How much is a web site really worth?

My business partner and I are re-evaluating our practices and pricing. We know how much time it takes us to build web sites, and what that comes out to at our usual hourly rate for graphic design work.

But we’re starting to question the upper limits. How much can one reasonably charge for a web site? How can we convince our clients that a web site is really worth that much? (This is for companies that either do not have a web site or have such a rudimentary and outdated one that they may as well not have one.)

We don’t really deal with e-commerce sites (for which you could derive a pretty straightforward value; namely, the income the site generates through sales, advertising, strategic partnerships, etc.). Instead, we mainly do informational sites–sites that tell what a company does, gives case studies of past work, etc. Marketing, essentially. The value of this sort of site is much more nebulous.

I personally feel that EVERY business needs a web site the same way that it needs, say, a telephone number, fax, and mailing address. So in one sense, the benefits to the client are transparent: if you DON’T have [marketing/contact device X], you won’t get as much business or won’t be taken seriously by consumers.

But have any marketing studies been done that would allow me to give concrete figures, so I can say to the client, “well, studies show that a company with a web site can increase its gross income by 15% on average,” or “new business directly attributed to web traffic averages about $250,000 per year for companies of size X in industry Y” ?

Well, as far as what one can reasonably charge for a web site the simple answer is: as much as a customer is willing to pay. The complex answer is: Whatever a customer is willing to pay YOU.

I know that doesn’t sound complex, but consider:

  1. You know you aren’t the only web designers around. Your competitors may price differently and give satisifying results, so, to be competitive you need to be able to charge less or give more.

  2. Not every business does need a web site. Perhaps every business that has more than a specific gross annual sales (just at random $500,000) would benefit from having a web presence, but a lot of small local businesses do just fine without them, and it would be difficult to prove having one would improve sales. Does the local ice cream store really need a website? Possibly not.

  3. Since you mainly develop information sites, perhaps you have developed a standard form that just requires information to fill in the blanks and everything else is pre-arranged? If not, perhaps you should. It could cut down your workload and you could pass along the savings to the customers.

These are just off the top of my head.

Well, as far as what one can reasonably charge for a web site the simple answer is: as much as a customer is willing to pay. The complex answer is: Whatever a customer is willing to pay YOU.

I know that doesn’t sound complex, but consider:

  1. You know you aren’t the only web designers around. Your competitors may price differently and give satisifying results, so, to be competitive you need to be able to charge less or give more.

  2. Not every business does need a web site. Perhaps every business that has more than a specific gross annual sales (just at random $500,000) would benefit from having a web presence, but a lot of small local businesses do just fine without them, and it would be difficult to prove having one would improve sales. Does the local ice cream store really need a website? Possibly not.

  3. Since you mainly develop information sites, perhaps you have developed a standard form that just requires information to fill in the blanks and everything else is pre-arranged? If not, perhaps you should. It could cut down your workload and you could pass along the savings to the customers.

These are just off the top of my head.

I doubt you’ll be able to find meaningful statistics like this. The results are too varied across industries and are determined by the quality of the website, which can vary greatly. Also, two companies with similar websites might see very different ROIs due to the amount of marketing they do for their site. If one company actively promotes the site to its customers and another doesn’t, they’ll see very different results.

In addition, both the cost and effectiveness of a site have very little to do with the amount of time it takes to produce it. Say a company wants a small brochure site, a few pages with well-defined content. The boss’s 14-year old could crank it out over the weekend, or they could hire a national advertising firm. The end results would both contain the same content, but there would be orders of magnitude difference in both the cost and the potential ROI. A high-quality firm composed of a team of graphic artists, information specialists, and skilled techies may produce a site with passing similarity to the youngster’s, but the quality of the design and attention to detail will make the difference in determining the results. A national firm might charge six figures for a site that a kid could do for three, but they’re not charging for their time. They’re charging predominantly for their expertise and the overall quality of the result. As an analogy, look at a Pepsi or Apple television commercial and compare that to the commercial for a local used car lot.

FWIW, I disagree that every company needs a website, but that’s an IMHO. I’ve seen a lot of websites that did their company more harm than good, and I’ve seen a lot of companies that had absolutely nothing to gain from a website other than the vanity of having one.