The True Costs of Investing Online Part 2: The Production Phase

By March 7, 2016Blog, Insights

In Part 1 of this series, we covered The Cost of Deciding the Need. Next up is Part 2, The Production Phase, which has 3 costs:

  • A project fee for the skills required to produce the outcome (usually provided and coordinated by a digital agency)
  • An internal cost of time required to coordinate and manage the project process from the client side
  • The cost of any required brand assets like images to use on the site and written content for each page of the site (if engaging a copywriter)

PART 2: THE PRODUCTION PHASE

Digital Agency Fees

This one is obvious! The agency will charge you (the client) a fee for the work required to provide and coordinate the skills and efforts to produce your desired outcome. This cost is a complex bundle of services and skills. It is important to understand each proposed item clearly when assessing a proposal to ensure you are clear on the additional costs not covered as part of the engagement.

These will most certainly incur additional costs that you need to account for in the process (e.g. the cost of purchasing images for use on the site). Assuming most common practice in proposed costs, the costs to produce a high quality website for your business will be anywhere between $20k – $100k.

This price range is generally dictated by the complexity and number of functions entailed in creating your desired website, web application or mobile application. Using our average project fee as a guide, we will call it $50,000 for the purposes of this costs illustration. This gets you a fairly scope-rich and functional product that goes well beyond a simple online brochure. An example would be an application or website that enables clients to log into a portal to manage their accounts and interactions with your business. This saves the customer time and headaches, plus saving your business money through reduced support staffing needs. Based on this, $50k is a feasible value proposition for the costs involved.

Now that we include the agency fees (i.e. the agency’s quote) into the costs, it brings the project up to $56,000.

Internal Client Time Costs

This is another one of those unconscious costs (similar to the costs incurred at the identification of the need stage) often treated as a given in some cases. It’s often poorly tracked, if tracked at all, so clear visibility as to these costs don’t usually exist.

If we take an average of the time involved from our clients for an end to end production of a mid-sized website project (between $30k – $60k) across a range of activities including planning and coordination, content creation and curation and final system testing for QA acceptance, we come to a total of approximately 80 man hours. Which at an average salary cost of $120k for internal team members involved on the project  comes to $5,000.

After we include internal client time costs to the project, we’re now up to $61,000.

Brand Asset Creation Costs

This is often mistaken by marketers as a cost component covered by their agency partner.

However, almost all website projects that we have seen in our business and produced by other businesses like ours, state in their proposals and contracts that the quoted price of creating your desired website does not include content. It is assumed and expected that the client will provide the content that will be featured in their new system.

For example, all images on the site need to come from somewhere, they either need to be sourced and purchased, commissioned through a photographer or selected from a client media database. Another example is the copy (text) required on each of your website pages, this needs to be produced either by an in-house team member or a professional copywriter.

Going further, things like introduction or how it works videos need to be produced and provided to the agency building your website. These costs are surprisingly often overlooked and proper planning must account for the costs of these items within proposed budgets. The availability and state of assets is different for each project and client. For the purpose of this cost illustration, again we use the average additional asset costs involved in a project which comes to approximately $10,000.

Now that we add the Production Phase costs (digital agency fees, internal client time costs & brand asset creation costs) to the Cost of Deciding the Need which was $6,500, we reach an on-going total $77,500 – and we haven’t even deployed or stated advertising yet!

That’s all for this week, stay tuned for PART 3: DEPLOYMENT AND OPTIMISATION, available next Monday.