A couple of years ago, we were in talks with a potential client who was vetting some other vendors simultaneously. The price difference was so significant between what we proposed and what another vendor quoted that the potential client shared the other vendor’s proposal with us for us to respond.
For some context, here are two key points:
- Our price was 5x what the other vendor quoted.
- The client ended up hiring us despite the price difference.
Here is the email exchange. Client to us:
Hi,
I’m copying the quote given by the other company. If I’m reading it correctly, it looks like the whole thing would cost roughly $3,000. I don’t need to get into the details, but if you could take a look and just tell me what you’re offering that is different or what they’re missing so I can communicate clearly why you are the better option? I hope that makes sense.
Hi,
Sorry, I’m running behind my schedule. Our standard website design process is roughly like this:
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1. Confirm requirements, sign a contract and deliver down payment (2 days)2. Complete the page design and get the customer’s confirmation (5 days)
3. Create body structure, pages, and features (10 days)
4. Localhost testing of main pages and features (first client test) (3 days)
5. Project improvement (first project adjustment) (3 days)
6. Domain name and server hosting (3 days)
7. Hosting Test (3 Days)
8. Customer testing and feedback (Second Client Test)(5 days)
9. Project improvement and delivery testing (second project adjustment) (5 days)
10. Complete delivery and pay balance payment (5 days)
According to the content of our communication and the questionnaire you submitted, I have roughly sorted out the requirements:
1. Logo design/adjustment — $150
2. 7 main static pages — $700
3. E-Commence with customized editing back end, appointment module, a blog with live comment module — $450
4. Online Marketing and SEO integration — $300
5. Social Media integration — $200
6. Domain and Hosting — Free for the first year, $220/year from the 2nd year
7. Picture and video copyright purchase, depending on the amount of use in the project, will be submitted before the project balance payment with the purchase list.
In conclusion, this is a medium website project that takes up to 30-40 days to accomplish; if only one-time client feedback and adjustment, the entire project may be compressed to 20-25 days to complete. The above is an approximate quotation and time required based on your needs, and I hope it will be of reference value to you.
Our reply:
Hi,
I mean, there are a ton of thoughts on this, here are just a few:
I can’t imagine a world where the ‘static pages’ would cost more than an eCommerce solution. Like, that is insane. To set up and configure a working eCommerce back end with payment, testing, customizing order emails, making sure customer accounts are properly set up, training on adding products, customizing front end product and catalog design to match custom static page designs and configuring filtering and searching of products could not be done for $450.
For context, we would come in cheaper than most agencies with a staff of 6-10 people; the average price for a site like this at those businesses is $25-35k. We can keep our prices below that by not having staff or extra office space (anymore).
It leads my brain to a lot of places, not to rip on the other company, but here a few more thoughts:
- He must not be making enough money to feed his family, or he is not doing very much custom work
- If he is not doing much custom work, how good and tailored to the project can it be?
- Is this going to be user manageable / in a CMS?
- Will credit card payments be taken on-site, or would it just be PayPal redirects?
- How much business would you feel comfortable selling through an eCommerce solution that costs that much? I would put it at a generous multiple of 10-15x, so maybe it would be suitable to handle the volume of $10,000 in revenue, but one has to imagine it won’t hold up to $100k in revenue. To put it another way, would you expect to build a physical store for almost no investment and have it perform as a business tool?
- He must be booking so many sites at these low prices that he couldn’t offer a personalized experience. (Ecommerce is widely considered to be an advanced website feature, he would need to book 20 sites a year to make $60k, and even more if they weren’t all E-commerce. How much attention can someone who has to secure that volume of work offer?)
- How many revisions could he possibly go through to get it right at that price? Eventually, a service provider pricing that low will give up and deliver something that isn’t right.
- His line items are too broad. With us you are getting WordPress with a Page Builder front end, custom design and configuration with a SEO foundation.
In contrast, we are selling a personalized experience. We custom-build the design and make it easy for the site visitor and you to use and update. We ensure it is working and is right, and everything is how you want it. It will be fast, secure, and mimic a shopping experience users are used to. i.e., clean and clear checkout, credit card fields on site, and account information readily accessible. We will bring in subtle animations on load to keep interest in the content and pages. All in all, we aren’t selling a commodity like XXXX is.
It comes down to service level and expertise. We have built eCommerce solutions that have brought in hundreds of thousands of dollars for our clients; if you include donations, that number goes into the millions. So we know how to create solutions that can handle large volumes and are easy for customers to use.
Regarding hosting, we recommend a host and, if needed, walk you through the setup process. We believe it is vital for you to own the site’s hosting so that it is never held hostage by a service provider. (Not that we would do such a thing, but it is easier to have the client own it from day one vs. having us be the gatekeepers should you ever need to transfer it.)
Hopefully, that all helps!
In the end, the client booked with us.
You will notice above that I keep bringing it around to our value proposition: a custom, tailored website that is made specifically for the client and their use-case. The competitior email is dry facts; you get website pages for $$. It doesn’t focus on the outcome or the experience they are offering.
On a side note, I don’t recommend stretching potential clients up to a significantly higher budget than they expected to pay, even if you can win the work. It can be challenging for them to overcome the sense that the value they receive is mismatched with the price – which is a recipe for potential issues.
But it is occasionally worth the exercise to make a sale on the pure merits of contrasting your offer with cheaper options. At the very minimum, it will hone your pitch and sharpen your offering.
Takeaway:
If you cannot support a price difference in a meaningful way, you ought to head back to the drawing board and answer the resulting tough questions.
