Custom Development Costs Too High?

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Small business has entirely different needs and expectations from technology than larger enterprise.  Okay, that is an obvious statement, right?  So then why are small businesses always so surprised to learn about the cost associated with custom projects?

 

 

First, a Little Background

There was a time 10 years ago, when the company I worked for would build websites for mid-size companies, and we could never quote less than $15-20k for a simple website.  In today’s world of WordPress and 1000s of templates to choose from at $30 a piece, that seems almost unbelievable but remember, frameworks like WordPress didn’t exist and neither did the templates, or even best practices for design in the early days.  As a result, you had to do pretty much everything by hand. You would write every function, connect it to the database, hand-code the HTML, and equally the designs were mostly original work that took time and research.  And so yeah, all-in, creating a WordPress equivalent website from scratch would have easily required 3-4 weeks of developer time, 40 hours from a designer, and another 40 hours for project management and requirements gathering.  All said, you’re talking about 6 weeks of work!

Fast forward 10 years and there are numerous companies offering to build a website for $500, or less!  By using an open source framework, free plugins, and by customizing an existing template for your design rather than starting from scratch, the website developer really only needs to snap peices together now – the pieces are built already, making it a relatively easy project to put together in days or even hours, rather than weeks.  No worries really about bugs either, since a lot of the logic is already written and revised from other projects.   Effectively, those problems have been solved now and we have commodity solutions to those problems.

Expectations Mismatch

The availability of lower-cost solutions is a great thing, but it creates a mindset of cost expectation that often isn’t realistic when you begin to look at custom coding work.  For example, even just adding a functional interface with JavaScript and AJAX to optimize user experience or validate a form, might not already exist and will require custom development.  On the surface this statement seems reasonable to a developer, but what if it is 8 hours of work and costs as much as the initial website itself? Will the client/customer still find this reasonable?

As businesses go deeper into custom work, there are fewer templates and fewer frameworks and technology stacks upon which they can stand to accomplish their task and as a result costs and time requirements will begin to scale exponentially. There is afterall, a reason why Amazon.com employs 1000s of people and yet you can have your own ecommerce site built in a day.  This dichotomy seems to always be an issue for the non-technical person to accept, not just at the small business level, but any time a businesses tries to go a layer deeper.  I’ve seen the same issue among mid-size businesses as well, when looking at going into deeper systems integration work.  One company in particular  I observed, went from using PHP/LAMP technology for their website in,  to deciding it was time to go deeper. They embraced an enterprise Java stack to begin developing the business logic and work on other systems integration work, and were stunned to realize their time estimates were less than a third of what was now required to do the work.

Development Value Pyramid

Lessons to be Learned

A lesson here, is both for developers to realize the paradigm that businesses are coming from when their expectations are challenged, and also for business owners to understand the reality behind why costs scale exponentially as we go deeper into systems.   When a business owner is use to $500 price points, a $5-20k price tag for the completely custom project they asked for is going to be scary and will invoke trust issues.  But that doesn’t mean the developer should work for less to appease a client, or that they’re necessarily wrong for proposing a higher cost for what the client asked for either.  The problem to be solved, is one of expectation management.

Advice For Developers

For developers, this is going to be a larger challenge the higher up on the pyramid you go, where the most commoditization has occurred.  If you’re trying to operate one layer below templated solutions, you’re going to have the biggest challenge convincing clients that you should be charging so much more, if they cannot see tangible value as a result, compared to just using a template.  In this case, you’d better align yourself with clients who have a lot of money to spend on branding design, rather than technology.  And if you’re offering customized app or interface development solutions a layer down, you’re going to see more and more frameworks trivialize what you do over time, and push you further toward commodization.

Indeed, it would seem a developer is better off specializing as low as possible on the pyramid, if they’re going to offer custom solutions.  Businesses however will continue to find opportunity to push value further up the pyramid and further commoditize and productize the solutions for the small business consumer.  This is why the SaaS business model is so poignant, since it promises to make available solutions that have real value for smaller businesses, who could never afford them before. So if there is any lesson to be learned here at the bottom line for developers, perhaps it is to be realistic in understanding who your audience is, and who is willing to pay for custom work versus a customized commodity. If you’re going to address the commodity audience, find a away to productize and scale it as a business.  But if you’re going to focus on skills and custom work, go as deep into the value pyramid as possible…and stay there!