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Large-site prices still declining, survey finds

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oldclass: 2 The price of setting up a large, complex Web site has plummeted from a year ago, while the cost of creating a small site has remained essentially flat, according to NetMarketing's latest survey of Web developers in six cities.

The median price for a large site has dropped to $275,000 -- a sharp decrease from $596,073 in September 1996, the survey found. The median price for a small site came in at $25,000 compared with $26,100 in September 1996 -- while the median price for a medium-size site was $83,000, compared with $102,025 in the year-ago survey.

Median Price High Low
Small Site $25,000 $378,900 $6,100
Medium Site 83,000 771,135 $6,500
Large Site 275,000 2,367,440 50,000

This is the third NetMarketing survey of Web developers to find out the costs of producing different-size sites for three hypothetical marketers.

Market still wide open

The first results, from September 1996, found huge differences in prices for the same services in city-by-city and national comparisons. The second survey in April still found disparity in pricing; on the whole, however, prices had dropped from September.

For marketers, these fluctuations mean it's still a wide-open market for Web site development, with plenty of room to negotiate prices.

Looking at the different cities, San Francisco turned in the highest median prices for the small and large sites, at $96,500 and $465,980, respectively. Still, that high median is down significantly from $1,037,500 in September 1996.

New York tops list

New York topped the list for the price of the medium site at $185,000, while Chicago, which had the highest prices for each site in the April survey, saw its medians decrease across the board.

While the data fluctuations are partially a result of changes in the lineup of participating developers, on a more fundamental level the Web development industry continues to evolve as marketers' expectations for their Web sites grow. The biggest change in the past year hasn't been some new technical bell or whistle; it's the realization that upfront strategy is an important segment of the design process.

"This isn't about technology and flashing pictures," said Marian Wright, business development manager at New York's Agency.com "It's about extending your business online."

As marketers expect more, the pitches developers go through get savvier as do the requests from the marketers. "The level of [requests for proposals] has shot up," said Ms. Wright. She said that marketers are starting to look for Web design firms that can also consult about developing strategies to get a better return on investment from their Web sites.

A lot of hand-holding

At the same time, however, developers are finding there is still a lot of hand-holding that needs to be done in the board room about the process of building sites. That all translates into billable hours that affect the bottom line for site design.

Marketers are also realizing the importance of building a solid back-end to a Web site.

"Sites are becoming more dynamic with at least some parts being database- driven," said Steve Klinenberg, VP-general manager of DigitalFacades, Santa Monica, Calif. Marketers are "going toward more sophisticated sites at the beginning." This ups the start-up costs, but can pay big dividends later on by making the site easier to maintain and redesign.

Developers are also having problems finding people with the kind of consulting and programming skills needed to fill these new rolls. Ms. Wright sees staffing as one of the biggest challenges for the industry.

Developers are finding it increasingly difficult to keep staffed with skilled programmers as they add new, more complicated business, she said.

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