The Low-Priced Competition

By Jesse Smith

Tuesday January 3rd, 2012

Pricing for website design begins at around $650... in a manner of speaking.

You may see prices like this, or even lower, posted on websites across the internet. However, in most cases, this type of number is just a theoretical starting point: you can't actually get a website for that price. Companies that use this type of pricing must charge additional fees for everything: additional pages, additional photos, and so on. Pretty soon all the additional charges start to add up to real money.

High-quality, custom design work is not cheap; yet a few minutes on the Internet appears to indicate that some companies do offer professional quality work for unbelievably low prices. In a line of work that requires human creativity, tasks can be standardized, but not automated. There is only so much margin that can be squeezed out of a high volume operation.

So how do they do it?

How do low-cost website design companies keep their prices so low? Between my professional work and various Competitor Analysis exercises I have completed as part of my MBA coursework, I've had ample opportunity to research this question.

In general, there are only a few ways that our competitors can make websites for very low prices. Many firms may employ all these strategies simultaneously.

The advertised price is not the real price.

If you've spent much time on the Internet researching your website design project, you have probably seen advertisements for unbelievably cheap website design services. As with most things that sound too good to be true... nobody is going to make you a world-class website for $300; it simply is not going to happen. At some point in the process, they have to get some real money out of you. Here are several of the techniques that the apparently low-cost design firms commonly employ to hide the true cost from you.

Charge extra for everything.

This pricing strategy does not treat your website design project as a key part of your business's ongoing marketing strategy; instead, this pricing technique reduces website design to its smallest component parts, and sets a fee for each of them. Also known as "nickel and diming," this pricing strategy is widely used by low-cost design service providers for its simplicity; but it can be highly frustrating for clients to live with. Service providers who price this way are not going to take the time to research your industry, check in on your competitors, or even spend time talking with you about your vision. They will take every possible shortcut to minimize their cost and therefore their involvement with your project.

Charge exorbitant website hosting fees.

This technique is effectively a hidden means of providing financing to you. Rather than pay the full price of a website upfront, you initially only pay a low flat rate; but after that, you are contractually obligated to host your website with the design firm for $65 a month. (By way of comparison, our optional website hosting service works out to just $3.75 a month, when you pay in advance; and we provide the first year of hosting absolutely free of charge on orders above a certain value.) Generally, the terms of these arrangements prevent you from transferring your website to another hosting service provider. If you keep your website hosted on a plan like this for two years, then you have paid $1,560 for a hosting service that was really only worth about $120. If they got you to pay $800 for the initial design work, then you have effectively paid more than $2,300 for what now looks like a small, hastily designed website with very few features. In this way, the high cost of hosting effectively helps the design firm to recoup their expense for building your website.

If your design firm contractually requires you to host your website with them, then you are probably paying too much for the hosting service in order to make up for the low cost of the design work.

Cutting Corners to Reduce Costs

You may be amenable to a lesser degree of service, if it saves you money on your website design project. If you are contacting a design professional for a quote, and you would prefer a low price to a greater degree of service, never be afraid to say so. This is a great time-saving technique. Your designer will either be able to tailor their quote to your needs, or else refer you to a more appropriate service provider.

However, if you are trying to choose between working with a local design professional versus a cheap commodity design company, it's important to consider what it is that some of the big companies do in order to keep their costs low. Know what you're getting when you sign up for a new website design project.

Describe template modification as "custom design."

This underhanded technique seems to grow more popular by the day.

Templates are low-cost, re-usable, pre-built websites that allow the designer to "fill in the blanks." Website templates are not a bad thing in and of themselves. There are many projects for which templates are appropriate. There are many templates that look very nice.

If you are an established firm looking to project your unique corporate identity as a part of your ongoing marketing strategy, it is unlikely that a template would be suitable to your requirements. On the other hand, if you're a startup on a tight budget, templates may well be the way to go for you.

However, template-based design should not be confused with custom design. It is emphatically not the same type of service. Unfortunately, there are many unethical companies that will happily imply that they are building you a completely custom website from scratch when in fact they are merely popping your content into a pre-built template.

If you want to save money by utilizing template customization solutions for your website project, just ask! I will be happy to work with you to build a website that suits your requirements and your budget. This type of arrangement provides you with the superior service of working with a local design professional, while also providing you with the cost savings benefit of template customization: the best of both worlds.

Outsource the Design Work

Outsourcing is standard practice in many industries. In website design, the outsourcing process might work in one of two ways.

Overseas outsourcing. The cost of living is lower in India and China, so the people there can afford to work for low wages. Many overseas website designers perform quality, professional work; but you won't be able to talk to them on the phone about your project.
Contract outsourcing. I know for a fact (because I once considered working for them) that at least one of the really, really big web design firms outsources its entire workflow to an army of freelance contractors. They pay the contractors a very low flat rate for each portion of a project. The rate is so low that for most projects it works out to less than minimum wage. A firm that pays at this rate attracts freelance contractors who are mostly "newbies" just getting started at website design. This type of firm experiences a very high rate of turnover, as their contractors quit in frustration after they figure out that they would get paid more to flip burgers. Yes, it's true that such a firm also probably retains a handful of "star players" who have figured out a way to standardize their personal work process; but statistically, if you go to one of these companies, you're most likely to end up with one of the newbies; and the fact of their newness will probably be reflected in the quality of their work, and in the quality of their interactions with you. Most importantly, the very low pay structure means that they do not have an incentive to linger on the details of your design, to make it pixel perfect. On the contrary: they have an incentive to rush through the job as quickly as possible and move on to the next one. (Keep in mind that a company can easily cherry-pick the examples posted to its portfolio, possibly including only samples from premium projects; so even if a company is able to indicate that they have done some stellar work in the past, this is no guarantee that you will receive the same quality of work for the low, low price they are advertising.)
Now, I should note that the involvement of freelance contractors in a project does not necessarily imply that a company is engaging in these specific business practices. Like many design and marketing agencies, Widgeon Web Design sometimes outsources certain work to freelancers, who charge something approaching the industry standard going wage range. Often a freelancer might be brought on board for a specific skill or ability that he or she possesses; to complement the design firm's core competencies; or to temporarily augment a lean staff size. This type of freelance web designer is an expert in their field, and performs high quality work, just as one would expect from one's design firm.

What makes us different

At Widgeon Web Design, we have a local office in Lacey, Washington where you can set up an appointment to meet with us in person to discuss your project requirements. Someone who is working on your project is available by phone and e-mail during business hours. This is a level of service that the process-outsourcing model cannot provide.

Furthermore, we offer professional consultations with marketing experts. At this writing, I am well on my way to completing my MBA in Marketing. Between my coursework and professional experience, I can provide you with insight and advice on best practices and modern theories of targeted brand-building. Again, this level of service is not available from the cheap website design firms.

If you would like to learn more or request a custom quote, please contact me through this website, or view my work on Widgeon Web Design.