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Rawson Web E-Commerce
Setting Up a Budget For Your Web Site
Click Here Use our Inter-Active Budget Calculator
Below to Add Up Your Budget.

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:

Web Developer Salary Range at Yahoo Jobs

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.

Approximate Number of static "brochure" type pages in Your Web site Project
 multiplied by $ 125.00 USD per hour per page
for static"graphic design only" pages

1 hour of graphic design is $ 125.00 US dollars per hour

Approximate Number of dynamic "catalog" type pages in Your Web site (ie: Flash Movie or database generated pages)
Project
 multiplied by $ 375.00 USD per hour per page for

1 hour of graphic design $ 125.00 US dollars per hour
1 hour of software programming $ 125.00 US dollars per hour
1 hour of online database system testing $ 125.00 US dollars per hour

Web Site Budget for

Brochure Pages  
Catalog Pages     
Total Pages         

The hourly rates above are for calculating a budgets only. The actual hours spent on a project can be much more or less than publicly posted here.

Professionals are selling code, experience and time, not just time. Amateurs work for a lower hourly rate longer hours on unproven code and may not be able to do the same job.

Professionals always try to work in a standardized "off the shelf" software programming environment to build your web site, so the work can be continued by any trained professional. Professionals already have experience writing blocks of "tested"code, so they know what works. This saves them many hours of work in designing your project.

SUMMARY OF INDUSTRY STANDARD
EXPECTED PAYMENTS MADE
IN ADVANCE TO BEGIN A PROJECT

1st Payment to start the project is 50 percent of budget 
(due before works begins)

2nd Payment to continue the project is 25 percent of the budget
(due on completion of first draft design)

3rd and Final Payment is 25percent pf the budget
(due on completion and before release)


YOUR YEARLY MAINTENANCE FEE (15 percent)
FOR THE ABOVE BUDGET IS:
(due on the 1st or the 15th of the month)


Payments are due quarterly for 3 month's work in advance, and must begin on the same day that the project is completed in order to guarantee continuity. Late fees of thirty percent apply after 10 days, and the contract may be dropped. You can get a maintenance contract with anyone you choose. You do not have to use us, but you have to make your decision each time at least 3 month's in advance. If you come back to us at a later date for maintenance, we will start over from the beginning and charge you our minimum fees or more to begin a new web site project.

Note:... If you do not maintain an asset properly, it will not work for you. This is exactly what is wrong with many web sites. They work at first and then they become "dated" and non-functional. It is important to stay up to date and make necessary changes to keep up with your customers. Otherwise money and time are wasted.

YEARLY MAINTENANCE FEE (PAID QUARTERLY)
15 percent
FOR THE ABOVE BUDGET IS:
(due on the 1st or the 15th of the month in advance)


The expected budget for web site maintenance is 10 to 30 percent of your total original budget per year. A good number to use for budgeting purposes is 15 per cent. The amount depends on how much of your original web site is updated every year.

Please fill in your information below and send us your above budget calculation. Look in you E-mail box for an automatic response from us which will also give you a FREE list of the "key" items which you will need to provide to any professional to begin work on your web site. This list will help you get your web site organized much faster.

Thank you for visiting the rawsonweb.com web site.

W. Derik Rawson
d.rawson@rawsonweb.com

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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

E-Mail:              info@rawsonweb.com
                           sales@rawsonweb.com
 
Web Page         http://www.rawsonweb.com

W. Derik Rawson
d.rawson@rawsonweb.com
713-522-0888 Direct

Chuck Gardner
c.gardner@rawsonweb.com
281-754-4314

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