How Much Does a Website Cost?

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You need a website. So the most basic question that follows is how much it costs. Well, the real answer is the one you don’t want to hear, but that voice in the back of your head is telling you, nonetheless: It depends. Think of it this way: How much does a house cost? They’re all different. It really does depend.

There are so many options and different ways to tackle this that I could give back an infinite number of prices. The more valuable question to ask at the beginning is, What do you need the website to do for you?” If you can’t answer that, you’re far more likely to either over or underspend. 

A February 2018 post by Internet Retailer found that e-commerce represented 13.0% of total retail sales in 2017, a marked increase from 11.6% in 2016.” Look, nobody is shocked to know that people buy stuff online. The goal for the company is to figure out how much. Take some time with the folks in the C-suite, sales, finance and marketing— and any other stakeholders—to get a realistic sense of the amount of money the company expects the website to bring in. As we mentioned, for some companies, it’s about generating warm leads for the sales team to close. For others with true e-commerce, there’s online sales of products, services, tickets, reservations, registrations and more that can give a firm dollar value. 

Got your number? Great! Let’s use it to figure out the value of the website. There are a lot of ways to find the value of something, some more complex than others. Right now, we’ll just do some back-of-the-napkin math to get a rough estimate using the long-term treasury bill, considered a benchmark for low risk in finance.

Annual Online Sales / T-bill Rate = Estimated Value of Site
$ / 3.02% = $

So let’s imagine a venue management company is projecting the website will bring in $5 million in ticket sales, $1 million in other online event registrations and $250,000 in online merchandise sales. That brings the sales total for the year to $6.25 million. Divide that against the T-bill rate of 3.02%, at the time this was written, and the estimated value of the website is $207 million. That value is based on the fact that I could expect to get the same $6.25 million earned if I were to put $207 million into T-bills. 

This ends the finance portion of the post, and I’ll admit that $207 million is more than most websites will cost, but the point I’m getting at is not about the cost. The focus should be on the value. What is the real economic impact the company is expecting from the website? Yes, this is a simplified illustration, but the point remains. Even if the firm spent $500,000 to design, develop and deliver this system, it would be only 0.24% of the value the system delivered. From that perspective, the decision looks like a no-brainer. You could be the star employee if every $0.24 you spent returned $100.

Start by asking How much revenue do I need this website to contribute to the business?” Once that is done, you will have a clear understanding of the value of the system. Then figure out what functionality is needed to convert the target audience and whether the company has the resources in house to build that. That’s when you’ll be ready to determine what makes sense to invest in the website.

Roger Haskins is a Strategy & Process Innovation Manager, arguably the coolest title in the building. Contact him at roger_​haskins@​dixonschwabl.​com

Roger Haskins
Roger Haskins
Digital Strategy Supervisor

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