There’s one question that bugs us web designers: Am I charging clients enough? Each one has a different approach to this question and may feel comfortable with his approach for quite some time, but there will always be points in the business where the issue resurfaces. And then we see ourselves with a pen and paper trying to come up with comfortable estimates for fees.
When scaling up our business, do we count the cost in? When a client asks for inclusion of certain features not stated in the contract, do we point him to the contract and push for additional charges? These are only two examples. The list is still long, but beyond those not-so- pleasant times, we have to take care of the daily needs of running the business, and that equates to expenses. You can’t keep the money long, because for one reason or another, it just has to be spent.
You Must Spend Money
A web design business startup usually starts out lean, and for many, it can be exceptionally lean. One may be able to generate a profit in the range of $30,000 or $40,000 in their initial year, which isn’t bad at all for that period. However, expect to incur higher expenses for the coming years. Huge amounts of cash have to be spent on a host of items – expensive design software, new iMacs, various applications, insurance payments, backup solutions, salaries, accountants, etc.
Don’t overspend – that’s the key. The moment you tip the balance and cause a huge difference between expenses and revenues, you will begin to ask yourself whether the business is still worth keeping. Remember also the lunch meetings with prospective clients and the new chairs to account for. Yes, you need new chairs, as furniture naturally goes through wear and tear. And yes, there’s still the free coffee for visitors and employees alike. You are never to serve cheap coffee. It’s bad for business.
For startups, a couple of things need to be done before you even sit down to calculate cost. Identify the particular website design projects that you don’t have trouble handling. Determine your market. If you are starting small, make a plan for targeting small businesses in your locality, for example. Client location matters, which means that you will use more fuel and time for customers that are based outside your city.
Next is calculating the manpower you need to accomplish your projects within specified deadlines. Figure out the cost afterwards. Set aside a substantial amount of cash for company registration, assembling of development and marketing teams and office spaces.
On the average, businesses spend about $6000 a month for a rental space that can accommodate a maximum of 10 people. Security deposit may be required, which is usually 5–10 times of that amount. Company registration fees can go up to $630, depending on the state you intend to operate in.
You may start with only one employee who you will task to do most of the marketing. $12K – $15K will be allocated for his/her salary. A few thousand dollars goes to items like electricity, phone and internet.
More Cost Downsides
Through the years, I, together with others in the web design industry, have come to know more downsides to the business—all of them directly or indirectly related to cost. Much as I like to give my employees the average salary of $55000, it just isn’t possible. If the overhead costs, stat holidays, holidays, and sick days are to be factored in, meeting the average salary goal will push us to charge clients not less than $100 per hour.
There are more that put burden on the budget. There are difficult clients to please, non-peak seasons to overcome, and deadbeat clients to chase down. It’s just a matter of learning the ropes, I guess. Luckily, our Brighton-based accountants, ACA, have come to our rescue here on more than one occasion, and it does help that they have offices in London!
Just Doing Good Business
It’s no wonder why we charge fees the way we do. We guarantee that this is all in the name of doing business the way it should be done. We understand everyone’s just trying to cut costs to have a little more for the family and employees to enjoy, but then again, prices are always negotiable and hopefully, with every transaction and agreement that we sign, nothing in the business relations and services are compromised.