Business Model Feedback

9 replies
I am new to this forum and just joined to get feedback. I am re-doing my business model, let me know if any of you tried this or see any major issues.

We develop websites focusing on small and start-up business (painters, salons, small retail, lawn care etc). We provide hosting, email, tech support, basic SEO, analytics, Google places listings, custom graphics and custom layouts and feedback forms for each client. Ongoing updates (plugin updates, small changes, email support) are all included expect for major design changes once the site is live and meets customer expectations.

We do not charge any upfront design fee, no money down and no contract just a service agreement.

All sites include what I listed above.
Monthly Service Fee
$50/Month - Basic Site: 4-5 pages and we usually do them in our banded weebly
$75/Month - Mid range custom site: 5-10 pages, more plugins and features and we do in WP.
$100-125/Month - Larger site with more custom graphic work and items that require more updates and paid plugins from us.

Our service agreements are signed by the customer and we can increase prices up to 5% per year. We host the site, we own the site design the customer only owns the content. They are free to leave us any time after 6 months but they will have to have a new site developed because we own it and we maintain it and basically lease it to them. We want them to be successful and stay in business, that is how we pitch it to them. We are almost like a partner, we want to keep them in business or we don't get our fee. That's the pitch and concept.


Let me know what you think we have done 6 new sites under this model but I want to know what the long term issues might be.

Chad
#business #feedback #model
  • Profile picture of the author RAMarketing
    You don't charge enough across the board to support any growth of your business. If you had 20 orders suddenly, you'd only have $2k coming in but 26 sites to maintain. Very thin. The way I used to pitch is this: First month is free, second month is $250, third on is $500. However, we tracked their traffic FROM the site so I could show them by the end of the first month they were getting over $500 worth of customers. Just my thoughts.
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    • Profile picture of the author SittingDuck
      Good point, but since I am try to focus small and home base business types many wont have a lot of traffic....ever its more of just having a web presence. If I do get a lot of heavy updates once I have 20-30 sites you are right I would have time to make new sites. Has to be some middle ground, is anyone else doing this model?
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  • Profile picture of the author travlinguy
    I think a lot of potential customers will balk at paying a monthly monthly service fee. Make that optional and I think you'll snag a lot more business.
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  • Profile picture of the author tooAlive
    Like RA already said, I think you're significantly undercharging your services.

    We provide hosting, email, tech support, basic SEO, analytics, Google places listings, custom graphics and custom layouts and feedback forms for each client. Ongoing updates (plugin updates, small changes, email support...

    All that for $125/month tops?

    That's way to little man. Break down your offerings into different packages and charge for each one accordingly. Don't just offer to "do everything" for one low price.

    If you want to keep the monthly charge low then I'd consider including a one-time setup fee to compensate. Otherwise I don't think it's worth it.
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  • Profile picture of the author Brendon Zahrndt
    SittingDuck,

    Welcome to the forum.

    It sounds like you have a decent enough front end model and judging by having done six sites using that front end it seems like you have some successful systems in place.

    I can't give you advice on your pricing as it isn't a front end business model I am familiar with, but you are asking for business model advice without giving any information on your back end - your marketing.

    My first question to you would be how do you plan on getting customers to your door step? If this is something proprietary I certainly understand, but you could be charging $2.95 per month across the board and still get little to no interest without some sort of intelligent marketing mechanism fueling the back end of your business model.

    This is a very rough sketch, as I see it and as I describe it mind you, but no advice is going to help you with a 'build it and they will come' business mindset so I am curious to know how we can help you once you give us an idea how you plan on 'driving' the bus, so to speak.
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  • Profile picture of the author SittingDuck
    Good feedback, right now its all by referral. I was just testing the business plan before starting to market our new direction, but good point on the cost to get clients that has to be built in. I was just getting tired of the rat race to find a new client, make $1,500-2K and then have to hunt down the next job. I want some residual income, but want to make sure it will work and the pricing is right before I put money into marketing.

    But since you asked, we plan to focus on niches vs going head to head with low-cost do it yourself website places. We plan to show the difference between them an us at a high level but focus in on small and new businesses. Not sure the best plan of attack for that yet, one idea is contact business that don't have a website and area by area niche by niche. Example search out all salons, storage unit company, lawn care providers etc by zip code that don't have a site and do cold calls and direct mail marketing to them. What do you think about that approach?
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    • Profile picture of the author Brendon Zahrndt
      Originally Posted by SittingDuck View Post

      Good feedback, right now its all by referral. I was just testing the business plan before starting to market our new direction, but good point on the cost to get clients that has to be built in. I was just getting tired of the rat race to find a new client, make $1,500-2K and then have to hunt down the next job. I want some residual income, but want to make sure it will work and the pricing is right before I put money into marketing.

      But since you asked, we plan to focus on niches vs going head to head with low-cost do it yourself website places. We plan to show the difference between them an us at a high level but focus in on small and new businesses. Not sure the best plan of attack for that yet, one idea is contact business that don't have a website and area by area niche by niche. Example search out all salons, storage unit company, lawn care providers etc by zip code that don't have a site and do cold calls and direct mail marketing to them. What do you think about that approach?
      I absolutely love cold calling (I know, I'm a rare breed) and direct mail works too as long as you are consistent with your mailings and your message focuses on the benefits of your services to your customers and isn't just mindless self promotion.

      I speak from experience because I did both cold calling and direct mail when I sold real estate many moons ago (I'm not that old though) and was very successful simply because I wasn't afraid to pick up the phone and ask people for their business.

      There is a do not call list, so be aware, but I never once concerned myself with getting 'busted'. Not saying take my advice, just giving you my experience.

      If you stick with both cold calling and direct mail you'll do very well. Just be yourself and treat your business like a true business and you'll do very well.
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  • Profile picture of the author octopus
    I think I read that on shoemoney, so you can have a look there for more information. But basically, what you could do is ask a % of the sales or new customers they get from the new Website. If you can search for long tail keywords to target to get traffic to their website, this could give you some money. And I bet that if you get them new clients, they won't want to leave your company.

    But I think like the others, your prices are really low.
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  • Profile picture of the author dndoseller
    Services in general are always less scalable and less passive then digital products.

    To make that into a sizable business, and those prices, will require more and more staff or outsourcing. If you want to manage all that staff and reinvestment to grow, then fine.

    The other problem with hosting and all that - is that you are essentially in the business of building other people's brands, instead of your own.

    I built sites for people for years, and it wasn't until I started building my danosongs royalty free music business that I started to understand the power of your own digital products, passive income and brand building.

    If your passion is truly to service other people's websites then you should be able to grow that model and make adjustments along the way.
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