Recently a prominent Australian business has started to advertise low budget websites for a monthly fee around $30. There's a lock in contract of 6 months but even then we're talking about a 3 page website for less than $200. So what's the catch?
Well, not having used their service or knowing anyone who has, we can't say for sure. As a web development business though, we have been looking for ways to offer everyone who comes to us a website that fits their budget. We haven't however been prepared to make the compromises necessary to sell websites at this price point but I thought it might be interesting to look at the business model you'd need to do so.
First up, at Blis, we don't "offshore" our work. We employ designers and developers with University degrees in graphic design and computer science. However, if you did send all your development work overseas, you would cut down on labor costs. We receive (unwanted) emails just about everyday from "offshore" companies and the going rate seems to be around $11 an hour. So we could probably expect that this $200 website will have people building it for around that sort of money.
You'd next have to expect that the whole design process would need to run a little differently to the way we do it. When we start a website, our clients gets a face to face meeting with us whereby we figure out what the website's goals are and how to best achieve them. We then plan out their site with them, design it with a unique layout which addresses their goals and then refine this layout with the client until it's exactly what they are after.
With a budget of $200 however, it's more likely that you don't get to participate so heavily in the process. Rather, it would make sense that you would get to pick from a number of pre-designed templates which they'll then drop your logo and contact details into. The end result of this is, as you can imagine, is a website which looks a bit like everyone else's. Not ideal given you're trying to compete against these people but for many small businesses it may be enough to get them started online.
The other aspect to this business model is the month by month fees. With this pricing structure, it really means you never own your website but rather you are renting it from the company who built it. This can be concerning if you then weigh up how much time you have put into writing the content. There's a fair chance you will end up spending more time working on your website than the developers do... and yet they are the ones who end up owning your site.
Finally, let's look at the motivation for a company like this to offer a $200 website service. Even at $11 an hour for offshore developers, they're not making large profits. So how do they fund their nation wide television campaigns and print advertising? Traditionally, the low price entry fee strategy is used by companies to "get you in the door". Once you've committed your time and efforts to them, they then make their profits by trying to up-sell you additional services at much higher costs. Given this, if you're considering going this way, make sure you look into how much the "other" costs are before you commit.
So there it is; a low price business model for building websites. We obviously don't view it as the right thing for our clients who want their website to increase their business but it may be just right for some businesses who just want to get something online that they can tell their friend and family about.