Anybody Try This, Yet? Amortizing Cost Of Design

You'll sell more at the $99 a month, I can promise you that. I can also promise you that every month, 20% of the cards won't go through. I don't know how much I would put up with for $99 a month.

I know a guy that just builds websites, nothing else, for $199 a month...with a 12 month minimum.

I can also promise you that if you offer $199 a month terms, you'll close plenty.

So the option is to have $1,200 now or wait 12 months to get fully paid.

I understand where you are going with this, but that is a big commitment. The most I'll do for my clients is 50% upfront payment.

Give them the chance and some people will intentionally or otherwise dick you around when you are looking at recurring charges.

Its a decent plan. But - make sure you don't forget about the time value of money.

Having $1,200 in your business NOW is MUCH better than $2400 over the next two years.

There is a very large opportunity cost to leaving that money in the clients bank account instead of yours. Under-capitalization is the #1 reason businesses fail.

Amazon.com can easily afford to do what you are proposing because they have deep pockets and can cover the expenses while the value of the customer builds up over time.

We don't have enough info to decide if this is a good option for your business or not. I would say a few things:

1) You need to try and double the amount you will get from each customer in the next two years. Instead of $2400 - try to get to $4800. Like Claude said, you will still convert a lot of them at $199.

2) Don't think you can just charge a cheap rate like $99 and make everyone love you. Often, they will have disdain for you after a few months. Higher prices have an effect on people's psychology that makes them esteem you more.

3) You are taking a big loss and a HUGE risk by not getting that money in your account immediately. Make sure you fully calculate everything you could be doing with that money to grow your business if you had it today. Two years from now, you could have had twice as many customers because you were able to use the cash to grow your business. This is a VERY large hidden cost in your plan.

Since you are spending so much opportunity cost to give this deal to the client - you should make sure the contracts are air-tight.

They simply MUST pay you for two years. They MUST provide you with an alternate payment method and give you the permission to charge it should the first one fail.

Otherwise, what is to stop them from turning off the card? People decide they want a different site all the time. Many customers change their mind every 6 months it seems. They could hire a new designer to make a different site and then turn off the credit card or close the checking account where your payments come. It's a risk.

Personally, I would never pay as much as you are going to pay to pursue this plan. Business is like a motor - and cash is it's fuel. My growth plans would be killed by spreading the cost for two years.

I wouldn't do this. 50% down/50% on completion are the terms I'll give if not 100% down. People used to ask once in awhile if I would offer terms on my WSOs. Nope. And these are paltry sums.

I was a credit manager for a national electrical wholesaler for 4 years, responsible for $2million/month in collections. Leaving little pieces of money lying around to chase people for and pick up is NOT worth it.

If you are going to have to go after someone for money, at least make sure it's for an exciting sum.

Why not charge a setup fee and then a monthly charge, similar to how Claude charges for his services.

Has anyone tried the financing route yet where the client gets approved for financing if they cannot afford your design fee up front? That way you get your money up front and the financing company is responsible for collecting from the customer monthly.

Design and Hosting should be kept seperate, that said if you can do it correctly, like the U.S telcomm industry does, it can be more easy to close.

So basically have them pay minimal or no money up front, but make sure 12-24 month period is a contract, on which their credit depends upon.

I am taking on a new client that is paying $300 a month for a crappy ass website from the yellow pages. Seriously, downright aweful site. If any of you saw it, you would vomit.

At best she ranks bottom of page 2 for search terms relevant to her business locally.

I just did a quick search for the yellow pages footprint. Thousands and thousands of websites built by this yellow page company. Granted some of these are freebie one page sites but the majority of these are $300+ a month.

As Jason pointed out, collections could be a problem and the YP have a strong collection company.

At $199 a month it would be easy to go in and undercut the YP while giving a product that is 100x better.

I personally prefer the upfront and monthly with the 50/50 model. However, with businesses that are long term YP customers I might consider the monthly route.

A big benefit of the monthly route is that you would control everything. The domain, hosting, site, etc. If they stop paying you take the site down. If it looks like they are never going to pay add the site into your private network to build links to your other clients.

You could do a search on Google and see if you could find pricing. I know the prices from having dealt with several clients that either got a quote from the YP or they were paying for a site from the YP.

"Plus, they get to keep everything I've ever done for them; Videos, website, links, blog posts, etc. It all stays."

I'm thinking that this is part of the problem. If you didn't charge the upfront and instead structured the design work as more of a "lease" then leaving you would = No web site for a period of time.

As it is, you've done the work and they can take what you've done and get cheaper hosting elsewhere. Which is fine, if you've built that into your pricing structure.

(Not a criticism... just thinking out loud. You've obviously found something that works for you, and I respect that!)

i just applied something like: i offered a new design like $600 dolar to one of my clients + webmail service just autoresponder and reports $300 dolar ...+$+$ anyway he got a total of 1200+ price for my service but also i gave him another option like : i build your site for 500$ and i will do the other services for only $129 monthly payment ... well the local company choose second options so i got a recurring one year deal with him everybody was happy... so system for recurring works better .. but about payment you are right need to ask more and stay at least in a good price