NetMarketing's exclusive Web Price Index survey of Web developers and advertising agencies in five key cities across the country shows that the median price of a small Web site is $26,000. But a developer in one part of the country will build the same site for $2,800, while another would charge $200,000.
For this survey, the first-ever tally of Web development costs nationwide, NetMarketing created three hypothetical businesses with very specific Web proposals, and found that the pricing disparity is even greater when it comes to medium and large Web sites.
While the median price for a medium-size site in the NetMarketing survey is $102,025, one developer bid under $10,000, while another claimed it could only do the job for a whopping $960,000.
A large site, with a median price of $596,073, racked up bids ranging from a rock-bottom $15,000 to a pull-out-all-the-stops $2,800,000.
Such wide variation in prices is a clear sign that the Web development market is nowhere near any kind of standard pricing, and the word for marketers is: Proceed with caution.
"This range of prices doesn't surprise me at all,'' said John Zaloudek, marketing process leader at Owens Corning, which recently opened its Web site. "But it concerns me. ... I think some people are trying to take advantage of the situation."
To create what will become an ongoing Web Price Index, NM worked with Web experts to develop three marketing scenarios. A description of each hypothetical marketer was sent to participating developers as well as a list of required elements for each Web site.
We modeled these scenarios after a combination of sites that exist, sites that could exist and sites that might be breaking new ground.
With hypothetical Web marketers in hand, NM then solicited the participation of four developers in each market, ranging from small providers to well-known Web houses to large ad agencies.
Each developer received the same marketing scenarios and re turned bids for each of the three Web sites. Results were compiled to determine national and regional median prices as well as national high and low prices.
NetMarketing will update the index every three months with new figures and an expanding network of developers. And starting next month, we'll ask developers to price out the latest site enhancements, such as chat, frames and other tools.
Why such disparity in pricing? Developer skill is a prime factor. Those new to the market will frequently issue low bids in an effort to generate work.
"Some people have no clue about what their costs are going to be because they haven't done much work," said Owens Corn ing's Mr. Zaloudek. On the other side of the coin: developers that have a lot of flash but come up short in the substance department.
The disparity in pricing is even more striking when comparing individual markets.
New York Web site creators undercut their Chicago and San Francisco counterparts by more than 50% in each category of site. Where the median price for a small Web site is $77,375 in Chica go and $92,500 in San Francisco, New York's price is only $35,000.
"It is competitive here," conceded Colin Savage, technology analyst with New York Web agency Agency.com. "But there's so much work we're not at all com peting for a small pie."
Prices in Atlanta and Dallas, meanwhile, come in much lower than their big-city counterparts, a not-so-surprising fact given the level of Web development activity on the coasts and in Chicago.
But by the same token, Web developers and clients don't necessarily have to be in the same city or even the same region, giving smaller markets an edge, at least in price.
"We didn't even meet face to face with one client until we were almost done with the project," said Kenneth Vernon, general manager and creative director of McMann & Tate, a Dallas ad agency that participated in the survey. "If we're trying to get a project with a client in Chicago or New York or whatever, then conceivably we're competing [based on our] rates being lower."
Also notable in the survey is the fact that traditional ad agencies are pricing their services competitively with smaller, Web-oriented shops. Realizing that size and weight aren't as much of a factor as knowledge and quick action, the agencies in the Web Price Index survey in most cases did not provide the highest bids.
The survey mimicked real life for a lot of developers, who despite the Web's growing influence on marketing still meet up with marketers that don't know what they want and want it done for peanuts.
"I ran into a guy on the elevator who asked me, 'Are you still doing that Internet thing?' What's a page cost me, $250?" a dismayed McMann & Tate's Mr. Vernon said.
On the other side of the coin, Agency.com's Mr. Savage said he routinely gets 20-page proposals from major marketers.
"I am noticing that more and more people who contact us do understand the Web and what it can do," he said, and it's a blessing and a curse. "There's the scary situation that some day they'll know more than us."