College towns see lower Web costs

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When looking for Web-savvy clients, developers in smaller cities are discovering the need to hunt customers outside their own back yards. At the same time, marketers looking beyond their city limits can find savings in development costs.

Median prices for building Web sites are significantly lower in college towns than the major markets for the second year in a row, according to this month's Web Price Index.

Lower prices

The median price for a small site in Ann Arbor, Mich.; Boulder, Colo.; and the Raleigh/Durham/Chapel Hill, N.C., triangle is just $12,000 -- far less than the $44,500 median in the major markets surveyed in June. The costs for medium and large sites in the college towns came in at $40,000 and $86,450 against $99,750 and $275,000, respectively.

These price differences reflect a lower cost of doing business rather than any drop in work quality.

Ann Arbor-based Fry Multimedia, for instance, was recently named one of the top 20 developers in the nation by Mecklermedia's Internet Computing based on the superior design and functionality of the sites they create.

Fry originally gained prominence with its launch of one of the first notable corporate marketing sites with its work for Godiva Chocolatier.

Yet, it finds doing business outside Silicon Valley and Silicon Alley can be a difficult. When asked about the advantages of being based in Ann Arbor, Sean Judge, Fry's director of sales, said, "I sometime think that there are not too many of them."

Mr. Judge cited the nearby University of Michigan as a benefit in terms of having a high-speed connection to the Internet and a constant flow of technology-oriented workers.

Other developers in the survey also say they rely on the colleges and universities in their markets for a ready supply of potential employees.

Said Nathan Perry, CEO of The Shop, Boulder, "We can flier the campus and get as many interns as we need."

Mr. Perry shares Mr. Judge's view that working in a college town poses unusual challenges, partially because few major corporations are based in these areas.

Companies outside the major U.S. cities also tend to still be maturing in their use of Internet technologies for business.

While The Shop has bid and won accounts against some of the major national Web developers, it has also gone up against some less sophisticated competition and lost smaller bids to companies that low-balled their estimates.

"Then we get companies coming back to us a couple months later saying, 'The guy who built our Web site wasn't making enough money so he went back to cutting grass,' " Mr. Perry said.

Fry plans to open offices on the coasts to help combat some of the disadvantages of being in Ann Arbor.

For now, Fry executives do a lot of traveling for client meetings and use the Internet both internally and externally.

Mr. Judge said Fry not only uses staging sites to show clients works in progress, but also ties a lot of its own billing software to the Web so customers can keep track of the hours and dollars being spent on their projects.

Still, for marketers focused on the bottom line, college towns deserve more than just a second look.

"When you have operational costs that are less, you can price your product less," said Mr. Judge.

Some insulation

While developers in these areas face the same problems from climbing real estate prices and soaring salaries, they're still not being hit as hard as their big-city brethren. "It's an industrywide situation," said Mr. Judge, "but it would be exacerbated for us if we were in Silicon Valley."

The other edge of that sword is that currently many of the most talented people in the field are drawn to the high salaries found on the coasts, making it harder for companies in smaller markets to lure new hires.

Mr. Perry also says that because of the steeper learning curve he faces with many of his clients, his company is used to developing stronger, more personal relationships with clients than it tends to have with larger, more corporate firms.

He said The Shop understands that answering the client's questions along the way is part of the overall job, and not a billable offense.

"We won't nickel-and-dime clients like a lawyer does," Mr. Perry says. "Nobody needs to be nickel-and-dimed in the Internet business."

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