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Subscription Model - Website Sales

by arc323
15 replies
Hello Warriors!

I am a long time lurker here in the forum and finally decided to engage with the community. I have launched a web design company targeting small business in a specific niche. I am a top level sales person and in my day job I sell SaaS solutions inside a specific industry.

I have several customers for my web design company but most were leads generated from my site. I did spend about 30 minutes cold calling one morning to test the waters and got one customer from that. I had to be careful not to overload myself but now my wife has agreed to quit her job so that she can focus on spawning the sites that I sell. I am a pro on the phone so generating new sales is not an issue for me.

I notice many web companies just charge a one time fee and maybe a fee for each update. I was thinking of using a subscription model and charging a monthly low and a very low design/setup fee. I am drawn to this model because it allows for recurring billing and will let give me a nice base to build on.

My questions are:

Why do many web designers charge a one time fee as opposed to a monthly fee? Is there something I'm missing here? Would it be better to have 200 accounts paying you $129.99 per month and have the constant revenue stream rather than charging the customer one time which forces you to constantly have to sell more and more? I'm very eager to hear your thoughts about this.

I look forward to hearing the responses and I have found this forum very valuable thus far. Thanks!
#model #sales #subscription #website
  • Profile picture of the author savidge4
    Originally Posted by arc323 View Post

    Why do many web designers charge a one time fee as opposed to a monthly fee? Is there something I'm missing here? Would it be better to have 200 accounts paying you $129.99 per month and have the constant revenue stream rather than charging the customer one time which forces you to constantly have to sell more and more? I'm very eager to hear your thoughts about this.

    I look forward to hearing the responses and I have found this forum very valuable thus far. Thanks!

    The short answer... if you do all of the work up front.. and the clients says eh... I don't want that anymore after the 2nd month then what? If you are developing cookie cutter crap I can understand this model. if you are developing custom code and a site that is built to convert and draw traffic specifically for that customer and their business.. well you want payment up front.
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    • Profile picture of the author arc323
      Originally Posted by savidge4 View Post

      The short answer... if you do all of the work up front.. and the clients says eh... I don't want that anymore after the 2nd month then what? If you are developing cookie cutter crap I can understand this model. if you are developing custom code and a site that is built to convert and draw traffic specifically for that customer and their business.. well you want payment up front.
      There is a contract that spells out cancelation in the fine print. At this point I would be exposed to loses if the customer decides they want to quit. I have figured that customer cancelations will happen but I can sell enough to result in a net gain.

      As far as cookie cutter crap, I am using 3 different Wordpress themes and branding the sites according. So yes, it's kind of cookie cutter but I feel that in order for my model to work it has to be like that. If a business wants to spend thousands upon thousands for a super custom site then I can't knock them, they just wouldn't be a good fit for me.
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  • Profile picture of the author Ron Lafuddy
    Aren't you basically describing site rental?

    Wouldn't all the problems inherent in that model, also be a problem with yours, too?

    The far larger question is: why would you start a business and not have this figured out?
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    • Profile picture of the author arc323
      Originally Posted by Ron Lafuddy View Post

      Aren't you basically describing site rental?

      Wouldn't all the problems inherent in that model, also be a problem with yours, too?

      The far larger question is: why would you start a business and not have this figured out?
      Yes, I would be describing site rental as I understand it. Of course any problems inherent in the site rental model would apply to my business - this is self explanatory.

      To answer the larger question: Because I can. I asked for some insight as to the pro/cons of each model. Clearly, you either did not understand the question or do not know the answer. If you can deliver some insight I would love to hear it.
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  • Profile picture of the author Freebiequeen1999
    Anything can happen....

    Businesses go out of business....they sell the biz....they bring in a new partner or their kid decides he can do a better website....so while I can see the idea of charging a hosting/upkeep fee with defined limited changes, the idea of little money down and higher monthly cost just will be a pain IMHO

    I can only imagine hey will conveniently "forget" they agreed to the price etc. and why others only pay xx per month ... they may also be a pain and try to get their "money's worth".
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  • Profile picture of the author wolfmmiii
    OP, what would your client be getting for $129/mo?? If the client needs a website built and you build it, the job is complete. Why would the client continue paying $129/mo?
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    • Profile picture of the author arc323
      Originally Posted by wolfmmiii View Post

      OP, what would your client be getting for $129/mo?? If the client needs a website built and you build it, the job is complete. Why would the client continue paying $129/mo?
      Ongoing maintenance. Additions, changes, on-demand product adding, weekly sitemap submission, possibly some blog articles (not sure about this). It will be a managed e-commerce solution. Plus, I will host it.

      In many industries businesses pay $99 per month for a hosted e-commerce site. That's kinda what I'm trying to mimic except I can sell it for $129 or maybe even more. I based my planning on $129 per month.
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  • Profile picture of the author SashaLee
    Hi there,

    Remember that while most clients "think" they need a website, what they actually need is a steady stream of qualified leads. Sure, they need a web presence, but they'll pay handsomely for a continuous calls/emails/inquiries to their business and will gladly pay a monthly fee to get them.

    All the best,

    Sasha.
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    • Profile picture of the author DABK
      Monthly payments work nicely if you deliver your deliverables on a monthly basis.

      If you deliver your deliverables upfront and get paid later, you put yourself at risk.

      To make it work, you'd have to charge a one time fee upfront equal to whatever amount you determine your costs are. So, everything in month 2 and beyond is profit.

      Or else, you have a minimum months contract, $159/month for 12 months. Then, you have to spell out in the agreement that the site becomes theirs only upon the receipt of the 12th month payment.

      That diminishes the risk, but you're still at risk. Plus, it adds to your work and, I think, makes it harder to sell.

      And, when you have to foreclose on a site, they can be unhappy, because they understood something other than what you said and they'll write up the web with bad reviews.

      Want monthly? Design a product that can be delivered over many months or, like Sasha said, deliver them a few customers a month and get charged for that.
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      • Profile picture of the author arc323
        Originally Posted by DABK View Post

        Monthly payments work nicely if you deliver your deliverables on a monthly basis.

        If you deliver your deliverables upfront and get paid later, you put yourself at risk.

        To make it work, you'd have to charge a one time fee upfront equal to whatever amount you determine your costs are. So, everything in month 2 and beyond is profit.

        Or else, you have a minimum months contract, $159/month for 12 months. Then, you have to spell out in the agreement that the site becomes theirs only upon the receipt of the 12th month payment.

        That diminishes the risk, but you're still at risk. Plus, it adds to your work and, I think, makes it harder to sell.

        And, when you have to foreclose on a site, they can be unhappy, because they understood something other than what you said and they'll write up the web with bad reviews.

        Want monthly? Design a product that can be delivered over many months or, like Sasha said, deliver them a few customers a month and get charged for that.
        This is great! I actually do charge a one time setup fee which more than covers cost. If I were to foreclose on a site, the domain would be pointed to my servers (until they changed it) and I could leverage that to push traffic to existing customers or even to my main site. Does this make sense?

        Thanks for your reply!
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        • Profile picture of the author DABK
          Yes, it makes sense. I was focusing on the feelings foreclosing will bring to you and them, and the results.

          Does $129 a month cover hosting, changes, etc. and a bit of profit? Do you have any idea how long they'll stay with you, on average?

          Originally Posted by arc323 View Post

          This is great! I actually do charge a one time setup fee which more than covers cost. If I were to foreclose on a site, the domain would be pointed to my servers (until they changed it) and I could leverage that to push traffic to existing customers or even to my main site. Does this make sense?

          Thanks for your reply!
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    • Profile picture of the author arc323
      Originally Posted by SashaLee View Post

      Hi there,

      Remember that while most clients "think" they need a website, what they actually need is a steady stream of qualified leads. Sure, they need a web presence, but they'll pay handsomely for a continuous calls/emails/inquiries to their business and will gladly pay a monthly fee to get them.

      All the best,

      Sasha.
      Thanks for your insight here! My niche kind of applies to what you said. I'll strive to deliver what the businesses in my niche are looking for. Currently there is not a company offering what I am in my specific niche. There are companies that use the subscrition model, but none dealing in my niche. For example, in the floral wire service business, FTD hosts florists website and there are several companies that only focus on that specific niche. Mine is kinda like that except there aren't any giant companies offering business solutions in this industry.
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  • Profile picture of the author Barry Unruh
    I prefer to charge a one time fee for developing a website AND offering monthly services. But, the monthly services are exactly that..I deliver something every month.

    The website sale is the entry point...
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  • Profile picture of the author Freebiequeen1999
    As long as your "set up" covers you to your satisfaction it sounds good

    I would suggest you invest in callrail (no sig line they don't have an affiliate program)...30 bucks a month gets you 10 lines to track...or you could make them use a google voice if you set it up right..or some other call solution so you can prove the value of your site
    you can also hook it into google analytics

    IMHO I would NOT..offer blog writing....offer something else if you must but "writing" can be so much changes....others in office, etc spouse, someone will want it changed..."Oh we forgot we can't say that....Oh we forgot we don't want to promote that this month"...they will dither around and even just getting the info off them is hard IMHO. I find the hardest part of working offline is not the selling or execution of work...it is getting them to 'GIMME THE GOODS"...ie, decide what they are promoting, figure out the sale they want, figure out the colors, the logo, etc. Yes people will tell you get it in writing ....but then they will call and whine LOL

    keep it simple IMHO, keep it trackable, keep your contracts and correspondence and list of what you have done and will do etc
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    • Profile picture of the author arc323
      Yes! Very cool..

      I like the idea of Google voice to track leads. Thank you for that tidbit!


      Originally Posted by Freebiequeen1999 View Post

      As long as your "set up" covers you to your satisfaction it sounds good

      I would suggest you invest in callrail (no sig line they don't have an affiliate program)...30 bucks a month gets you 10 lines to track...or you could make them use a google voice if you set it up right..or some other call solution so you can prove the value of your site
      you can also hook it into google analytics
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