The True Costs of Investing Online Part 1: The Cost of Deciding the Need

By February 29, 2016Blog, Insights
True Cost of Investing Online - Part 1 - Leafcutter

At Leafcutter, we encounter the topic of budget associated with developing a website, web application or mobile app. In our experience, a business owner’s’ understanding of the level of investment required can often fall short of the mark. Especially if the brand is still in it’s digital infancy or the key decision makers are learning the power of digital.

In this special 3-part series, we’ll take you through the key areas of investment required to create a digital product, using websites and web applications as the primary examples. We’ll create a checklist that will provide anyone looking to invest online with a realistic and honest guide that provides clarity to what is really involved in creating a website, web application or mobile application that drives results and outcomes that justify the investment into the best digital agencies.

To preface our checklist, it is essential to understand that a website is the sum of many independent parts and skills. To illustrate this, imagine the well known symbol of mechanical cogs that feature in the workings of clocks. The finished clock is made up of, and ultimately formed by, the coming together of many different parts and components. Below, we have outlined what these are:

PART 1: THE COST OF DECIDING THE NEED

  • Identifying the Need
  • The Project Scoping

PART 2: THE PRODUCTION PHASE

  • The production process includes 3 costs:
    • Digital Agency Fees (project cost)
    • Internal Client Time Costs
    • Brand Asset Creation Costs (e.g. sourcing and purchase of imagery)

PART 3: DEPLOYMENT AND OPTIMISATION

  • Website Hosting
  • Ongoing Maintenance and Management
  • SEM SEO, PPC & Other Advertising Products

Over the next 3 weeks we will release more of our checklist and key costs that need to be taken into consideration on any website, web application or mobile app project. These have been broken down into 3 stages to help contextualise where and when the activities and related costs apply.

PART 1: THE COST OF DECIDING THE NEED

Identifying the Need

The decision to create a website, web application or mobile application, ultimately starts from an idea that addresses a need. In the case of business, there are many needs that ultimately culminate to the idea of having a great website.

Here are some examples of business needs: promotion of services or offering of product for sale online, sharing of information and communication with key audiences, and delivery of service making life easier for customers and operations more efficient and scalable. The first true costs come into play at the point of deciding that a website (refreshed or new) is an idea that addresses key needs. Once the key needs have been identified the process of thinking about how a website could address those needs is the next step. Once this thinking is clear, hiring the expertise or engaging a professional to bring your vision to life is possible.

To get to this point requires an investment of time and effort that usually involves up to 5 people. Of these there are probably 1 or 2 key people doing 80% of the hands on work, but the other 2 to 3 people are still required to put time and resource towards preparing for the initiative. For example, on a project with a pharmaceutical client of ours, their website project team consisted of their project lead (senior brand manager), their product category manager (business unit lead), their IT manager (senior IT/business analyst), their regional general manager, and their head of IT (and these roles are just the ones we know about!).

It would have taken that team more than 22 man hours to simply identify and decide that a website will address their needs and to think through and discuss the ‘how’ among themselves to justify the investment. Assuming an average senior professionals salary of $120,000 (to play on the safe side of town), this investment in internal man hours comes to $1,375.

The investment required just to determine what your business’s need is, can be as much as $1,375.

The Project Scoping

Once internal stakeholders are aligned and agreed that a website is required and is worth investing in because of the needs it addresses, it is essential to formulate and document a clear scope of work.

Documenting the scope of work is essential to being able to properly manage the creation of the end product and is essential to being able to get accurate quotes for the work involved. To do this accurately requires the input of an experienced professional team who understands how to articulate marketing needs into a project scope to deliver on. Attempting to put together a project scope without this guidance and expertise is a risk and it invites uncertainty, which ultimately leads to the need for more budget and often ends with a product that doesn’t live up to expectations. This is a big cause in projects going off-course and outcomes failing to be met.

This website scoping process ultimately involves another 50 internal man hours plus the costs of engaging a professional (bringing contractor’s in house or using external agency resources) which are generally approximately $2k depending on size and complexity of the project. Bringing the total investment up by an additional $5,125.

Once you’ve determined the need, scoped out the requirements and articulated the project outcomes, the costs will have totaled $6,500.

That’s all for this week, to continue reading check out the next article: PART 2: THE PRODUCTION PHASE.