Why Web Designers Charge What They Do

Jan 22, 2015 | Business Development, Web Design, Web Development, Websites

The cost of a designing a website can differ greatly from company to company. Thanks to that difference, people can struggle with understanding why websites cost what they do. That’s what we’re going to get to the root of: the thought processes, logic, variables, and most importantly the math that goes into pricing web design and development services. We’re going to focus on custom web design and development for the purpose of this conversation. Squarespace and other do-it-youself web platforms certainly have their place, their pricing models are straightforward and easy to understand, but come at the cost of 100% customization. Now, the custom side of web design and development is not as easy to understand and that’s what we’re going to talk about.

Basic Website Components and Costs

On average, the following figures can be applied to estimating the cost of a website:

  • Domain Name – $15/year
  • Hosting – $150-400 a year (depending on needs)
  • Web Planning, Design and Development Time – 60+ hours
  • Continued Website Maintenance – $1000 a year and up (depending on needs)
  • Marketing Your Website Online – $750 a month and up

How Do You Calculate the Cost of a Web Project?

The question, “how do you price out a web design project?”, has several answers so I’ll speak for our processes at Oak City Tech . Similar processes are followed by reputable web agencies we work with, so I feel there is validity there. We’re going to focus on the most common trade money for time. Add on to that additional expenses, such as domains, hosting, photography and so on, and you’ve got your total cost.

Time + Expenses = Project Cost

Seems pretty straightforward, right? Then why will you get 5 different quotes from 5 different agencies on the same project?

Why Web Design Quotes Vary So Much

Web design quotes vary so much from agency to agency because of two key variables – hourly rate and the hours required to complete the project. To give you a quick example; if two agencies estimate 100 hours for initial development time, but their hourly rates are $50/hr vs. $100/hr, then you’re going to get a large variance in cost for that particular item. Remember, that’s only if one of the two variables changes.

Understanding Hourly Rate

So why exactly do web agencies have such widely ranging hourly rates? That’s answerable and depends on a few factors:

  1. the quality of work they do
  2. how established the designer is
  3. tried and true supply and demand
  4. the overhead of the agency and similar factors

Our hourly rate at Oak City Tech is $130/hr. The method to which we arrived at our hourly rate is a logical and ethical one. So, why $130 an hour and not $120 or $140? When we factor in items such as: salaries, sick days, vacation time, overhead(office, software, hardware, etc), health benefits costs, the agencies’ percentage of billable time, holiday time, etc, we naturally come to a formula.

It’s actually quite simple math. We wanted to pay an average employee salary of $60K across the board – a totally reasonable salary, if a little low in our industry and market. The quality of work we do at Oak City Tech and the fact we have a growing client and project list supports that decision.

It boils down to this: we’re charging that hourly rate so we can pay our team members a reasonable salary(they deserve more, in my opinion). We’re not charging that amount to gouge our clients and we’re not picking random numbers out of thin air. Our clients want to pay their employees fairly and create a sustainable business – so do we.

Complexity & Completion Time

The second big variable in figuring out project cost is the hours it will take to complete the work.  I feel like this is the largest area of confusion between web designs/developers and their clients. There is no such thing as “a simple login area”. If a client hasn’t worked in or on a web project before, there is a good chance they don’t have the background knowledge or understand the amount of work that can go into a seemingly simple feature request like “a simple login area”.

I’m a car guy so I like to draw parallels with myself and cars. I know how to drive a car and I can fix a few mechanical things here and there but it ends there. So when my power windows stopped working and I brought my truck into the shop to “fix the power windows”, it seemed simple to me. Little did I know that the issue goes back to the entire electrical system. So my simple “fix the power windows please” request isn’t so simple, in fact, it turned out to be a huge amount of work.

That’s what it’s like for a lot of clients when it comes to web design/development costs, and feature requests. All we can do is explain clearly what goes into that particular request, work/time-wise, in order to make sure the end result is functioning as the client intended.

Properly Estimating a Project

Accurate estimating is another huge can of worms, but I’ll briefly touch on it because it’s a need to know item. When it comes to estimating the time it’ll take for a custom web project, the designer needs to fully understand everything that is requested from the client, and everything recommended from the shop – if not, someone’s going to get burned. Let me repeat this very important point; the designer needs to fully understand everything that is requested from the client. It’s a two way street, the client needs to make clear to the designer what they want. As much as we wish we could, we can’t read minds.

Here’s a quick example. Let’s say you’re working on a portfolio site for an artist. You know you, as the web designer, need to create a section of the site the showcases the clients’ work. They’ll be supply the content and photos; seems simple enough, right? Wait! Did you know that your client is expecting this section to : have a “featured” section that always at the top of the page, support both landscape and portrait orientation photos, have a password-protected section for private projects, and allow the client to arrange the projects in a variety of ways besides reverse chronological. And so on. This simple example shows that a section you originally estimated 8 hours to design and 12 hours to develop is now going to take 12 hours to design and 24 hours to develop. Who’s on the hook for that extra cost – the designer or the client?

This brings us back to my most important point: the designer needs to fully understand everything that is requested from the client. The client needs to fully communicate and make clear to the designer what they want. Lastly, while estimating time is tough, OCT has the luxury of looking back on past projects to get a baseline of what to expect. We cumulatively track our time across our entire workforce, day in and day out, which allows us to look back on past similar projects and use real data to estimate future jobs very accurately.

The Big Picture, a Real Web Design and Development Project Estimate

Most agencies and freelancers will break down all the elements of a project into line items, estimate the time for each, and multiply that time by their hourly rate. That’s exactly what we do at Oak City Tech as well. Here’s a sample from a past, medium-sized e-commerce project of ours:

  • Information Architecture 7h x $130 = $910
  • Research 3h x $130 = $390
  • Wireframing 6h x $130 = $780
  • Design 22h x $130 = $2860
  • WordPress Development 38h x $130 = $4940
  • Browser & Device Testing 6h x $130 = $780
  • Bug Fixes, Revision & Polish 8h x $130 = $1040
  • Calendar & Gift Card Integration 10h x $130 = $1300
  • User Role Management/PW Protected Content 8h x $130 = $1040
  • Content Entry 12h x $130 = $1560
  • Filterable Product Categories 8h x $130 = $1040
  • Project Management 20h x $130 = $2600
  • TOTAL  (148h x $130)+$360 = $19,600

That’s basically the whole process: from explaining hourly rates, to time estimates, to putting it all together. When you break it down piece by piece, it’s much easier to understand. If you’re a freelancer or running a web agency, I hope you’ve done the math to come to your hourly rate – and I hope you’re tracking time. If you’re instead looking to buy web design services, I hope this article has helped you understand what goes into the process of building a website. Everything is simpler when all parties understand the process.

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