Sunday, April 30, 2006

$10,000 is the magic number

I was reminded in a conversation with Geoff Katz yesterday about an old saw in the Web Development world.

Way back when, someone once wrote that, when you total up the true costs, a high-quality professional corporate web site costs $10k per page. It doesn't matter how you do it - it doesn't matter what kind of platform or technology you use... from Zero to the final, high-quality site will cost $10k per page.

Now... of course, as with all things that sound oversimplified, this is a serious generalization. But, none the less, there are a couple of things that I find very interesting about this statement.

First... the idea of "true cost." This is something that I think few people (client or service side) really understand. It's a hard thing to get your head around - but it's an important one.

To start thinking about "true cost" you need to understand all the actual costs that go into a site. So let's imagine that you need a 10 page corporate web site. Say it's a simple marketing site - pushing the message and the brand in order to create brand awareness, brand affinity and to create demand for the product. Say it also drives business leads to dealers for your product. Okay - so all of us in the web world can come up with some rough numbers on what we would bid to do the development. Now... you need to understand that that bid is not the "true cost" of the site. You need to add to that the cost of time spent by client employees - time spent defining the goals and the problem; time spent choosing a vendor; time spent managing that vendor; time spent managing internal stakeholders - the list goes on. Then we need to add to that the costs associated with the distraction that the development of the site causes. There will be opportunity costs associated with other initiatives and marketing goals that become de-prioritized. Then we have costs associated with hardware and software and additional third party vendors.

Okay... so we total that up. Now assume that the client has chosen a very, very skilled firm to do the development. Firms that are, in fact, good at this are also very expensive. In my experience, when we do the math on the above we will see that the $10k figure is pretty damn accurate.

Now... let's imagine that the client says "no way - that very skilled firm is 3 times the money of this other firm." And they take the low bid. At that point what we see is the internal costs to the client will increase - especially the opportunity costs. At the end of the project when we total it up we will see a number that is well below that $10k figure... but we will also see internal costs continuing to rise.... because the client is now working on fixing the sub-standard product. At this point they are likely either working with this cut-rate firm to re-do the site to get it to "high level, professional" status or they have gone back to square one and are doing new vendor selection.

In the end... the cost is the cost and is more often on the low end than on the high end.

Second Interesting thing... I can hear a bunch of you right now. "$10k per page!!! Are you crazy? I can buy a copy of Photoshop and a copy of Dreamweaver and have one of my IT people do the site! My daughter has her own web site! It's only a damn web site!!!"

Let's cut right to the chase.

There are web sites -- and then there are Web Sites. The two are not equal. Just because you signed up for some cheap hosting and used MS Publisher to create some bad HTML pages doesn't mean you have a Web Site.

What you get from the cheap end is what you pay for. If you look at the "true cost" model above you will see this. But more importantly - you need to think about what a web site really should be. It's not - at least not anymore - some bastard stepchild of marketing and IT. It's not a little weird thing in the corner. It is an integral part of your business. It is an integral part of your messaging. It is a key touchpoint for your brand.

Would you give your teenage son a DV cam and Final Cut Pro and have them do your TV ad campaigns? Would you let your exec asst handle your PR efforts? If you did - would the money you saved be worth it? Would you think that the results would have a positive effect on your business or a negative one?

If many businesses approached space planning the way that they approached web sites their staff would be sitting on milk crates in an unheated concrete room and sales people would meet with customers at the Greyhound Station.

Every touchpoint for your brand is critical. You need to own each one. There needs to be strategy and their needs to be synergy. One weak touchpoint damages all your efforts. As we used to say in the cooking world "the end product is only as good as the weakest ingredient."

This is why you pay $10k per page. Because without doing so the money you're spending on all your other efforts goes to waste.