How to calculate the cost of site creating?

Started by MartinL, Apr 04, 2023, 12:15 AM

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MartinLTopic starter

Occasionally, there is a need to develop basic websites.
And I always find myself at a loss when trying to determine the cost.

My thought was to provide the client with a cost breakdown, where it is itemized as follows:
1. Domain (cost of idea, registration, or marking it as 0 if the domain is already obtained)
2. Structure development (or providing a general outline and internal layout - essentially demonstrating to the client that this step is necessary and someone has to handle it)
3. Design (using a pre-existing template or creating a unique design from scratch, or...)
4. Implementation (using a CMS or coding in plain HTML/PHP for a one-page site)
5. Content creation (handled by the client or delegated to a subcontractor)

But how do you calculate the prices for such work?
Of course, it would be convenient to have a fixed standard price, like $100 per site. However, in reality, numerous additional factors need to be considered. So, how does one proceed?

Please refrain from suggesting to multiply the working hours by an hourly wage. This method doesn't work because the cost of creative work differs from the cost of coding, and a website built on Wordpress or Laravel also has different costs. In the end, we would still need a breakdown table to calculate the overall expenses.

On a related note, it's essential to communicate openly with the client to understand their specific requirements and budget, ensuring a fair pricing structure for both parties involved.
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aravalisec

Using such tables to calculate website costs is clearly an impractical approach. It introduces unnecessary bureaucracy and confusion for both you and potential clients. Each time, you'll find yourself sitting down with the client, repeatedly explaining the price list.

A more practical system involves providing a rough cost estimate based on the client's requirements. You listen to their wishes in any format and make an approximate calculation. You then communicate this estimate to the client and engage in negotiation.

Alternatively, you can directly inquire about the client's budget for the project and compare it to their desired features. Negotiations can then revolve around finding a middle ground.

Once the final price is determined, you delegate tasks to your employees and negotiate with them regarding compensation. If the budget falls short, you independently decide where to cut costs without involving the client, ensuring that enough remains for their requirements and leaving room for profit.

Of course, it's important to include a contingency reserve in the overall amount. This serves as a buffer for unforeseen circumstances, and if unused, becomes a bonus for you.

It's worth emphasizing the importance of open and transparent communication throughout the process, ensuring both parties understand the scope, limitations, and financial expectations of the project.
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alloberogar

In my perspective, your inquiry pertains to the creation of a business model. In Russia, pricing is primarily influenced by purchasing power. This means that the cost of work is established through negotiations. Without a clear statement of work (TOR), determining a specific price can only occur after analyzing all requirements.

To begin, segment customers based on their typical needs. Decompose the requirements for each requested website and group customers with similar requirements together.
Next, calculate the resources required to fulfill each item of the requirements. It is ideal to have templates for each item that can be easily customized for specific tasks without incurring high costs and time-consuming efforts. These templates usually evolve during the work process and should be consistently optimized.

Thirdly, ascertain the approximate market prices within each customer segment. When advertising, avoid specifying exact prices, but rather indicate a starting point as "from."

For instance:
Customer in segment A: starting price from $100
Client in segment B: starting price from $200
and so on...

By determining the requirements of customers within each segment, you can calculate the necessary resources for meeting those requirements. Consequently, it will become evident which clients are not viable due to lack of cost-effectiveness. Disregard the practice of offering significantly reduced prices; it is never wise to accept terms that are unprofitable for your business.

Remember, establishing transparent communication with clients and focusing on mutually beneficial arrangements is crucial for sustainable business growth.
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juicebrenner

By changing the development methodology, the need for technical specifications and price lists with services can be eliminated. Instead, the focus shifts to the cost of your working hours.

Ideally, the process would involve creating a TOR (Terms of Reference), agreeing on the project's cost, initiating development, delivering the project, receiving payment, and ultimately making a profit. However, as you mentioned, it often happens that customers themselves are unsure of what they want.

In such cases, you may find yourself in a situation where you have already written a project plan, and the customer suddenly realizes that an important feature was not included. Adding this feature becomes challenging, as it should have been considered during the system design phase. Recalculating the cost and presenting it to the customer may result in farewells, as the initial budget and announced cost have already been allocated, and revising it becomes difficult for various reasons.

Even worse, you may complete a project, only for the customer to reject it, claiming it does not align with their original vision at all.

However, in an iterative approach, the work is divided into sprints, typically lasting two weeks each. At the end of each sprint, you showcase the progress to the customer and outline the plans for the next sprint. Throughout the project, the customer remains highly engaged and actively participates, allowing them to witness their project grow and witness the addition of new features. This approach minimizes paperwork and bureaucracy. I believe it is unnecessary to explain the advantages of this method to you.

Embracing an iterative methodology not only allows for better alignment with customer expectations but promotes collaboration, flexibility, and adaptability, resulting in higher customer satisfaction and successful project outcomes.
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