Better to charge $50 per month or $600 one time fee?

18 replies
For offline website sales do you guys think it is better to have someone pay $600 initially for a website or do the website for free with a $50 recurring hosting charge- keep in mind I would require at least a year contract for the monthly plan. Who has tried this? Do people usually cancel after a year or just keep paying the $50 to have a website up; this would be for small/medium sized businesses.
#$50 #$600 #charge #fee #month #time
  • Profile picture of the author Jason Kanigan
    "A dollar today is worth more than a dollar tomorrow." ~Burned into my brain by my Accounting prof almost 20 years ago. (Who became the dean of the school of business. Smart guy, that Mr. Dolan.)

    The $600 now is worth much more to YOU than the $50/month.

    However, if your prospect can't afford it (oh my, it's only $600...that's really a sign, don't you think), then you could offer the monthly as an option. If you do want them on board. Do you?


    BTW you can edit post titles by clicking "Edit" and then "Go Advanced".
    {{ DiscussionBoard.errors[8456194].message }}
    • Profile picture of the author aharrold
      Originally Posted by Jason Kanigan View Post

      "A dollar today is worth more than a dollar tomorrow." ~Burned into my brain by my Accounting prof almost 20 years ago. (Who became the dean of the school of business. Smart guy, that Mr. Dolan.)

      The $600 now is worth much more to YOU than the $50/month.

      However, if your prospect can't afford it (oh my, it's only $600...that's really a sign, don't you think), then you could offer the monthly as an option. If you do want them on board. Do you?


      BTW you can edit post titles by clicking "Edit" and then "Go Advanced".
      Haha sorry I am a rookie on the forums here, but I agree that it's better to have the money upfront. I think I will offer them the $50 per month option, although I don't really want to work with people that can't afford $600 to invest in their business. I will use this model until I get some more capital (since I have to pay a team of three) and then move on to larger projects- I appreciate the input you have given me thus far Jason!
      {{ DiscussionBoard.errors[8456220].message }}
  • Profile picture of the author Aaron Doud
    Better answer? Both

    You should always have a fee up front for the website. If it is a bigger project you can bill it over 3, 6, or 12 months at a slightly higher rate.

    But you should have something of value so you can get the monthly fee as well.

    $600 & $50 might not go over well but I bet $600 and $20/mo would. Plus you could offer a better monthly package for $50 that some would buy.
    {{ DiscussionBoard.errors[8456311].message }}
  • Profile picture of the author DaniMc
    There is a huge difference in value for you. The option should not be 600 or 50. It should 600 or 75.

    -The time value of money cannot be underestimated.
    -You are losing to inflation.
    -You are losing out on being able to grow your business if that money was in your account right now.
    -Whatever costs are involved in delivering the site will cause you to go negative on this customer for a few months.
    -You are taking a risk of them going out of business or deciding they don't need a site and not paying you.
    -If you have a lot customers on this type of plan, your risk goes up measurably.
    -If you are ever looking for business financing, accounts receivable are good - cash is better.
    -Never underestimate the amount you are losing by allowing payments. They get to keep that money in THEIR accounts longer and use it to grow their business and you do not. That is worth something.

    Now, the big companies can afford to invest in their clients and spread the payments out but they amortize everything and know exactly what the deal should be. You don't need to do all of that - just make sure that if you are taking a risk on them, you are compensated for the risk.

    Make a choice for your business and decide how you will handle this. Don't make a one-off policy for this customer. Create a company policy and stick to it with every customer.
    Signature
    Be kind, for everyone you meet is fighting a hard battle.
    {{ DiscussionBoard.errors[8456341].message }}
    • Profile picture of the author aharrold
      Originally Posted by Dan McCoy View Post

      There is a huge difference in value for you. The option should not be 600 or 50. It should 600 or 75.

      -The time value of money cannot be underestimated.
      -You are losing to inflation.
      -You are losing out on being able to grow your business if that money was in your account right now.
      -Whatever costs are involved in delivering the site will cause you to go negative on this customer for a few months.
      -You are taking a risk of them going out of business or deciding they don't need a site and not paying you.
      -If you have a lot customers on this type of plan, your risk goes up measurably.
      -If you are ever looking for business financing, accounts receivable are good - cash is better.
      -Never underestimate the amount you are losing by allowing payments. They get to keep that money in THEIR accounts longer and use it to grow their business and you do not. That is worth something.

      Now, the big companies can afford to invest in their clients and spread the payments out but they amortize everything and know exactly what the deal should be. You don't need to do all of that - just make sure that if you are taking a risk on them, you are compensated for the risk.

      Make a choice for your business and decide how you will handle this. Don't make a one-off policy for this customer. Create a company policy and stick to it with every customer.
      Both of you are right, thank you for taking time for such detailed replies. Like my dad always said "A bird in the hand is better than two in the bush".
      {{ DiscussionBoard.errors[8456618].message }}
  • Profile picture of the author ewenmack
    Originally Posted by aharrold View Post

    For offline website sales do you guys think it is better to have someone pay $600 initially for a website or do the website for free with a $50 recurring hosting charge- keep in mind I would require at least a year contract for the monthly plan. Who has tried this? Do people usually cancel after a year or just keep paying the $50 to have a website up; this would be for small/medium sized businesses.
    Depends on your business model.

    If it is to build websites for a once $600,
    or get $50 per month for life.

    Remember who makes the most money
    in the end...

    The big hosting companies
    or the big web design firms?

    Selling to the masses is where the big money is made
    and if it means $50 per month for life, so be it.

    Best,
    Ewen
    {{ DiscussionBoard.errors[8456649].message }}
    • Profile picture of the author princewally
      Charge up front, then a smaller fee for hosting. Working for free sucks.
      {{ DiscussionBoard.errors[8456656].message }}
    • Profile picture of the author aharrold
      Originally Posted by ewenmack View Post

      Depends on your business model.

      If it is to build websites for a once $600,
      or get $50 per month for life.

      Remember who makes the most money
      in the end...

      The big hosting companies
      or the big web design firms?

      Selling to the masses is where the big money is made
      and if it means $50 per month for life, so be it.

      Best,
      Ewen
      I would much rather have $50 per month for a few years. My only concern is that they would cancel early and leave me with my tail between my legs.
      {{ DiscussionBoard.errors[8456839].message }}
      • Profile picture of the author ewenmack
        Originally Posted by aharrold View Post

        I would much rather have $50 per month for a few years. My only concern is that they would cancel early and leave me with my tail between my legs.
        If you own the company domain,
        then they may be less likely to cancel.

        There will always be some who will cancel.

        Just got to give plenty of value up front
        to get them hooked

        Pile on plenty of service at the beginning.

        And be responsive to requests
        later on.

        Those tactics will help retention.

        Best,
        Ewen
        {{ DiscussionBoard.errors[8456857].message }}
      • Profile picture of the author Joe Mobley
        Very good answers here from people that I have grown to respect. Let me suggest that YOU are the determining factor in your question. What are your wants and needs?

        Want more immediate cash? Charge more up front. Trying to build more of a passive income? Charge more per month.

        As you have alluded to, a $50 per month website could easily turn into a $1,200, $1,800 or more website.

        There are pluses and negatives to both but the fit is determined by you.

        And you are not forced to stay with one pricing model. Try one strategy and, as needs change, flex it into what ever you need.

        All the best,

        Joe Mobley



        Originally Posted by aharrold View Post

        I would much rather have $50 per month for a few years. My only concern is that they would cancel early and leave me with my tail between my legs.
        Signature

        .

        Follow Me on Twitter: @daVinciJoe
        {{ DiscussionBoard.errors[8457150].message }}
  • Profile picture of the author Mel McDoogle
    This is the best advice i have heard on this topic: "Make a choice for your business and decide how you will handle this. Don't make a one-off policy for this customer. Create a company policy and stick to it with every customer"
    {{ DiscussionBoard.errors[8456756].message }}
  • Profile picture of the author dollarswealth
    If you have other services you can sell to him, like creating facebook fanpage and adding fans, SEO etc, then build the website for free and offer your other services later. If you treat him well, there is a high probability of him buying your other services.

    Even if you do not have other services you can offer your self, out source it to fiverr
    {{ DiscussionBoard.errors[8458200].message }}
  • Profile picture of the author ATAC
    My number 1 Rule
    Cash in hand First and Only way I work ..
    That is if you want to get paid....
    {{ DiscussionBoard.errors[8462642].message }}
  • Profile picture of the author Kommrad Khol
    Why are you charging such a low price?
    {{ DiscussionBoard.errors[8466654].message }}
  • Profile picture of the author Vector Graphics
    Originally Posted by aharrold View Post

    For offline website sales do you guys think it is better to have someone pay $600 initially for a website or do the website for free with a $50 recurring hosting charge- keep in mind I would require at least a year contract for the monthly plan. Who has tried this? Do people usually cancel after a year or just keep paying the $50 to have a website up; this would be for small/medium sized businesses.

    This would all depend on how much maintenance you are going to do to the website if any. Are you hosting the website too? If so then I would go with the monthly fee for sure.

    You could do a one time fee if the site is hosted elsewhere and you don't have to maintain it.
    {{ DiscussionBoard.errors[8466666].message }}
  • Profile picture of the author webprogramzone
    If you are in need of money in bulk then go for one time payment but if i have to select one of them i would definitely go for monthly charges
    {{ DiscussionBoard.errors[8466827].message }}
  • Profile picture of the author KittyPoo
    I would prefer to charge on monthly basis , because it gives me benefit to get for long term and might get advantages of the currency fluctuations too.
    {{ DiscussionBoard.errors[8470207].message }}
  • Profile picture of the author Lokahi
    Whether online or offline business, never do anything for 'free', even if you will be getting a monthly subscription there after. Anything free has no value to your customer and will be seen as cheap. Better to make them pay a smaller price for the website and additional hosting or maintenance fee monthly than to give it away and have it devalued.
    Signature
    {{ DiscussionBoard.errors[8473684].message }}

Trending Topics