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Pick right partner; right price will follow

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When a company first weighs the decision to go online with its own Web site, price is always a key factor. Even though the value of the Internet as a competitive business tool is now widely accepted by all but the most backward of bosses, that still doesn't mean it's worth paying any amount for a developer's services.

The Web development business is so new that prices remain disparate and in constant flux. NetMarketing's own tracking for our Web Price Index over the past year indicates that while major developers are slowly moving toward more consistent pricing, it remains a wide-open market out there.

If you put out the same request for proposal to five different developers, you are likely to get back five very different project estimates.

So how do you find your way to a fair price for both your company and the developer -- and still get all the features and functionality you want?

Well, the short answer is: You're probably going to have to compromise.

We have a report on the front page of NetMarketing this issue that talks about negotiation strategies different clients and developers are using to settle pricing differences, but I'll tell you from personal experience that the only sure way I've found to get the price I want is to give up some functionality, at least in the beginning.

Several of the sites I've worked on involved competitive bids, and the first wave of responses has never failed to astonish me. The bids were always well beyond what I had budgeted -- even though in some cases, we discussed our budget with the bidders ahead of time!

Fortunately, it's like buying a car: I've never been in a situation where we ended up paying anywhere near the amount originally bid. In some cases, the final contract was for less than half the original proposal. This is an interesting point for those who rely on our Web Price Index for an overview on national pricing: The prices we publish in our Index are the equivalent of first-round offers, and should be taken as such.

In the real market, I've always found developers happy to reduce the price in return for other concessions, particularly a willingness to put off some of the more expensive features until the basic site is up and functioning.

What's crucial here is demanding a detailed breakdown of the estimate for every part of the project. Then you can see which tradeoffs make the most sense. Never accept a bid that doesn't break down every price estimate down to hourly labor costs.

That strategy so far has worked well for me on several sites: I've stayed on budget with development costs, the sites have built out slowly but consistently, and they've generally been profitable within the first year.

The other crucial factor, at least in my experience, is not to let price be the key determinant in choosing a developer in any case. The best way to get what you want is to find a developer you can partner with for the long term.

The dumbest thing you can do is to simply hire the lowest bidder. It looks good on paper, but down the road you're likely to find yourself -- and your brand -- stuck with a cut-rate site that's neither scalable nor flexible as you grow.

That's a recipe for disaster, and in the end you're just going to have to go back out in the market and start all over anyway. Much better to find the right Web partner first, and then haggle to find a realistic price for the project.

David Klein is associate publisher-editor of the Ad Age Group. You can e-mail him at dklein@crain.com.

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