How website projects are priced for Charities and NFPs.

For many charities, having a professional website is essential for raising awareness, attracting donations, and sharing the impact.

However, getting quotes for a new website project or a site rebuild can be difficult due to the different ways agencies quote for projects.

With a value-based versus time-based predicament, Third Sector organisations can miss out on real delivered value if agencies don’t convey this correctly.

1. Introduction
2. Understanding Agency Pricing
3. Why Charities Are Vulnerable
4. The Dangers of Value-Based Pricing
5. Red Flags and How to Avoid Them
6. What Charities Should Do Instead
7. Conclusion

Introduction

The process of developing a website can be fraught with challenges, particularly when it comes to navigating the often murky waters of agency pricing.

Unfortunately, charities can end up paying more than they should for their website projects because agencies often quote them based on the perceived value of the project rather than the actual time and resources required.

In this blog, we’ll explore why this happens, how it affects charities, and what you can do to avoid falling into this trap.

Understanding Agency Pricing

Web development agencies typically use different pricing models to charge for their services.

The two most common are time-based pricing and value-based pricing.

Time-based pricing is straightforward: the agency charges based on the time spent on the project, usually calculated in hourly or daily rates.

Value-based pricing, on the other hand, is where things get a bit more complicated.

Here, the agency determines the price based on the project’s perceived value to the client rather than the actual time or effort required to complete it.

In theory, value-based pricing can be beneficial for both parties.

The agency gets to charge what they believe the project is worth, and the client receives a product that should ideally match their expectations of value.

However, when applied to charities, this model can often lead to inflated costs, as the agency might perceive the project as more valuable simply because of the importance of the charity’s mission or the potential reach of the website.

Why Charities Are Vulnerable

Charities often find themselves in a vulnerable position when commissioning a website project.

There are several reasons for this. First, many charities lack in-house expertise in web development, which means they rely heavily on agencies to guide them through the process.

This reliance can sometimes lead to a lack of critical questioning when it comes to pricing.

Secondly, charities are frequently passionate about their mission and keen to make a significant impact with their online presence.

Agencies can sometimes take advantage of this passion by convincing charities that a high-priced project will deliver the desired results, regardless of whether the actual work justifies the cost.

Finally, charities often have constrained budgets, and the pressure to maximise their spending can lead them to accept a higher quote believing that it guarantees better outcomes.

The Dangers of Value-Based Pricing

While value-based pricing is not inherently bad, it becomes problematic when it leads to overcharging, especially for organisations like charities, which are often operating on tight budgets.

One of the main dangers is that the cost of the project can quickly escalate beyond what is reasonable for the work involved.

For example, a simple website with a few pages and basic functionality might be quoted at a premium price because the agency believes the site will be highly valuable to the charity’s mission.

Another danger is the potential for scope creep. In a value-based pricing model, agencies might be incentivised to add unnecessary features or services to justify the higher cost, leading to a more complex and expensive project than initially planned.

This can result in charities paying for features they don’t need or that don’t significantly contribute to their goals.

Moreover, value-based pricing can create a mismatch in expectations.

A charity might believe that a high price guarantees a superior product, but this isn’t always the case.

The agency might deliver a website that meets the minimum requirements for the project but falls short of the charity’s expectations for quality or clever WordPress functionality, leaving them feeling short-changed.

Get a bespoke WordPress site on a budget.

We think that Third Sector organisations deserve better than a third-rate website. Get a bespoke, lightweight and fully editable website on a budget.

Get started

Red Flags and How to Avoid Them

Charities need to be aware of the red flags that might indicate they are being overcharged for a website project.

One key warning sign is a lack of transparency in the pricing process.

If an agency is unwilling or unable to provide a detailed breakdown of how the costs are calculated, it’s a red flag that they might be padding the quote.

Another red flag is a significant emphasis on the “value” of the website without clear, concrete explanations of what this value entails in terms of deliverables.

If the agency focuses heavily on how the website will “transform” the charity’s online presence without backing it up with a clear plan or scope of work, the charity should proceed with caution.

To avoid falling into these traps, charities should always seek multiple quotes from different agencies and compare not just the price but also the proposed scope of work.

It’s also essential to ask for references and case studies from similar projects the agency has completed.

This will give the charity a better understanding of what to expect and help them gauge whether the agency’s pricing aligns with the market.

What Charities Should Do Instead

Instead of relying solely on value-based pricing, charities should consider a hybrid approach that combines elements of both time-based and value-based pricing.

This approach allows for a fair assessment of the time and resources required to complete the project while still taking into account the unique needs and goals of the charity.

Charities should also prioritise clear communication and set detailed project specifications from the outset.

By clearly defining the project’s scope, deliverables, and timelines, charities can ensure that the agency’s pricing is based on actual work rather than vague promises of value.

This approach helps manage costs and sets the stage for a more successful collaboration with the agency.

Another effective strategy is to engage in a discovery phase before committing to the full project.

This phase involves working with the agency to develop a detailed project plan, including wireframes, design concepts, and a clear scope of work.

This gives the charity a better sense of what the final product will look like and provides a solid basis for pricing, reducing the likelihood of unexpected costs down the line.

Conclusion

Navigating the pricing of website projects can be a complex task for charities, especially when dealing with agencies that use value-based pricing. While this model can work well in some cases, it can also lead to inflated costs and unmet expectations if not carefully managed.

By understanding the potential pitfalls and taking proactive steps to ensure fair pricing, charities can avoid paying more than they should for their website projects.

Ultimately, the key is to maintain clear communication, set realistic expectations, and ensure that the project’s scope and costs are aligned with the charity’s actual needs and goals.