How much should you spend on a new website?

As the director of a web design agency I appreciate how difficult it is to answer this question.

We all know how to shop for a new computer-- compare a few different manufacturers, look for online reviews, choose features, and buy one.  Not the cheapest, and not the top-of-the-line.

But how much should a small business pay for the company website?  If you read the spam you might think $299.  And if you speak to one of hundreds of very talented interactive advertising agencies across the U.S. you might get figures of $60,000, $80,000 or more...

It's hard to identify value in an industry that's fairly new.  For small businesses, I offer the fairly simplistic rule-of-thumb:

• Small company:  1%
• Medium-sized company:  .5%

I'm referring of course to a percentage of annual revenue.  Spending less than 1% of your annual revenue on a marketing tool that is working for you 24/7 is a responsible, smart investment.  This is not an annual investment-- this is key-- this is a one-time cost.  Unlike recurring marketing costs, once you build a website the bulk of the expense is history.  Paid-for.  Finished.

Sure, you might decide down the road to optimize your site for Google, or do an email marketing campaign, or change up the content, but these projects are smaller (and much lower in cost.)

Do the math yourself-- how many sales do you need for a 1% investment to pay for itself?  How many new clients?  I'm guessing not many.

Relying on a busy, incomplete and unattractive website is like giving your clients a shoddy service:  It may be OK, but it's not going to help your business grow.