Buyers and Sellers guide to Web Design and Development firms

A few weeks ago I requested visits to Auckland Web design and development firms, receiving a healthy range of responses. I didn’t get to visit everyone, but thanks to everyone who replied, and to those who suffer my visit.

I managed to get to, in the self-imposed two-week deadline, 11 companies: 3Bit, Marker Studio, OnFire, Pitch, TheWebCompany, Studio Alexander, Silverstripe, Young and Shand, Gravitate,  Swaytech and Starsoft. Thanks also to Lee ter Wal Design, whom I work a lot with and also recommend. I have emerged far more knowledgeable about the scene in Auckland and the business in general, and am impressed with what I saw.

Every firm had strengths which lent them to a particular niche, or made them better for a certain kind of client. At the cheaper end the game is about selling to clients who are fairly unsophisticated, and while the websites are fairly basic, their main service to us all as end customers is in actually getting their clients to have a half decent website in the first place. Many of those clients will later graduate to more sophisticated websites and development companies, and these early experiences will set the tone.

At the very top end firms are performing complex work for high traffic sites owned by very large businesses. And stretching from the bottom to the top are a vast array of firms (over 800 in Auckland I am told), from small, medium and large generalist firms, to firms of all sizes that are stronger in one area, such as heavy duty technical work, branding or marketing.

Despite the competition, there are thousands and thousands of local and not so local businesses demanding quality work. Businesses understand that websites are critical, and a little sales effort and a record of quality work will help you find them.

There are a number of ways that I can sum up what I learned, and I’ve settled on this:

The Buyers and Sellers guide to Design and Development firms in Auckland.

Buyers Guide

Designing and building a website can be done at a range of costs and benefits:

  • $3,000–$5,000 will get you a very basic WordPress website based on a pre-existing template. It will be roughly acceptable but probably not inspiring.
  • $5,000–$15,000 will get you a well-designed functional brochure-ware website. You’ll use a smaller, younger firm to do so, and you’ll need to be very clear on what you want. This isn’t the time to iterate too much, but you should get something that represents your small business well.
  • $15,000–$50,000 gets you a well-designed website with a degree of capabilities. It may include eCommerce, or even hook into one or more of your legacy systems. These are for growing and medium sized businesses, and are well worth the investment.
  • $50,000 and above, and that can be over $1m but is typically $100-200,000, gets you a range of websites/updates for serious businesses. This is a space populated by advertising agencies running multiple campaigns, or large companies with very complex requirements and legacy systems.
  • Anything over $200,000 and you should be working on the principal website for a huge business (by NZ standards). If you are paying more than this for a marketing website then you should let me handle it and I’ll split the difference with you 50/50.

Prices

Firms charge between $90 and $200 per hour to external clients. $120 is the acceptable limit for an up-and-coming firm, while $120–$150 is what most professionals are charging.

If you are paying $90 to $120 an hour then you are either very lucky, or you have ordered up thousands of hours of work in advance. For those huge commitments you may pay low rates, but be prepared to enter into a binding contract, as the biggest shops make money on time and margin, and with lower margins you need longer commitment.

If you want (or are) one of the smarter eggs around and can do complex work that others can’t, and incredibly quickly, then look to $150 and above for the right rate. Like a great mechanic they will make it up in time saved and better results.

Note that these are prices firms charge to end clients. Retaining an individual directly or is often cheaper, though you may not get the same time commitment. Firms that are selling services to clients at one rate do need to make a fair margin on any contractors they hire, and also need to be amply compensated for the overhead, risk and brand strength that comes with a larger more established firm.

Intermediation

The industry is in parts very fragmented and layered, with some specialist firms receiving work from agencies who in turn hold relationships with clients. Sometimes there are three or more layers, and I wonder whether the end-clients even know about the people who do the actual work.

I must sound a warning here. Retaining a master agency who then retains other firms is a very good way to spend a lot of money and get a lousy result. This layering pushes the end client further away from the designer and developers who do the work, and it becomes a game of Chinese whispers.

Meanwhile the client may have internal ‘run by committee’ issues, so that multiple voices from agency, development and design firms and clients are driving the results. The results are generally a mess, and a quick scan through this blog will show a few of them. Ferrit is a classic example. A large number of people and firms were associated with that disaster, yet very few are willing to acknowledge that now.

The new digital agencies are pretty good, but I would recommend that you understand and stick to what they are good at, and retain direct relationships with firms to fill the gaps.

Good clients

As a client you need to get a range of tasks done to build and maintain a great website, and not every firm can do everything well. Choose between an integrated firm, one that can outsource some pieces to others or choose individual firms yourself.

However you also need to make sure that you are a good client, as only good clients can help firms make great websites, and deliver excellent business outcomes.

  • Good clients have a defined mission, vision and values for their company, which will guide the purpose and design of the website. If you are not certain of your mission, vision and values then the project will almost certainly fail. Seek help from a business or branding consultant if you have not done this step, and everything thereafter will become a lot easier. I’ve been exposed to this sort of work many times over the years, and in NZ have worked with Ray Labone, founder of Designworks, who has done this for dozens of decent sized NZ companies.
  • Good clients also have a brand strategy, based on the above and on awareness of the positioning of their company and products in the market including  with users. If you have not done this, then seek help from a branding firm, making sure you understand what they need to be briefed. Ray Labone and Grant Alexander are both excellent choices for this sort of work, as is Brian Richards (BRR). Grant, is also part of our Equip BBD team with Ray, while Brian and BRR have their own team delivering Better By Design work.
  • Good clients are clear on the purpose of the website, which build from the mission, vision and values, the brand strategy and a healthy does of business strategy. Great web development firms will help you tighten this up, but make sure you are aware of the need beyond “we need a new website” before you engage.
  • Good clients know what good looks like - they have favourite websites, understand what competitors are offering and have strong yet flexible ideas on the feel of the website.
  • Good clients listen to great designers, knowing when to step back and the the design process take its course. Jumping in too often can lead to poor outcomes, but leaving it all up to the designers can lead to poor business outcomes as well.
  • Good clients have one point of contact who is responsible to the business for the website. That person is ideally a nerd, designer and business person combined. The design process takes input from others in the business, but the final outcome has to be driven by this one person, not by a committee, and not with anyone else having a veto. If you want a veto, then get involved. And sorry, not every product or division, or indeed almost no products or divisions, gets to be on the front page.
  • Great clients allow developers to use an iterative approach, and expect to hear words like “sprints”, “weekly reviews” and “ship”. They have an over-arching scope, but are happy to pay on a time and material basis versus an estimate.
  • Good clients don’t dramatically change the scope, dither for too long on decisions or go out of contact for days.
  • Good clients allow the time and money for the firm to use the appropriate design tools to deliver a high quality product
  • Good clients form lasting relationships, understanding that websites need constant maintenance and development to stay fresh and usable.

Sellers Guide

While a track record is your best sales promotion tool, I observed that too many firms rely on word of mouth to generate sales. That’s great when it works (it works for me), but I strongly encourage all firms to have a sales strategy that is a little more mature. You may decide to blog, attend conferences and do stunts, or you may hire sales professionals and account managers who enjoy meeting new clients and door knocking. Those firms with the sales professional (hunters or gatherers) were easily out-performing the teams of just designers/developers.

I was generally very impressed by the description of the design and development process from firms, showing a mature industry approach. It’s a continual struggle in general to ensure that clients understand the value of what they are getting, and my cynical view is that paying too much is often worse (Ferrit, Localist) than expecting to pay a few thousand. Work done up front to help clients understand the value of the process is good, and you can price it in such a way so that the client sees the full process as a better deal.

Pricing seems all over the place, so I’ve tried to help with the list above. Like anything, an hourly rate is a poor indicator to clients of what they are going to get for their money, so the best forms are very god at setting expectations or even using fixed price approaches. Make sure, you smaller firms, that your real hourly rates are not getting diluted enough.

We went through what good clients should do above, so here’s my take on what good firms are doing:

  • Good firms start their first workshop or pre-sales process with understanding the company mission, vision and values and step through from there. If there is a gap in the process (e.g. website purpose) then they help the client get through that part.
  • Good firms know what they are good at, and what they are not good at. They outsource or recommend other firms for parts of the process where they are not strong, or for clients that are out of their zone.
  • Good firms are superb at estimating time to spend on projects, at understanding how painful clients will be during the pre-sales process, at reconciling the hours actually spent versus the original estimate, and learning from the process. (They often use Workflowmax.)
  • Good firms use clickable wireframes, do usability testing and grok Rocket Surgery Made Easy.
  • Good firms are superb at listening to clients, reflecting their needs while also giving standing reasonably firmly on the things that really matter.
  • Good firms educate clients so that they increasingly understand what great websites are, and give clients books to read, recommend conferences like Webstock and otherwise help them be great.
  • Good firms ensure that clients sign off on various stages through the process
  • Good firms deliver beautiful and beautifully functional websites that meet agreed business outcomes.
  • Good firms use well supported content management systems that are widely used and appropriate for the use case.
  • Good firms test several times. They have a testing team, test scripts and they also conduct regular user testing.
  • Good firms have long lasting relationships with clients, and help client achieve their business goals through continuous development and maintenance.
  • Good firms know how to sell. Almost all of the firms I visited had no active sales function, preferring serendipity and word of mouth. Responding to competitive tenders takes time and effort, and for only a percentage chance of rewards. Waiting for clients to walk in the door is foolhardy. Forming lasting relationships and producing high quality work wins in the end, but don’t be afraid to pick up the phone.

Summary

I know this is wrong, in places and perhaps overall. I saw a biased and small sample of firms. Biased because they were the firms that somehow saw my tweets and blog post, and small because I allocated only two weeks to the effort.

So please let me know what is wrong, what I should add, change or tweak from a client and firm perspective. I am happy to keep editing this in public — it was gestating for long enough as it is.

I feel I was very lucky to both meet a great range of firms and to be allowed to ask and get frank answers often very probing questions about the business. I really enjoyed the process, and despite my sometimes blunt observations and questions, I hope everyone I met did as well. I have emerged with a lot of respect for the individuals, the companies, the industry, and for whoever is educating you all.

My thanks again to everyone.

Finally — yes — I can recommend all of the firms that I did meet. But before you pick up the phone make sure you understand what your own strengths and weaknesses are, and what sort of firm you are looking for.

About Lance Wiggs

@lancewiggs
This entry was posted in NZ Business and tagged , . Bookmark the permalink.

17 Responses to Buyers and Sellers guide to Web Design and Development firms

  1. Lance, great, incisive analysis as ever. Thanks for taking the time to do this work on behalf of the whole industry. I’m a newcomer to Auckland and my agency doesn’t do web design but I will comment on the two parts of your piece that are not wrong, but may mis-represent the way part of the industry is changing.

    I am writing a series of blog posts called “The Creative Agency of the Future” #FutureAgency in which I’m collating examples from the business operations practices of agencies who are challenging the status quo and looking for improved ways of delivering excellent marketing services to their clients. http://creativeagencysecrets.com/category/creative-business/future-agency/
    Here are two ways that leading agencies are different from the ones you researched:

    1 – charging. Some agencies are moving away from time/hour charging basis and onto a fee wholly based on results, or partly based on outcomes.
    2 – business development. This is my specialism. It makes me cry that marketing agencies can’t market themselves successfully. Many whine about “procurement” or “RFPs” or “pitching and coming second” but the underlying fact is that a planned approach to HOW you win new business tends to deliver MORE new business. If you don’t do it yourself, outsource. It’s the lifeblood of your agency and as you say yourself, relying on word of mouth may not be sufficient for your business survival.

    Rebecca Caroe, Creative Agency Secrets
    A blog about agency new business development.

  2. brenda09 says:

    Great article Lance. While you did see only a small selection of Auckland agencies I think the outcomes and issues as you have summarised them are consistent.

    I would say that yes, web design and dev firms vary in their competencies and areas of specialisation, but overall they have a commercial imperative to get their shit together and do good business.

    The area I have observed the most weakness in in NZ is that of being a good client. It’s great to see your note on this and I agree wholeheartedly. It is amazing how inefficient, frustrating and unsuccessful a client can make a web project – a bad experience for everyone. Frequently the web project is handed off to whoever might have a few bits of spare time – they have no knowledge, no authority and no awareness of their own lack of ability to run the project client-side. Nightmare!

    There is however also a bit of a gap for account directors/managers – particularly between agencies and larger clients or projects. The value of this role is under-rated and yet when done properly, adds tremendous value to both sides.

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  4. amanzi says:

    My experience with Wellington-based firms is quite different in the low-end. For $3,000 – $5,000 I would expect to get a custom template, created from scratch, but with a minimal set of layouts. There are several small website designers who will customise an existing WordPress template for under $1000. For lots of small businesses this is all you need.

  5. Chris Hails says:

    As an (evenings only) freelance web developer of 15 years standing I’d agree with amanzi that $3K is a lot for a basic WP install with pre-existing template. I’d feel like I’d ripped off a client without giving them a lot more advice and support – you could get basic ecommerce going for that much with PayPal integration.

    Many small businesses in Auckland are still finding their feet online – and being bombarded with all kinds of promotional offers at shockingly low price points which I can only assume results in the industry as a whole continuing to be viewed as a bunch of cowboys.

    Wearing my NetSafe hat, I have to say thanks very much for putting this down in such a digestible format. We’ve talked for some time about creating a ‘safe buyers guide’ for getting your business online and the kind of standards buyers should expect and be mentioning in contracts.

    We do get the odd report about hacked sites built on low cost, open source platforms that should ideally be hardened and continue to be supported post launch. Plus people being stung by ‘dark art’ SEO specialists is another pet peeve of mine.

  6. Regarding the above, you may get independents and freelancers doing sites lower than $3k but that’s not counting the time qualifying what is appropriate to a client, talking to them about content etc. That’s a price point for someone who likely knows a fair amount of what they’re doing IMO and by the time you’ve fiddled with domains, content, and nailing down requirements, $3k is a reasonable place to set base expectations.

    Another suggested point is often clients approach us seeking a website when actually what they are after is an commercial identity and public basis to present themselves. Toning down technical expectations of ‘web’ design and steering them down a decent branding process to tidy up their communication, quality of a decent logo and visual, and messaging guidelines can often have a better business outcome than building them a complex website. This also tees them up well for ‘phase 2 development’ in the future with a decent starting point.

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  9. thewebsiteguysnz says:

    Great article. I find it hard sometimes to get quality info like this on the NZ Market. I agree with you about marketing. NZ is very disjointed in the way it goes about Web Design. There are no real market leaders (bar the one that should not be spoken of).

    What we have found is the more you focus on a niche the better you will do. Even if that does range from high to lower end.

    We do a lot of work on WordPress in Auckland and we charge between $1500 – $3000 for a base site. Depending on the level of work involved with Ecommerce WP sites being around the $3000 – $6000 sites.

    When it comes to your pricing I think you are right when we talk about a business who needs a lot of time and wants to create a site with actual purpose over just a website. Too many designers give this industry a bad name by throwing up template based sites that are not helping the business (although some clients do seem to prefer this.)

    Just my opinion.

  10. Great article. I find it hard sometimes to get quality info like this on the NZ Market. I agree with you about marketing. NZ is very disjointed in the way it goes about Web Design. There are no real market leaders (bar the one that should not be spoken of).

    What we have found is the more you focus on a niche the better you will do. Even if that does range from high to lower end.

    We do a lot of work on WordPress in Auckland and we charge between $1500 – $3000 for a base site. Depending on the level of work involved with Ecommerce WP sites being around the $3000 – $6000 sites.

    When it comes to your pricing I think you are right when we talk about a business who needs a lot of time and wants to create a site with actual purpose over just a website. Too many designers give this industry a bad name by throwing up template based sites that are not helping the business (although some clients do seem to prefer this.)

    Just my opinion.

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  12. Mike says:

    This post appears to have taken off in the US. You might want to clarify if the prices shown are in NZ$ or US$. Great article!

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  14. Nigel Smith says:

    Excellent blog, thanks Lance. I run an agency in Auckland (Transformer) and I found myself nodding to most of the points you made. One issue we’ve encountered increasingly is that requests for new or revamped websites often come from an IT department. They tend to have an enormous list of bells and whistles that have to be included in the scope and then they go price shopping on how much each component will cost. As you rightly say a marketing led approach from a client with a clear marketing and brand strategy generally leads to a much more successful website.

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