How Much Should You Pay For Your Web Site?

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When I first set up my web design business I struggled to decide what I should charge for my services.

Looking around the internet at other web designers there is a massive difference between some and I've even seen a number of web designers selling basic sites for just ?50.

Now that I'm more established and have a growing number of satisfied clients I have confident that my prices are fair and will sustain my business for the future, but I still get many people asking for sites and expecting to pay almost nothing in return.

So recently I came up with a calculation which I present to people when they question mine or anyone elses web design quote. I would like to pass this calculation to you in the hope that anyone looking for a site can make a more balanced and realistic choice when asking for quotes.

I'll use a real example from one of my clients although I won't mention who they are here.

Let's start with average visitor numbers

My client regularly gets over 16 visitors per day to their site. It might not sound like much when you consider the millions of surfers out there but what you have to remember is thier site is properly optimised so those 16+ visitors are targetted visitors who are actually looking for the products my client sells.

I know this because the statistics for the site show me exactly what phrase each visitor typed into their search engine to find the site and over 95% of the results are directly related to the content of the site.

So using an average visitor rate of 16 per day we can extrapolate for a whole year (don't forget web sites work 365 days a year unlike other forms of selling) and so the site will get 5840 targetted visitors per year.

Marketing Rules

Marketing rules state that you should only expect to return between 1% and 2% from any advertising campaign so from those 5840 visitor we should only expect around 58 to actually purchase anything from the site.

If your conversion rates are lower than this then you really should look at why this may be. Perhaps your pricing is too high or maybe the site itself is putting people off.

Value of your web site

Ok, so you know roughly how many sales you're going to get from your site. We now need to work out what that is worth to you in real terms.

Work out the average cost of your products and multiply it by the number of sales you forecast.

Using my client again, their average product is ?463. So multiplying that by 58 we get ?26,854.

How much to pay for your web site

We now know how much our web site is worth to us in terms of generated income. So how much of that income in year one should you spend on your site? Well, that is entirely up to you and your budget but if you use the calculation above you should now be able to put your expectations into perspective.

My suggestion is that you should expect to put around 10% of your income into your marketing efforst (be they on-line or off-line). If you're going to be totally reliant on your site for your sales then I would suggest most of that 10% should go to your site.

If you are going to do other forms of advertising than just a web site then look to spend around 5% on the site.

For our client that would mean a spend of ?1340 pounds. In actual fact, we charged them around half of that to create their site.

?671 investment for ?26,854 income is not a bad return, I'm sure you'll agree.

Publication Date: Tuesday 1st February, 2005
Author: Russell Davies View profile

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