Explaining the Pricing Curve

I was at a party last night and word got to a gentleman, let’s call him Chris, that I’m a web developer. So he engaged me and started telling me about an water equipment rental business he’s starting, and how he’s interested in a website. He’s hoping for it to manage his events and be able to handle e-commerce. Sounds pretty simple, and I was imagining how I could help use the site to go the extra step and be his primary database for rentals and purchases, or at least tie into it. Also, I asked if he’d want a custom design.

It was at this point that I wanted to figure where this guy was really at in his desire for a website, and threw out a very low, ballpark estimate of what he could expect. Chris reeled in horror, and much more than I was expecting. He was looking for a figure in the hundreds, not thousands! Much to my chagrin, Chris then proceeded to tear apart the web industry and explain vehemently how he’s not asking for much and those prices are ridiculous, etc… Ugh. This is why I prefer to just program and not deal with sales.

Here’s my question for you guys, how do you explain to someone who knows nothing of web development that their expectations are just unrealistic? And how do you deal with these events? Do you realize this guy’s just looking for a free site, offer some cheap advice, and move on? I’m always caught flat-footed in these moments.

What I ended up doing was telling him to use something like Wix to just build the site himself and look further into having the site made for him if and when his business takes off. I then said he could email me questions, and I’d give free advice… He offered to pay for my consulting, but I didn’t want Chris having expectations tied to my consulting because he “paid me”.

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Interesting question, and no doubt something that comes up for tons of other people in the web industry, myself included.

It sounds like “Chris” is the classic example of a client you want to avoid. I also think it was smart not to accept a vague promise of his “paying for consulting” which would’ve aligned the rate to similarly cheap expectations.

It reminds me of the stories of plugin developers accepting a $5 donation from somebody and then getting a laundry list of customization demands from the donator because they “paid.”

I would’ve probably done something similar in your situation. Recommend something like Squarespace, or if they were particularly cheap, setting something up on a free WordPress.com, Wix, or Weebly subdomain site.

For the event management, I’d just recommend EventBrite and let him figure out how to link/embed stuff on the website on his own. Setting up a proper self-hosted event management solution in that budget is just not an option.

In my experience, it’s just not worth trying to convince people like this the true value of a professional website.

Just to play devil’s advocate, if I were in Chris’ shoes, I’d need to see a real value proposition of a DIY site builder made site vs. a custom site made by a professional designer/developer.

Would I really make more revenue with the professional site? In something like the water equipment rental business, would potential customers really care either way?

These are the sorts of answers that are difficult to provide, especially to somebody who is already predisposed to a more low budget, site builder solution.

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If someone reacted the way Chris did, I’d just smile like a crazy person and nod my head. It’s not worth pursuing Chris as a client at all. What you did was good: I’ve learned that the quickest way to filter out crummy clients is to give them a high starting point. “Custom websites start around $3,000 and the sky is the limit”.

What’s ironic is that Chris is likely spending tens of thousands on equipment, trucks, rent, etc.

If you’re going to try to convince someone, you can compare custom software to other industries. For example:

  1. How much would it cost to buy a delivery truck? Now, how much would it cost to buy a custom delivery truck with X, Y, and Z specific for your business? Answer: $20k - $80k+
  2. How much would it cost to rent a building? Now, how much would it cost to have an architect design & build you a custom building tailored to your needs? Answer: $piles_of_money.

You can also frame it around time spent:

  1. How long do you think it would take someone to build the website you described? 20 hours? 40 hours?
  2. How much do you think software developers make per hour? $50? $100?

That’ll give you a baseline of $1000 - $4000.

If someone has run a business before, they’ll have a grasp of these answers. If they haven’t, they’re probably not going to be convinced by anything.

Another thing to consider: It helps to position yourself as a revenue source, not a cost center.

  1. How much is one customer worth to you? $500? $1000?
  2. That means this website needs to generate 6 - 12 new customers for you to be worth the investment. It’s likely to generate 100’s of new customers. Therefore, my price is too low :smile:

Once you get down to the math, it’s pretty obvious a custom website is worth every penny - to the right business.

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@andy good arguments there.
Probably someone like “Chris” will answer that they can manage with an ordinary delivery truck and a cheap rent will do fine for what he needs, he already thinks the same about his site.
That is maybe because he doesn’t have any knowledge about what a professional site can do for his business, and I think with some clients there is a way of turning this around.

One good argument is your last one, position your self as a revenue source, that is a very good reason to have your site built by a professional designer/developer.
And there are clients that do get to understand these points.

But very sadly “Chris” even may end up saying the developer earns to much money, 50$ / 100$ per hour.
At that point, yes, turn your head and look another way because if the client doesn’t value your work, it’s not worth trying to convince him of the opposite.

Anyway, @jasontheadams , I wasn’t there, you probably felt what type of client was “Chris” going to be, and you probably did well :slight_smile:

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It’s different for each potential client. But in this case I would have pointed out the difference between a brochure site and an integrated business workflow tool.

If all he wants is a web address, then he can get that for cheap or free. But if he wants a system that allows him to manage his business, and has unique workflow needs that aren’t going to be handled well by an off-the-shelf platform, then he’s talking about something different.

If it’s not worth thousands of dollars to him, then he can’t afford it. Simple as that. No one ever said you couldn’t do a lot with Gmail Labels and Google Calendar. Starting a business is often about “making do”.

Once you’ve made the distinction clear (and subtly pointed out that what’s at stake is actually the value of his business, not yours), he’s in a position to decide how much a tailored system is worth to him. And I’ve found that pushes right past the bargaining phase where he tries to convince me that “it shouldn’t be that hard”.

(I also would have quietly hated him for devaluing my work, of course.)

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It’s a sad reality… and I fear there is nothing to be done: the web industry is hugely miss-understood and you just can’t re-educate everybody. To be honest: I’ve never worked out how to effectively communicate the idea that even though two websites look the same, they may actually be entirely different – to the point where one can be so bad it could potentially destroy your business and one could be so good it may potentially be a huge help in making it thrive! :frowning:

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Thanks for all the excellent thoughts and encouragement! It’s never pleasant having someone belittle your work, even in ignorance. But I’m glad to hear I’m not the only one who struggles with it! I did get the feeling, specifically with Chris, that I wouldn’t want to work with him in any case. He’s fun to hang out with… not so much to work with/for.

Perhaps it’d be helpful for me to spend more time researching the revenue of various sorts of sites, not just e-commerce. That would give me something more to offer than merely organizational advantages.

But you’re all right in that I could tell I wasn’t about to talk myself out of that one. Chris, specifically, had his mind made up long before I showed up, and I wasn’t about to change it. Even if I did, I wouldn’t want to work with him as I’d likely have an uphill battle the whole way.

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  • absolutely. There is very few things in the world of web design as unenjoyable as working for a bad client! Test the water by all means but then get out of the conversation nice and quick when you begin to detect that the potential client is likely to be a nightmare to work with/for! :wink:

I’d be really interested to see a link to “Chris’s” website posted here when he gets it done.

@buzztone For what purpose? Not to imply, but I’d rather not post anything if it’s just going to get torn apart. If he’s doing it himself, it will look and function as such. Nevertheless, I hope the best for him and his business. :smile:

I love this thread, I’ve often had conversations like this.

I don’t have any doubt that people hear of others getting $500 websites and expect that they can do everything. I like the analogy of comparing website costs to cars.

If you’re only willing to pay $500 for a car, then you’re probably only going to get a bomb that might get you here or there half the time. On the other end of the scale you could spend millions and get a car that is hand crafted and made specifically for you with all the bells and whistles you need.

And then as Andy pointed out, it’s not just about how many hours it takes you but how much value you are providing your client. And the cost of the project should reflect that otherwise you are doing yourself a disservice.

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Hey guys,

Great thread here. One comment that I might add is that this is probably going to be an uphill battle as various software solutions and hosting companies continue to promote their “build your own free website” and “get your website for just 1¢” campaigns. I think a part of it is that we’re being de-valued by our own industry.

Might be something good to have a collaborative article on at some point. Or even some interviews with people who were sold on those ideas and then realized that it wasn’t that simple. I know I’ve had a few clients that went that route and then realized that they needed to hire someone. Maybe I’ll try to put such an article together in the future.

Hey fellow Jason!

That’s a very good point. Unfortunately that is the nature of the industry. We’re engineers at heart, always trying to push the standard of capability. That means that some of our contemporaries are raising the standard of what laymen, so to speak, or capable of. It sort of pushes in from behind and forces us to push harder into producing better custom solutions.

The other competitor that I describe to people is “my potential client’s cousin’s nephew’s buddy”. Not to say connections aren’t good, but people are often ignorant of what really makes a good website, and will therefore assume that what some young kid who “can code” will make a product that’s comparable to what the professionals do. And it’s way cheaper! Shoot, I remember making a site for someone when I was 15 for a $45 lacrosse stick! :grin:

Personally, I prefer building something up rather than knocking something else down. If I could get every person to read an article on the matter, I’d write about the various build-it-yourself solutions versus custom solutions, and help the reader understand where one ends and the other begins. And it’s not just the site itself, it’s also support! I presume we all are affiliated with rockin hosts that have 24-hour backups, CDN’s, etc. to take performance and security to the next level. Why that’s important ought to also be explained.

Great thoughts! I like where this thread has gone! :smile:

@jasontheadams I want to add my own experience here just to present another case scenario. Me and my business partners were discussing with a potential client who was going to launch a new software application for a particular market niche with a great potential of growth. This person has always worked as consultant and sales man before starting this business. We made our proposal for making the website and then starting an ongoing maintenance and marketing campaign for him.
The client didn’t like our proposal and made a very strange counter proposal: he would pay us a commission based on the sales made through online leads. Pay attention here, I’m not saying just online sales because the software costs $30.000, and no one would buy online a $30.000 application. That’s a complex software that need expert people for the setup and installation. So, basically he proposed a commission based payment with the only problem that we are not sales men, and we wouldn’t have any control over the sales process. We could end up working for free for the first months, which is unacceptable giving the amount of work involved in designing and making a custom website.

Needless to say, we refused the proposal and lost the client but I don’t regret it.

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@jasontheadams I’d just be interested to see what someone with surprisingly low expectations on price comes up with. More interesting perhaps would be are they happy with what they get for that money?

You know, I find that a good number of people have little to know idea what to expect from a website. For those that have a good website, it’s an obvious asset, but to people who only ever use them there can be a surprising learning curve. I’ve heard a number of times that unless a site is e-commerce, it “doesn’t need much”. It’s difficult to describe to someone (for me anyway) how something that doesn’t directly earn you money can still be a great asset. Not that it’s difficult to understand, but if the person isn’t thinking in terms of profitless assets, it can be a troublesome concept to get across.

You might wana consider not working for such a client. I categorize such leads to BAD CLIENTS category. You can not start teaching such clients about the value of your time/code/design. Working for such clients leads to more work from more bad clients.