How You Should (or How You Can) Budget for a New Company Website
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Tl;dr - 1. Set a budget. 2. Find a partner you can trust and share it with them. 3. Build something awesome.
Budget. This is one of the most cringe-worthy words spoken when starting a website project. Depending on which side of the project you’re on, it can be a strategically used word, or it can be a word received with much apprehension.
While the question of “what’s your website budget” can seem like the moment you drop from the pinnacle of a rollercoaster when you’re deathly afraid of heights, it’s actually quite innocuous.
First Things First, a Definition
Before we dive into all the factors that can go into creating a marketing budget, which often will include having a dollar amount set aside for a website redesign (or if it’s a brand spanking new website, just a website design), let’s first remember what the definition—and purpose—of “budget” is.
budget: noun bud·get \ˈbə-jət\ 1
- a : a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them
- b : a plan for the coordination of resources and expenditures
- c : the amount of money that is available for, required for, or assigned to a particular purpose
With the above definition, we are mostly concerned with points “b” and “c”. That’s because, when we talk about a creating a marketing or website budget, we are talking about creating a plan for the coordination of resources and expenditures, which will ultimately be used as the amount of money that is available for, required for, or assigned to a particular purpose—in this case, the (re)design and (re)development of your website.
Getting Comfy with How You’re Going to Use Your Marketing Budget
For you to be the most successful with your project, you need to be comfortable with the idea that your budget has a purpose. At this point, you may be wondering what this purpose is… The fact of the matter is, your budget is there to be spent—in this particular example, it’s meant to be spent on your marketing and a new website.
So, your comfort level with knowing that your budget is there for a reason, and that reason is to be spent on a specific thing, is key to taking the relationship with whomever you partner with to the next level. When you either don’t set a budget, or aren’t honest about how much you’re comfortable with spending, you’re already setting yourself for failure and disappointment.
This all said, I will be completely honest in saying that your fear of your prospective website design company taking your entire budget the moment it passes your lips is completely valid. You should prepare yourself for the two reasons that this may happen:
Snake Oil Salesman: The reason most people fear giving out budget numbers is that they are concerned that their prospective partner is going to just say that’s what the project will cost. Here’s an example of how this plays out:
“You: Our budget is $15,000…
Prospective Partner: Oh, really? What coincidence! It’s going to cost you $14,999.99! - which is just under budget!”.
(Another reason people don’t want to give budgets is because they’re going for whatever is cheapest. This is a terrible way to approach getting something that’s going to be quality. Being cost effective is smart, but being cheapskates is not, and I know that you’re not like that - you’re the smart business person)
Larger Than Budget Project: The other reason why they may say the project equals that of your total budget is that what you’re wanting to do will actually take that, or more, and they’re agreeing to give you a reduction in cost on the project to make it happen and bring you on as their client.
Perhaps it’s because they align well with your brand vision.
Perhaps it’s because they think your type of business would be fun to work with (we are creatives, you know).
Or, perhaps they’re just nice people and want to help you do something awesome.
We have, on a number of occasions, taken on projects that have cost more than the client ended up paying, because of a restrictive budget. In those cases, we either saw opportunities for long term partnership where we could develop a mutually beneficial relationship, or we really liked the brand or people behind the brand and thought we would really enjoy working together. In either instance,
The point here is that you need to be comfortable with spending your budget, and you need to find a partner with whom you trust to spend it with. This will save you a lot of grief in the end, and will help you realize success in your endeavors.
How to Create a Digital Marketing Budget / Website Budget
To start, let’s first discuss what the average general allocation for marketing / advertising should be.
On average, a company’s marketing / advertising budget should be 7% - 10% of total annual revenues.
If you don’t want to do the math, this means that if you brought in $1M in revenue for 2015, you should be allocating between $70,000 - $100,000 for your total advertising / marketing for 2016. How you break out your budget from here is where it gets tricky fun.
When you’re planning your budget, first ask yourself - what are you wanting to do this year with your overall marketing / advertising? What are your goals and objectives? How do you define success?
Did you know that digital marketing and, more specifically content marketing, is proven to be more effective than traditional marketing / advertising (to the tune of over 60% 2). Did you also know that conversion rates can increase to be over 6x higher for content marketing adopters vs non-adopters 3
So, how should you create a budget for your marketing, which generally includes your website?
Once you’ve calculated the overall marketing budget you should / can work with, next is to determine how important digital is for your business. If you are absolutely against using digital marketing, including your website, for your marketing and sales, then the answer is pretty simple - don’t spend very much at all (a small part of me dies inside when I say not to make that a focus, but it is what it is).
In today’s world, a company website—and in general, marketing online—is critical to the success of a business. If you know you need a new website, whether that’s due to needing to update the design, build out some really cool features, or perhaps gain the ability to manage the content on it yourself, then you’re going to want to ensure you allocate enough of your overall dollars to the effort.
Based on the revenue example from earlier, I would recommend setting approximately 20% - 30% of your total budget for your website.
While this may seem like a lot, this budget range ($20,000 - $30,000) enables a number of things that will be geared towards a successful outcome.
1. Partnership: This budget puts you in a range where it’s extremely high for the cheap, theme-based design/development companies that are out there. You know, the ones who buy themes and tweak them to meet your brand colors, and have an arsenal of 3rd party plugins that are used to do a lot for very little. These companies are unable to do many, if any, customizations for you, and often lead you down a path of agony when you want to make changes or updates in the future.
This range also puts you in a spot where it’s too low for really huge agencies. You know, the ones with teams of over 20 people, massive offices, and five $8,000 espresso machines (you know, because they’re suave, hipster and also seemingly all French lumberjacks, all at the same time).
It’s a budget range that aligns you with agencies that are capable of delivering a custom brand experience, while not marking you off as a “small fish”.
2. Realism: Our hourly rate (as of the date of this blog post was published) is $125. On the high end of this budget range, that boils down our hourly estimate & investment of time for a $30,000 project to be around 240 hours. Unless your $1M company is the most simple of companies, it’s relatively safe to assume that there are possibly quite a few moving parts. These moving parts take time to plan, design, build, optimize, and make successful. This time quickly adds up.
While 240 hours seems like a lot of time to invest in an outcome, I can say that our average project is around 190, and it’s very easy to swing 50 hours one way or the other.
So, it’s realistic to think that what you want will actually take this amount of time. Being prepared and comfortable for this will help you be successful throughout the process.
3. Staying within Budget: Let’s face it, going over budget sucks. We don’t like it. You / our clients don’t like it. Bank accounts don’t like it. It’s just not a fun thing to have happen.
If you approach creating your budget by looking at going as cheap as possible, or if you choose to work with a company that gives you a “too good to be true” cheap proposal, you’re almost certainly going to exceed the time and cost budgets that you had set.
That’s why when you set the right type of budget at the beginning, and work with a partner who takes a strategy/plan-first approach, you will be better prepared staying within your desired budget—making everyone a happy camper.
Website Budget Calculation Summary
1. Calculate Your Total Budget: The recommended % for overall marketing budget is 7% - 10% of your total annual revenue (read: not profit).
2. Determine Your Goals & Objectives: This is more of a strategic design then a math calculation. Rate how important your website and digital marketing are to your business. One way I like to do this is based on a scale of 1-10, where you value your is based on a scale of importance (1 = not important at all, 10 = critically important). Calculate the importance of every item in your goal list (content marketing, website design, social media, PR, advertising, etc.).
3. Calculate Your Tactical Budget: With each of your marketing tactics ranked 1thru 10, I then like to set a % as .5, based on the importance level chosen. So, if you think your importance level is a “6” for your website, then you should allocate 30% (50% of 6) for your website project. This is not an exact science or methodology, but instead, just a starting point for making an objective decision on overall numbers. Obviously, this can and probably should be tweaked and reviewed prior to finalizing your decision on these numbers.
Are you actively marketing your business online? If so, how did you go through your budget-setting process - whether that be for overall marketing, website, etc.?
We’d love to get your feedback on how you approached it, if it was successful, what you thought were important factors in the outcomes, and if you would change anything about how you did it, for future efforts! Feel free to leave your thoughts and feedback in the comments below 🙂
1 Merriam-Webster
2 Custom Content Council
3 Kapost
