Phil

The Real Cost of a Web Project

The most common question we get asked in our industry is “how much will my project cost?”.

It’s a natural question. Every day people use a dollar figure to qualify their buying decision. Our brains have been wired to associate cost with value.

But a piece of software is not a commodity. It’s a long term, vital asset or tool that will evolve alongside your business. It will increase revenue, reduce expenditure, and create greater efficiency in your organisation. It’s an asset of value that provides a return on investment

Instead of asking “how much will this project cost?”, there are two better questions to ask; 

how much should I invest to achieve the returns I want?”, and

how much will it cost my business to NOT do this project?”.

Return on Investment

This should be the real focus of any decision to create a piece of software - finding the place in the business where we can produce the most significant value for the lowest investment.

A simple example would be the development of a more effective contact form. For many organisations, their contact form is the entry point into their sales funnel. Exploring ways to increase the conversion rate of the form should be a priority. You could reduce the amount of required fields, make it available directly on key landing pages, and have submissions import directly into your CRM for further action. 

If a contact form lead was worth $500 to your business and these usability changes increased the number of leads by 4 per month, the return would be $2,000 per month. If the cost of development was $3000 then break even would only take 1.5 months to achieve, not bad! 

Over a year, your $3,000 investment would have generated a return of  $21,000.

Another example would be a situation where a paper form is being used collect data. If a paper form is used then it’s almost 99% guaranteed that at some point a person has to manually type that form data into a spreadsheet or 3rd party system of some kind. 

It’s clear that efficiency can be gained by collecting that data directly into a digital format and automatically pushing it to the 3rd party system. We can then start to put figures around the time saved in full-time-employee (FTE) hours, and scale that to work out what the return will be for developing that efficiency.

As a result, we can determine the acceptable investment to generate that return.

The cost of not changing

This is another important aspect of decision making - the cost to the business if the software isn’t developed.

In our example of the contact form, the cost of not changing is $21,000 per year. That’s a pretty significant loss to the business, and it adds up over years - it’s not one-off!

When you weigh up the cost of not changing with the investment required, the decision becomes much clearer. It’s less tied up in our consumer mindset - and put firmly in the realm of our business brain, where it belongs.

At Webscope, we approach all project and feature requests in this way. We want every piece of software development we do to add value to our clients’ businesses and be a success for them. We don’t produce work that’s a cost to a business, we create assets of value that generate a return on investment. We create - Software with a Purpose… and we’re damn good at it.

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