I believe your chances of success are already at risk.
The phrase ‘how long is a piece of string?’ always comes to mind.
Of course I know clients need to quantify how much is it to acquire the services of a web developer or designer. But the real question about the cost of a website or any online presence, you need to ask yourself…
What is your planned turnover?
Be realistic, what is really is your planned turnover, what do you hope to achieve with your investment?
I spoke with an Irish retailer who stated very quickly that they intended to sell as much online as they were currently selling in their ‘bricks and mortar’ store. When I asked what their turnover was… there was only a few muffled sounds. Retailers have trouble telling a marketing person their financials! And to be honest I only asked to see their ‘pained’ reaction. I quickly interrupted an awkward silence with ‘well if you have 5 staff, a large rented premise on the high street, with tax and overheads you probably need a turnover of at least 400k to cover operational costs, to which I got a cautious nod.
…so the plan is to gross 400k online each year from online sales?
I continued… so the plan is to gross 400k online each year? Their eyes lit up at the very thought of it. I then asked what is your annual on-line marketing budget?
And this is where it always falls apart, they answered… I kid you not €1000 ($1100). They are hoping to spend one thousand euro to get a return of 400,000. We are in Las Vegas territory here. I pointed out that their proposal may have a few flaws, so they upped the spend to 3000!
…we are in Las Vegas territory here.
This story is true, the point I am making is that it is not unusual, I hear similar optimistic mathematics regularly from clients. Generally your marketing investment (website, advertising, acquiring customers, product development etc) should be 10% of turnover. Gartner’s annual CMO spend survey 2018/19 says the figure is steady at 11.4% worldwide. It is summed up quite well on Brafton.com.
To put it into the context of the retailer in my example above it should be 40k. It may sound like a lot of money, but in fact it is quite cheap, because they are probably spending 200k in rent and wages to operate the physical store which has a turnover of 400k. But it will only cost 40k to make the same money on-line.
So if this person asked me how much is a website whose objective was to make 400k a year, I would probably say they should put aside 80k for year one and 40k every year after. This is to cover web design and development, web traction, social media, communications, support and part-time staffing of the online store.
75% of consumers have admitted to judging a company’s credibility based on their website design. – Bluecorona.com
Now you may say, I don’t have that kind of money and most people don’t. But ask yourself, what are your goals in terms of turnover? How much can you spend in terms of cash and more importantly time and then you can asses your website and online business investment.
With some creativity in year one, a spend of 2k initially can grow into a turnover of 10k+, in year two you can increase your marketing budget. Keep an eye on your return, if you are not getting it, take some time to refine your efforts. Remember if your marketing is effective the investment comes back you in multiples, it costs you nothing.
These are just estimates, every business is different, but you get my drift, it’s a no brainer. It is important to be realistic.
62% of small businesses are investing 4% or more of their revenue on marketing (Engage2Connect, 2016)
A website is just a phrase, it can’t be picked up, weighed or touched, it is virtual. Every website is expected to do something different, but by and large the number one use of websites is to anchor a marketing strategy to acquire money in some shape or form. Some go the direct route with online stores, others blog to build their profile to profit off-line.
So to summarise, you should have a vision, then scribble an aggressive financial goal on a piece of paper and work out the steps to get there. Some people would say this is working backwards… I will tell you, it is the logical beginning to any marketing effort.
Decide on the destination and then organise a map.
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