COVID-19 Update. Many businesses are facing a digital transformation this year that they've never faced before. Big projects have been put on hold for many, but other projects have seen tremendous acceleration in timelines. As you plan out your 2021 budgets, we recommend planning for and investing in your website and digital marketing as separate budgets to embrace this digital transformation that is reshaping the online landscape, and we hope this guide helps you with your yearly planning.
Originally Published December 2019
In the world of web design and development, there’s one great equalizer that can send any project to ruin.
We’ve heard horror stories from an array of organizations with big dreams of transcendent websites that would change the game for both their business and their industry. And, yes, at first glance, these ideas seem brilliant, appealing insightfully to the user experience with effective navigation, engaging design, and innovative concepts, etc.
Then the cruel, crushing reality sets in once the development process begins. These organizations have spent days upon months focusing on ways to bolster the brand and increase revenue with the website but didn’t put enough thought into one crucial caveat: their budget.
Strategizing without any kind of adjacent thought towards your budget is the very definition of putting the cart before the horse. At that point, you may as well tell your investors that you’re traveling to the moon when you can’t even afford the rocket fuel, never mind the spaceship.
It’s understandable, and, as web developers and marketers, we totally sympathize with not letting something as sobering as a budget ruin your fun.
However, the consequences of such oversight or miscalculation go beyond being just detrimental. The best way to aptly describe a budgeting faux pas on your website production is “downright catastrophic.”
And here’s why:
The Pitfalls of Poor Budgeting
A poorly executed budgeting strategy will both do damage to your website and brand as a whole.
First and foremost, upon completion of your website, marketing the final product with paid ads and social media campaigns, for instance, is a must. Unfortunately, if the site ends up costing over double of what was expected, those crucial advertising funds won’t be available. As such, your shiny new website will be a sitting duck.
On top of that, failing with your budget usually means a website with a fraction of the intended functionality. Remember that consumers aren’t patient with poor functionality on websites. A 100-millisecond delay in load time can cause conversion rates to drop by 7%, for example.
Also, 38% of people will stop engaging with a website if the content or layout is unattractive. Sadly, that’s your website’s most probable outcome with an inaccurate budget. Since you planned in a way that far exceeds what’s affordable, the specifications will be off-kilter, leading to compromises in design and content.
The Delicate Balancing of a Budget
If it’s been 3 to 5 years since the last time your website has been upgraded, it’s time to look into a relaunch.
As such, with the year coming to an end, your organization must decide how much they’re going to set aside for web development.
There are a few things you and other decision-makers need to consider when crafting your budget:
To be competitive in today’s digital market, you must be willing to spend—but with a quality website and effective marketing, the return will vastly eclipse what you’ve paid.
For context, at many agencies, the minimum web project is $25,000. Working with a web development agency gets you a dedicated team made of multiple disciplines, experts in design, digital strategy, development, system integrations, user experience, ecommerce, and more. Twenty years ago, when many businesses moved online, a single web developer handled everything, and design and focus suffered as a result. But a team bringing all of their strengths together provides a website that is growth focused and scalable well into the future.
This way, it’s possible to maximize each aspect within the confines of what can be spent instead of being shocked to learn that your idea costs too much. Although you can’t afford to skimp with your budget, precise scaling is a necessity.
Understanding the direction of each dollar will keep you honed into the process.
Projecting the Prices
Before delving into projections, we must reiterate that to get the most value from your website, be willing to spend the most you can depending on your current scale. In other words, don’t nickel and dime your web development budget – especially as a larger organization – but don’t overshoot preposterously at the same time.
Here are some projections on your website budget:
If your organization is a medium-sized b2b company using the site for lead generation, and making $25 million in revenue, its suggested to budget 5% - 10% of revenue on marketing, and a portion of that dedicated to your new website.
Whereas an eCommerce website with tons of products and that’s earning around $25 million in revenue, should be spending approximately 10% - 15% of their revenue on marketing, including website design, development and maintenance.
Large businesses should be aiming to spend even more for the sake of adding the most optimal features to meet their growing client base.
Really, these costs depend on your business and its needs, your competitive landscape, future revenue goals, and most importantly how much you are willing to pay to acquire a new customer and your customer lifetime value.
If you are using your site for lead generation, understanding how many leads are needed to hit your 2020 revenue goals, in terms of unqualified lead (UQLs), to a marketing qualified lead (MQL) to a sales qualified lead (SQL) and the conversion rates between each funnel, will help you set a lead goal tied to your new site and marketing activities. It will also help you set key performance indicators for things like cost per MQL, cost per acquisition, and your customer lifetime value.
If you can’t answer the question “How much are you willing to acquire a new customer?”, let’s talk!
Other Vital Budgeting Factors
No matter its size, every budget has its limits. Therefore, depending on factors such as market research, brand image, and your given industry, you must decide the most crucial aspects of your website.
To further illustrate, if your business makes most of its sales on mobile devices, you will benefit from catering your budget towards a responsive design strategy. Why? Because the various intricacies involved in a responsive website are most conducive to generating sales conversion on a website. So, you wouldn’t want to waste time pouring money into elements that cater specifically towards the desktop experience.
Remember, the Work isn’t Done After the Website’s Completed
We’ll leave you with this parting note:
When you relaunch or create a brand-new website, you can’t dedicate a budget strictly to the technical aspects.
We’ve broached upon this subject already. Still, it’s integral to your website that you have enough money left over to market the new and improved product.
It’s a perfect way to let your audience know that you’re focused on keeping pace with the times and that you’re staying in tune with their needs.