Like any return on investment calculation, website ROI is based on the cost and the results. Here’s a look at both.
Website pricing varies wildly. Costs range from free for DIY tools, to millions of dollars for high-end digital agencies. For most companies, prices from web designers may start as low as $1000 for a freelancer or $100,000 for a fancy site from a big web development firm.
Generally, the price of a site relates to the total time it takes to create it. There are no material costs since pixels and code aren’t bought by the truckload. Costs are based on estimates of the time required for design, programming, and communication.
The content (writing and images) also takes time, whether handled by the web firm, a freelance team, or the company itself.
Here are the major cost factors:
Design: Is the brand well-established or it is being revisited? Is an off-the-shelf template being used?
Programming: Are the features of the site somewhat standard? Or are they more custom? Is the site’s functionality complex?
Team: Are there a lot of skilled specialists involved? What is their experience level?
Content: Is it a large site? Is a lot of new writing required? Redesigns often have lower content costs. Is there photography or video production needed?
Results from these efforts can vary even more. The website ROI may literally be negative; if the site doesn’t produce any results, the cost of the site is basically a loss. Website ROI may also be in the tens of millions of dollars, either in direct revenue from e-commerce sites or in the value of leads for a lead generation website.
Many factors affect the variation in return on investment. Here are the five main factors in website ROI:
The Cost of Creating the Website
As we mentioned, costs can vary wildly. The dollars and hours spent during design and development are the baseline for the ROI.
The Cost of Maintaining the Website
Post-launch, out of pocket expenses – such as hosting – are probably low. But there is the time involved in content marketing (blogging, email marketing, social media), and potential advertising costs may be high.
ROI Tip: Build a site that will be easy to update. It should never take a designer or programmer to update content.
The Traffic
The number of visitors is the top line for measuring success. If the site was designed to be search engine friendly, the site is far more likely to perform well in search engines. Ultimately, it’s the marketing activity, not web design, that has the biggest impact on traffic.
ROI Tip: Build a site that is search engine friendly and consider the cost of marketing that is actually needed to generate traffic.
The Conversion Rate
The percentage of visitors who take action, becoming a lead or purchasing through e-commerce, determines the bottom line results. Unlike traffic, it’s the web design, not marketing activity, that has an impact on conversions. But together, traffic times the conversion rate equals results.
ROI Tip: Design your website for your users. For example, build a site that is mobile friendly with responsive design. Build it specifically to turn visitors into customers. Use compelling design, frictionless interactions and informative content.
The Website Lifespan
Although car buyers often think ahead about how long they may own the new vehicle, website buyers often do not. But this has a huge impact on the return on investment.
All things being equal, a site that is effective for twice as long has twice the ROI. A great site will produce results for five years or more. A bad site will need to be redesigned within two years or less.
Really want to dig in and calculate website ROI? Here’s a post where we suggest using this formula for search optimized lead generation websites.
When both costs and outcomes are all over the board, it’s a challenging market for the buyer. Everyone knows someone who has been burned. We’ve got a whole collection of web design complaints.
But then again, do it right and you may generate so much demand that you’ll have to send a price increase notice!
Even so, a website is not a place to save money. The difference between a $20k and a $30k price tag might seem high, but a great site will produce dramatically better results than a good site, which may translate into hundreds of thousands of dollars over time.
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Hello, I have a project business plan to prepare for my masters about creating an e commerce website for insurance. I was wondering, a 100% return on investment after 2 years is it a good or bad RIO for e commerce? Considering the website cost 3 millions dollars and the company made net profits of 3.4 millions through the website within 2 years. Is it good or is it not logical?
Thank you!
This is great; I was just conversing with a few colleagues about how organizations can really see the value that their websites are bringing
Re: cost for website, you have to take into consideration that cheap does not necessarily mean quality. Also, consider that if you are dead serious about your online business or your web presence, do not hire one individual to do the job. He/She could get sick, find another client, etc. and you may end up with no support. Get a team who has contingency plans and proven support.
Is there a way to find the calculate the actual ROI on a website?For example, your ROI is $15 for every dollar spent. Is there a way to calculate that somehow?
Thank you for the post….you have such great information and easy to digest. I would like to ask; if you have an e-commerce business would you recommend building a WordPress site or using an e-commerce platform such as Shopify?
Hello, Jeannette. Probably, Shopify is easier to setup than WordPress ecommerce, but they both may work well. If you’re looking into WP, take a look at WooCommerce. It’s not as DIY as Shopify, but it’s very good. Hope this helps!
Hi, for a fashion eCommerce site, which CMS would you recommend pls? woocommerce or magento? Thanks.
Great info you have here in your post Andy!You completed a number of nice points there. I did a search on the issue and found nearly all people will have the same opinion with your blog.
Thanks for your tip here Andy. A website design/redesign me cost much time or effort (if you do it yourself) but it’s totally worth it. If you would think of long term then a site redesign could help you save $$ in the future by getting the most ROI.
Hi Andy,
Great article. As a new web designer (mostly WordPress), what advice would you have when turning over a completed website to the new client.
What is the realistic time frame for a website that has incorporated SEO to show within the first five pages of search engines?
Again, thanks for sharing
If a page is going to rank, it will probably rank within a week. Sometimes it’s just a few days. If you don’t see it within 10 days or so, it’s probably not going to rank at all.
On the other hand, Google+ posts often rank within 24 hours. Share the page on G+ and you might see the post rank for the keyphrase right away!
Well as a Digital Marketing consultant at times this is one of the most challenging task for me to convince my clients about the ROI of Re Designing there Old Style Websites in both terms SEO and Conversion Rate that may increase for sure
Really? Some web design firms are $100,000 per website? What kind of website is this and does this includes website maintenance?
Absolutely. It’s likely that you visit sites that cost more than this everyday.
We have built many $100k websites and they are some of the highest ROI sites we’ve done. Some of these are ecommerce sites that generate millions of dollars in revenue per year. We once built a site that cost $120k and sells around $700k in products per month.
I agree with Tim: “Website development ROI has some inherent intangibles, but your article touches on some of the most key considerations to help anyone in the process better assess the value.” Couldn’t have said it better, myself!
I also love where you say, “Ultimately, it’s the marketing activity, not web design, that has the biggest impact on traffic.” All too often, we come across organizations that have the mindset, “If you build it, they will come.” While a great website is as essential as building a strong foundation for your home, how are people aware that it even exists?
Great stuff, as always!
Yes, I think it’s the post-launch activity (marketing) that affects traffic the most. And the pre-launch activity (design) that affects the conversion rate the most. But they both do influence each other. There’s some kind of yin/yang diagram coming to mind. Maybe a good topic for future post…
Thanks for dropping by, Katie!
Thanks Katie. Good stuff. Andy has a way of bringing out the best in everyone around him doesn’t he? A natural leader—a thought leader at that. And Andy’s right again, in that the compelling, self-evident user-experience (pre-launch) leads to the conversions, where integrated marketing tactics such as SEO, email, PPC, social, blogging etc (post-launch) impact traffic. And Andy, I’m humbled by your expertise, but would be honored to collaborate with you anytime. Thanks for your inspiration.
Great article, Andy. I love your writing. Website development ROI has some inherent intangibles, but your article touches on some of the most key considerations to help anyone in the process better assess the value. Well done, as always.
Thanks for the encouraging words, Tim! I’m glad you liked this one. How come you and I never collaborate on content??