The apparent price / value ambiguity in IT

So a potential client is wanting a five-page web site developed for their small business. They get three quotes. One is $500, one is $1,500 and one is $5,000.
How is this possible?

Note:
The $500 quote was from a company in India.
The $1,500 quote was from a local freelancer.
The $5,000 quote was from a business in the Perth CBD.

Each provider quoted for a web site with the same specifications:

  • Five pages
  • Contact form
  • Social media integration
  • Project gallery

The price disparity is huge!

It’s easy to see why web designers/developers have a reputation akin to used car salesperson in 2024. It must be so hard for clients to assess the cost vs benefit when the price difference is so marked!

Truth be told, all three of the providers will likely be able to deliver them a reasonable web site. What it comes down to (in my opinion) is hourly rate/overheads and internal processes.

Hourly rate

Because web development is a service industry, we, like car mechanics, plumbers and accountants – need to charge based on the time we spend working on your task.

Since the early 2000’s the competition in the web development industry has skyrocketed. Every man and his dog can potentially build a web site. With the market flooded with vendors, some have no choice but to charge less to get your business. So you may find some freelancers working at rates less than the minimum wage. This is especially true with overseas contractors in India.

Overheads

The big company in the CBD has high overheads; rent, utilities, staff, insurance etc. When factored into the price of making your web site, their hourly rate will likely be in the hundreds of dollars. The freelancer however (given that they already have all the necessary tools) is really only charging for their time.

Internal processes

Another determining factor in the pricing of a web site is how many people will be working on your project. Your web site development task may be passed between two or three staff members along the chain; one to design, one to develop/code and one to manage the project. There may also be an accounts person and someone who cleans the offices! All of these working hours factor into the price.

Summary: recommendations when choosing a web provider

When you request a quote for your web site, ask how many hours the project will take. Then you can compare between quotes and get a clearer idea of how much each company/provider is actually charging based on the time they predict it will take to complete the project.