How much should you spend on a website?

When you’re planning to design and develop a new website or update your current one, it’s easy to get carried away. We are all faced with the same problem – there’s a finite budget but an infinite amount of work that can be done on the website.

“How much should we spend on our website?” is often the question posed by marketing departments and management alike.

The answer is usually expected to be a finite amount of currency for a project that lasts a finite period of time.

Before moving to Jersey, I was running a b2b service company in the UK. It was there that I realised “How much should we spend?” was the wrong question to be asking when it came to website design and development.

As a business, our objective was to increase our profit by 50% year on year. After trying a number of sales & marketing channels, we realised that our website was the one that provided the best ROI. Applying the 80/20 rule we decided to focus on our website and natural search engine optimisation for almost all of our new business leads.

“As long as it cost us less to acquire the customer than the profit we made from that customer we were happy.”

But what about the budget? As long as it cost us less to acquire the customer than the profit we made from that customer we were happy.

We were happy to keep spending on our website until each incremental pound spent didn’t generate an extra pound and a penny in profit.

We could have gone with a large complex website that took 6 months and £15,000 to develop – much like our competitors.

Instead, we started small and spent money over time rather than in one up-front chunk. The result was better cashflow and a better result.

We took time to develop a strategy that took into account what our customers really wanted. We developed a website that was highly search engine optimised so that our potential customers would find us themselves.

But the most important thing was that we didn’t do all the work up front then “set and forget”.

Because we kept the initial project small, the up front cost was minimal and we had our site live in less than 4 weeks. Even better, we started generating leads and making money almost straight away. Our website redesign wasn’t a massive drain on cash flow. In fact, it was cash-flow positive almost as soon as it launched.

So how did we keep the up-front project small? We began with a few pages – one for each of our key services, a page about us and a contact page.

But we then continued investing each month – effectively splitting what most people would have spent on a massive up front project for a new website over 12 months.

We spent these months learning what our visitors liked, what kept them on the site and what made them leave. Then we made changes to the website to reflect that.

We researched what our clients were searching for and created content that answered their questions. Then we asked them, very clearly, to make a response – either contacting us for a quote or providing us with their contact details in return for additional information and resources.

“Our competitors … thought we were spending too much and focusing too much on our website.”

Our competitors were generally more interested in promoting themselves through the industry trade press – expensive PR targeted at competitors rather than customers. They thought we were spending too much and focusing too much on our website and even told us so.

But for us there was no getting away from the fact that the website was our most cost effective lead generator both in terms of lead quality and lifetime value of the customer. And best of all, we could clearly measure ROI. In fact, a large part of the reason that our business was eventually bought by a larger competitor was our approach to our website and inbound marketing.

So that’s how I learned that expecting a finite answer to the question “how much should we spend on our website?” was fundamentally flawed.

The answer should be more along the lines of “when spending an incremental pound doesn’t generate an incremental pound and a penny of profit”.

But perhaps the question could be better phrased in the first place – something like “What improvements can we spend on for our website that will generate us more profit than they cost us to make?”.

My view is that spending on website design and development should not be limited unless:

  • It no longer provides an ROI that justifies the additional spend.
  • The company has a limit on how much it can cashflow at a given time (for example, because customers pay on net 30 terms).

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