 2000 was $25,000. Prices for Level 1 sites ranged from $6,100 to almost $400,000. For Level 2, or medium-sized sites, NetMarketing reported a median price of $83,000, with a low of $6,500 and a high of $771,135. Level 3 sites, the largest and most complex, cost an average of $275,000, with a low of $50,000 and a high of $2,367,440. The survey turned up some interesting trends. While the cost of creating a small site has remained essentially flat since the late fourth-quarter 2000, the median price of a large, Level 3 site dropped by more than half, from $596,073 to $275,000. Median prices for Level 2 sites dropped slightly, from $102,025 to $83,000. "The biggest change in the past year hasn't been some new technical bell or whistle," NetMarketing reports, "it's the realization that up front strategy is an important segment of the design process." Not surprisingly, the most expensive place to hire a Web development company is New York City (New York), where the median price of a Level 2 site is $185,000. The least expensive is the Raleigh/Durham (North Carolina) area, where a similar site will cost you $30,000. [Inexplicably, the NetMarketing survey does not include Seattle (Washington), home to one of the largest concentrations of Web development companies in the world.] Bells and Whistles What if you've already got your Web site launched, and you want to add specific components? Many companies that launched Web sites in the early days -- say, 1998 -- have already found it necessary to virtually redesign and rebuild their sites, as the level of sophistication on the Internet rises. At the same time, many Web development companies have moved upmarket, forsaking the low-end projects that were formerly their bread and butter. "We got our growth working with small companies to develop Web-site strategies for them," explains Jordan Mitchell, director of Internet consulting for Vista Internet Solutions in Seattle. "These days, we won't do anything for less than four or five grand." "We have several clients [for whom] the updates cost more than the original site," adds USWeb's Mike Wilds. "We've had people who started with a $15,000 site, and now they're adding $45,000 in improvements." Adding personalization to an existing Level 1 site costs a median of $10,000, according to NetMarketing; Level 2 sites will pay $16,000, while a large, Level 3 site can add personalization for about $26,125. As for chat functions, the prospective costs vary much more widely. The national median for adding a chat system to a Level 1 site is $2,150; for a Level 2 site, $5,000; and for a Level 3 site, $50,000. The national high for adding a chat room to a Level 3 site: a whopping half-million dollars. "There are really two components [to a chat system]," says Scott Pine, vice president of sales and marketing at Free Range Media in Seattle. "There's the chat software, which can cost from $1,500 to $5,000. . . . The development can run into the thousands, depending on the complexity. Around $10,000 is a good ballpark figure. It's basically just horsepower to handle more users, so that the software can handle 70 people chatting simultaneously instead of 10." Asked what's driving Web site costs, developers answer unanimously: people. There are simply not enough high-level Web site developers to go around. While copywriters, HTML coders, and graphic designers can be had for $75-$125 per hour, top site developers can almost name their price. "Particularly here in Chicago (Illinois), the competition for technical people is very fierce," notes Dal Harris. "It's one of our major struggles, to get enough really strong developers." Whatever a company's Web budget, all the developers agree on one thing: the best Internet strategy is one that complements the company's existing business, that includes clear goals and effective mechanisms for drawing users to the site, and that projects a realistic return on investment. "The key is to make sure that the [client's] expectations and the deliverables are as closely matched as possible," says Mike Wilds. "And that the project has a cost-justifiable budget. When you get down to it, cost is not the issue; value is the issue." Related Links Web Price Index -- Guide to Current Web Pricing Trends
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