How can you set a realistic website budget?
Small businesses and startups are often keen to find an affordable small business website design service — but what makes a website “affordable”? How do you set a website budget?
That mainly depends on whether it’s a personal site or a business site.
Why? Because while personal websites often cost money, successful business websites do not. In fact, contrary to the hype of DIY platforms and cut-price cowboys, a cheap business website can easily cost you more than a professional one.
Personal Websites Are Not Business Websites
Personal websites aren’t built to make money. So traffic isn’t their priority, and even if monetised with ads or affiliate income, that isn’t their key goal. They aren’t expected to pay for themselves.
So, personal websites are a true cost, not an investment. It makes sense to minimise that cost, but as delays and mistakes have little impact, DIY platforms can be a reasonable option for personal sites.
The moment you start hoping your site will pay for itself, it stops being a cost and becomes an investment. That changes everything.
Why a Business Website Budget Is Different
Unlike personal sites, business websites are marketing vehicles, competing for search positioning, traffic and sales. So they need to prioritise performance, on several fronts. It’s not just about looking pretty — a pedal-powered Lamborghini won’t win the race.
Search engines promote quality sites because that’s what users want. However, quality requires investment, effort and expertise. So focusing on cutting costs can easily cripple your chances of success.
If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur. — Red Adair
When profit depends on performance, it is wiser to invest more than you need to, rather than too little. Extra investment tends to increase profits. Underinvestment risks project failure, wasting the whole budget. This is sometimes called the Common Law of Business Balance.
As the Huffington Post put it, “Sorry, But Saving Money Won’t Make You Rich”. It’s still a good idea for personal sites, but frequently fatal for businesses.
Setting a Business Website Budget
If you’re vague about budget, vendors won’t know whether to offer you a race car or a pedal car. They will know you’re not ready to buy. Anyone who is, already knows how much they can afford to invest and whether or not their business plan would justify getting extra finance.
However, setting a lower budget than you could afford won’t get you a better deal — just a more limited solution. Unrealistically low budgets only attract amateurs, moonlighters and cowboys, who pluck prices out of the air to bait you into a hasty purchase you’ll regret.
So, business websites can either be valued as solutions for specific problems, or as part of an overall marketing budget. Alternatively, there’s a simpler rule of thumb for assessing the base value of the work involved.
The Value of Solutions
The value of a solution is the sum of the savings and profits you’d expect from addressing a problem or achieving a goal. In theory, if the solution costs you less than that, it’s worth doing. In practice, business success is never guaranteed, so 10% to 20% of that value is normally seen as a fair price.
For instance, keeping an office open for business 24/7/365 would need at least 4 staff, costing over £96k annually in wages alone. In that context, spending £10k to £20k on a website to cut that cost would be reasonable.
Simply put, it costs money to make money. Even employees typically pay commuting costs of £400 to £800 per month, usually out of their post-tax income. A website can help you avoid that, and as it’s a business expense, whatever you invest in it also reduces your tax burden.
That’s why established websites that attract regular visitors often sell for very large sums. Value depends on circumstances, but a successful business-critical website can be a very valuable asset indeed.
The Marketing Budget Approach
Without a more specific problem to solve though, the simplest goal to focus on is turnover. As that depends on marketing, a common guideline for setting marketing budgets suggests investing 10% of turnover in marketing to drive growth. That said, firms in more competitive industries often invest 20% of their turnover or more, and young firms need to base their investments on turnover targets until they achieve stability.
Many first-time business owners don’t set a turnover target. However, the simple goal of “making a living” means earning at least the UK’s Living Wage. That’s currently about £24k per year for a single person.
We can divide that by 0.9 to get the turnover needed to also cover a 10% marketing budget: £26,666. That gives us a marketing budget of £2,666, even with no other costs.
That rises rapidly if other costs are added to the Living Wage target — or if you’d just like to earn more.
The Value of Work
Building an effective business website largely depends on your input and schedules. As most business owners are busy, it can easily take a week or more to get content and/or feedback for each page. Yet web designers have to cover costs and earn a living, even when they’re waiting for you — just like regular employees get paid to wait for their managers and colleagues.
So the simplest rule of thumb is to consider your own schedule, then budget at least £600 per week that you expect the project to take — and don’t count weekends or evenings unless you’re willing to pay overtime. Freelance web designers like me can sometimes offer more affordable website package prices, but no one should be expected to commit to long projects for less than a Living Wage.
Microbusiness Mistakes
Now, if you’re a sole trader or other microbusiness owner thinking, “I can’t afford that!” — I understand. That’s where I started, and I’m here to help. Still, I see many making the same mistakes, so remember:
- “Cost-effective” beats “cheap” every time. “Cheap” cuts costs by cutting corners and compromising quality. Your website will be competing with around 2 billion others. You won’t win that by doing less than your competitors.
- Sites need ongoing support — but cheap designers tend to disappear.
- “Savings” lose value unless interest rates match inflation. Business investments carry risk but should offer better returns than loan interest rates. So either save wisely for (at best) tiny returns or invest wisely for far higher ones, but be aware that you can get either wrong.
- Marketing expenses are tax-deductible. So costs can be offset by year-end tax reductions. Ultimately, your business should pay for it, not you.
If you’re a bootstrapped (self-funded) sole trader or another microbusiness, my affordable website packages are probably what you need. If you aren’t sure though, we should talk.
Finally — Don’t Hide Your Website Budget
You will not get a better deal by being vague or understating what you could invest in the right solution. Setting a budget lets designers offer solutions that work within it. Still, remember that setting a website budget that’s lower than you could afford is only likely to reduce its performance and the returns on your investment. After all, it’s better to get a 10x return on a four-figure investment than on a three-figure one.
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(Originally published in September 2021, this post has been updated to reflect later increases in the Living Wage)
