Agency pricing tiers: How do you compare?

Worried you’re not charging enough? See how your websites compare to typical agency pricing tiers.

I get a lot of questions about perspective on what’s “normal” at other agencies. Often, it’s a question about agency pricing.

A client recently asked, “What are the average fees you’ve seen folks charge for websites? That is, design, development, and production.”

The short answer—at least US$10,000 for a basic site. But a more complicated site could easily be US$100,000+. It depends on complexity and your clients’ expectations.

In this article, I’ll review typical agency pricing tiers for building websites. Keep in mind that pricing is relative—a specialist agency with a strong reputation can charge more than an undifferentiated agency that’s newer on the scene. And you still need a sales pipeline of clients that are willing to pay an appropriate price.

Tiers of agency website pricing

I’ll assume your agency is pricing on an hourly basis (or on a milestone basis using an internal hours estimate). I list pricing in U.S. dollars; you’ll want to adjust if you price in another currency.

$10,000+

Unless an agency has extremely low-cost labor and strict project management controls, they shouldn’t charge less than $10,000 to design and build a quality site. If you charge less, you don’t have enough time to do the work.

At $125/hour, that budget translates to 80 hours. Once you subtract 16 hours for project management and client service, it leaves only 64 hours for the actual design, development, and launch. If you have two people working 15 hours a week, you’re out of budget by week three.

$25,000 – 50,000

At this level, agencies have budget to add some in-app functionality, such as customized tools. They can also do basic user testing. The agency might be doing some content creation, too.

$100,000+

If a client is paying $100,000+ for a website, they’re likely getting custom back-end capabilities, strategic information architecture, great design, user research, content migration, more content creation, and what the client should perceive as an amazing client experience.

At $125/hour, that’s an 800+ hour budget. If the client isn’t local, that’s enough to do an in-person kickoff and potentially another in-person meeting or two.

$1 million+

There are a few agencies that charge $1 million or more for their websites. These are primarily corporate websites that use proprietary enterprise content management systems (CMS) with licensing fees that are already $100,000 or more. This budget likely includes travel for on-site meetings at the client’s office.

Pricing by page vs. custom templates

Several clients have asked about pricing websites based on the number of pages (e.g., 25 pages vs. 100 pages).

I don’t recommend pricing by the number of pages. Instead, price based on the number of custom templates you’re creating, since they will require design, development, testing, and quality assurance.

For example, a sample site might have five templates:

  • Homepage template
  • Top-level interior template
  • Second-level interior template
  • Landing page template
  • Special template for the services section

These pages would be easily replicable (e.g., to add a new page that uses the landing page template), but the agency’s initial design and setup will take time.

However, you should use per-page pricing for content creation (and migration). Migration pricing will depend on whether it’s a manual migration or a mostly automated database-to-database migration.

Know what to expect from your market

All the averages in the world don’t matter if your prospects aren’t willing to pay a fair price.

Small businesses often want more than they can afford, so you may need to cut scope to fit their budget. You will also have to manage client expectations and be extra-vigilant on change orders.

Prospects in smaller markets tend to want to pay less. Prospects in New York tend to pay $200/hour for what anywhere else would be $125/hour.

For instance, I don’t think agencies should charge $5,000 for a website (their hourly-rate equivalent would have to be too low) but if your target market can only afford $5,000 websites, you need to decide if you’re going to play. One solution is to have a single person handle everything, to eliminate internal handoff complexity.

If you’re going the “squeeze the budget” route, project management is vital. A client who charged $10,000 for websites was having cash flow problems and a few projects that were dragging on. I did a Work Breakout (WBO) to dig into how much work those delays were taking, and discovered his team had delivered $27,000 in work on a $10,000 job. This was why it took longer and why he wasn’t getting cash fast enough. Once they fixed the over-delivery problem, things improved dramatically.

Other factors: Reputation, competition, and cost structure

Reputation matters. When your agency has a strong reputation, you tend to attract clients who are less likely to price-shop. This also tends to extend to having a client vertical specialization—if prospects see you as the perfect match, price isn’t the main factor.

Your competition matters, too—but you don’t always know what they’re charging. Most agencies don’t publish their precise web development pricing, so it’s hard to compare yourself to the competition. And there can be huge ranges—I worked for one agency that had an $8,000 minimum… and another that had a $75,000 minimum. Both used the same CMS technology and the same hourly rate assumption—the output was quite different.

Your labor cost structure can factor into this, too—if you’re paying contractors $15/hour, your labor budget will stretch more than if you’re paying contractors $75/hour.

Wherever you are now, take a moment to assess how your pricing compares to the typical tiers. If you’re undercharging and aren’t sure how to fix it, let’s chat.

Question: What do you see your competitors charging?

Image credit: Ladder photo by Anton Bielousov, via Creative Commons

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