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Budgets for webs sites can range from thousands
of dollars to millions of dollars. The minimum "retainer" or "down
payment" to start up even the smallest commercial web site
is usually about $2,500.00 USD, because of the rather large initial
time commitment to set up a permanent web site. Remaining payments
for additional work are usually stretched out over time according
to the client's needs.
Web sites which you hear about for very little money are not truly
professional. They are only cookie cutter type web sites with pre-set
features
which are exactly the same for all customers. These web sites are
not permanent.
Moving from them is very expensive and time consuming. You can loose
your permanent dot com address, your data and your software is worthless
after the
move. These
web sites also cannot be customized for
business
because
they lack all the
professional
software
programming features. You are pretty much stuck with what you are
given, with no hope for
changing the format or adding functionality. In general, it is always
better to go ahead and spend the money to set up your web site correctly
the first time. Once you
have a professional web site, you can
grow
and expand your business with confidence by
using standardized professional software and professional developers.
Range of budgets for Commercial
Web Sites
A Graphics Only Brochure
Web Site
$3,000.00 to
$5,000.00
This initial web site will place your company on the
world wide web to advertise its presence and receive it's E-mail.
It usually costs
about
$3,000.00 to
$5,000.00. This site looks a lot like a color brochure for your products
and services, and it can actually be printed out by your customers
anywhere in the world. It becomes your company's continually updated
color brochure. Many companies now put money previously budgeted for
printing four color brochures into their web sites instead. These web
site brochures are generally known as
a "static" or "informational" web sites. They may
also include small sections of very limited animated graphics with
some Flash
movie programming and
XML streaming
media windows. These sections do not print out easily, but they
look nice on the web site. (ie: a small product demo banner sized
window or a news ticker like the
ones
on
the Rawsonweb
home page).
A Small Catalog database driven
Web Site
$5,000.00 to $10,000.00
This web site allows your customers to search
a small database of inventory and prices to order via credit cards
on a secure encrypted
E-Mail
system
etc. It will will move you up into the $5,000.00 to $10,000.00 dollar
range.
A Small Business E-Commerce
Web Store $10,000.00
to $50,000.00
(USA national
average cost for an E-Commerce web site is $20,000.00)
This web site places a mail order branch office
for a small business directly on the Internet will range from $10,000.00
to $50,000.00.
Cost advantages of a Business on the Internet
Since a full sized
cash register computer and bookkeeping
system for a
small business (ie: a restaurant,
a gift shop), called a POS ("Point of Purchase") system,
now costs about $ 15,000.00 for a small retail store and the up
front investment in store merchandise held
"in stock" purchased in advance costs many tens of thousands
of dollars more, the above price range for a full business on the
Internet is quite reasonable. On the Internet the exact same POS computer
system is used, but there is little or no up front investment for
"in stock" merchandise and no cost for real estate property.
This can be quite a savings when starting a small business.
The average "bricks and mortar" retail
business
in the USA, now
costs
about $ 200,000.00 or more to setup. These costs are usually paid
for by an individual taking out a small (minority or other) business
loan
from the Federal Government Small Business Administration, or from
personal equity financing from family and
friends. Brand new businesses of any kind (ie: restaurants) have a
95 percent failure rate, while existing "bricks and mortar" or
web-based businesses which expand services, do much better.
A business
is considered
weak and immature in its first five years of existence, stable in
its second five years of existence, and fully mature only after fifteen
years in business. It take a lot of time to develop a good business,
with a stable cash flow, so being able to survive day after day and
come back to try again is critical to success.Walt
Disney
went
bankrupt
three
times, before
Walt Disney Studios was finally a
success.
Believe it or not, there is inherently much less risk
in an Internet business, because one can start over again many times
for the
same
cost as
starting
up a single
"bricks and mortar" business. In the long run, business
experience
is essential
to success, so getting that experience at a lower cost is less
risky. The learning curve for a "bricks and mortar" business is
about the same as for an Internet business.
To protect
against failure one can also pay the extra costs of from $30,000 to
one million for a license from a successful national franchise (ie:
a small dry cleaning company, a web-based business, or a huge MacDonald's
restaurant operation), but then one is working exclusively for that
company and
even financing
that
company with one's own money. Instead of just being an employee who
can quit the company anytime, one becomes a slave to that company and
may or may not be able to sell the franchise for a profit in the future.
One is not really in business for oneself, although that is what the
franchise says in its advertising.
Now, however, on the Internet a small retail business
can easily find customers from
all
over the
world, and not be limited to a small area in a local neighborhood.
The owner of that company can work entirely for oneself.
The risk of failure is still
very high, but at least one has a chance
to
be
truly
independent
in business for much less risk than the high cost of setting up a traditional "bricks
and mortar" business. An Internet business also allows one to
work from home and travel the world without having to worry about
local
retail
estate
rentals.
This ability to expand ones business world wide for
a smaller up-front cost is why many retail businesses have moved entirely
onto the Internet and away from the shopping malls. DELL
computers are sold exclusively on the Internet. DELL has no retail
outlets at
all. It has become a multibillion dollar empire by doing all of its
business on the Internet with customers directly. Ebay
is a
virtual company with zero inventory. It has just a headquarters
office. The list goes on and on, and new companies like Google
are
popping
up all
the
time.
What else does one need to know about doing business
on the Internet. It works! BUT it is not EASY. It takes years of dedication,
at least
5 years, to get something to really work. Better to get started now,
than work an old and out-of-date business model, called "bricks
and mortar".
A Corporate
E-Commerce Business Web Site
$50,000.00 to Millions
This web site
uses"legacy" database
and "data warehouse"
information from multi-national corporate headquarters etc.
An example of this last range is "travelocity.com" which is linked
directly to the American Airlines billion dollar SABRE computer airline
reservations
system based in Oklahoma City.
Another issue to consider in
building a web site is....
Web Site Maintenance
15 percent
of Your Initial Budget Per Year
Web site maintenance can
run about 10-30 percent of your initial budget per year, which
is the same renewal rate as keeping any asset functioning.
Some of this cost can be avoided with a database-driven web
site where your customers fill in the forms and documents themselves.
Money also has to be set aside to cover the on-going expense of
running your expanded business. E-mails still have to be
answered just like telephones, and now customer can place telephone
calls with "live" pictures and video directly to a company via the
Internet itself.
Today, most modern
interactive E-Commerce web sites allow a customer to talk
immediately
and directly
to a "live
person" on the web page to ask questions in "real time".
This feature can increase sales dramatically by giving the customer
service
right away. Customers can talk to company representatives by typing-out
questions in a chat room. They can also receive a copy via E-mail
of the entire
conversation for their records. Customers can also
"click" on a button to place a
FREE Internet telephone call from anywhere in the world direct to
the company, to ask questions, and receive a copy of the voice recording
in their E-mail as well. In addition, "live" video demonstrations
of the company's products and services can be broadcast directly to
the customer while the sales
representative
is
talking.
The possibilities for servicing customers on the Internet are endless,
but the costs of these extra service must be included in a monthly
maintenance fee. People who work in a "bricks and mortar" store
are paid by the hour and so are people who work in a store on the Internet.
Why Flash Movies Are Used
Only in Small Sections On Most Business Web Sites
Web sites are like slide shows. Each time you click
on a new link, you see a new slide. Flash is a video which "plays" inside
an existing web page. It adds little motion pictures to your web
page. The problem is that these little movies are far from ideal
for entering business data except in very small doses. Flash movies
must translate data into the web page in which they are imbedded,
so data transfer efficiency and security is less than perfect.
Also, to really do an entire web site in Flash with strong data connections,
and totally replace web page "slide shows",, a highly specialized
dedicated Flash server called Flex is required. It is a "real time"streaming
media video server and it costs $ 30,000.00. Only large media companies can
afford do an entire web site as a stand alone movie. This a luxury that few
small businesses can afford. Flash is the future but it is coming at a high
price. It also does not print out on paper easily for your customers.
In addition to the above, a web page must download all of a movie before it
plays and a media player program has to be downloaded as well. This is why
you often see the words "now loading..." or "please download
new software to view media" on web pages sometimes, instead of getting
the immediate information you need right away from a web site.
Most serious businesses use web pages first and then add Flash as an extra
method of communicating. They never ever start up in Flash, because they know
that customers will leave the web site before the presentation begins. This
is why Flash is used sparingly on most business web sites.
If you really want to go to the next step up on the
web, which is basically producing interactive television videos which
are delivered through a web site, please click on item below to prepare
an additional budget for a steaming media web site, complete with
professional film production services for mass distribution via the
web. The large media companies are already doing this type of web
site.
How
to Estimate an Industry Standard Budget For Producing Professional
Films and Videos
for use in Flash Movies and other forms of Professional Film/Video Distribution
and
Rawson Film Professional Production Contract
With a fast Automatic Budget
Calculator
Calculate an Industry Average Budget
Professionals all cost about the same. Choose
one by their online work samples and ask them what the web site
cost.
According to HR Magazine (Human Resources Magazine), in this current
year 2005 , the "average" salary range today for a professional "web
developer"ranges from $65,000 to $85,000 per year. Developers
earn as much as lawyers. If you are not a member of HR, try this
link to Yahoo Jobs to see salary survey:
Note: The University of California at Berkeley
is in the San Francisco Bay Area and this is the center of the
software developer talent pool.
A professional lawyer at a law firm
makes about the same yearly salary
as
a web developer. The average law firm charges about $125.00 to
250.00 per hour for
a lawyer's "billable time" for short term outsourcing
contract work. A firm makes really good money when its
lawyers are all busy and it looses money when they are not
busy. The general rule of thumb that companies use for short
term
out sourcing
contract work is to bill 2 to 3 times the cost of a permanent
employee, on the theory that the employee will not be busy
all the time during the year. This fee covers
office
expenses
and
sales
overhead and the permanent employee's yearly salary.
The above scenario for any professional firm is
the practical
reason why professional web site developers with
serious
experience
will charge $125.00
per hour or more for their "billable time". The
only way to save your company money in the long run is to
make the
commitment to hire a full time
web developer employee if you can find a good one. The problem
with that idea, however, is that most experienced web
developers work for themselves. Out sourcing still maybe
your best
answer. Long term outsourcing contracts of 6 months or more
can reduce hourly rates. Short term outsourcing
contracts of 6 months or less increase hourly rates. It
is that simple. If you cannot afford an in house
lawyer, you probably cannot afford
an
in house
web
developer.
A Web
Master
is
not a Web Site Developer
As big as the name sounds, a web master is
just the person who fills the orders and responds to E-mails.
This person
is usually a secretary or an operations manager. Web
masters do not design web sites. They are
your salaried employees, who are trained
by web developers to use password protected web pages to access
your web site to
make
the daily additions or changes your web site to keep your
business running. They run your business, not your web site design.
Their
salary is not considered part of a web site maintenance budget.
When
you open a bricks and mortar business, you hire a store manager.
The store manager does not design your store, an architect does
that.
The same is true for a commercial web site. A web master is just
an operations manager. A web developer is your web site architect.
The developer designs and builds your web site.
Short Term Contracts
(less
than 6 months to build a site)
Since web sites normally take several months
to
build,
you can see why you should budget
ten's
of
thousands of dollars for a serious site. The average
starter commercial business web site now
costs about $20,000.00 to build and takes about 3 months
to finish.
This is
still about one tenth the cost of opening a full bricks
and mortar business which can cost $200,000 to $300,000,
so it
is still a bargain.
You can hire an inexperienced person for a low hourly rate,
who will take longer and make mistakes, or you can hire an
experienced person at a higher rate,
who will work
fewer hours without a lot of problems. Both will get the
job done. The end result total budget will add up to be
the
same cost, but professionals are easier to deal with in the
long run. Rates
used
below
are industry
average rates for experienced professionals.
Copyright by W. Derik Rawson 1995-2003
Friday August 11, 2006 9:57 PM
Rawson Web E-Commerce
2419 Brazoria Street
Houston, Texas
All Business Correspondence to Mailing Address:
Rawson Web E-Commerce
P.O. Box 130671
Houston, Texas 77219-0671
281-754-4315 Main Number Voice/Fax
Thomas McKiddie
t.mckiddie@rawsonweb.com
281-754-4314
by
Rawson Web E-Commerce
Design and Production for Graphics/Television and Internet
Los Angeles - New York - Houston
Production of Animation for Sesame Street, New York
National Television Commercials and PBS documentaries
W. Derik Rawson Cameraman/Director/Editor/Producer
Copyright 1996-2005 by W. Derik Rawson Revised
Monday September 4, 2006 11:47 PM
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