05 Jan A Research by Ivory Shore: 600 firms competing in Web Design Industry out of 33,000 in Canada
Latest research by Ivory Shore, an Internet Strategy, Internet Marketing & Web Design firm highlights the commoditization of Web Design market yet how some companies are able to charge premium due to their strong brand and internet presence.
There are approx. 33,000 Web design firms in Canada targeting Small/Medium Business clients. 67% of them are registered companies and another 33% are legitimate freelancers. This figure is much bigger however for the purposes of our study, we have not included the freelancers or companies that do not do a minimum of 1 website/month.
By seeing the companies visible on google and ones that post ads on craigslist, and adding those up, we have been able to arrive at the above numbers for Vancouver. The Canada-wide numbers above are an extrapolation of Vancouver numbers (Based on Web design firms/ 1000 people).
This stat point that there is 1 Web design firm for every 1000 people, which makes web design a very commoditized business with small margins. But it’s not true, when you look at the pricing structure in the industry.
In our primary research in Metro Vancouver regions, we figured out that the price for a Small Business website with 8-15 pages is anywhere between $600 to $10,000, with a mean/average of $5,300 and a median of $3,800. So when there are so many options available to customers, then why do some web design companies charge $600 while others charge $10,000 for the same service?
Top 5 reasons for this as mentioned by customers in our primary research are:
- Established businesses do not want to experiment with their brand. For them quality assurance is key so they trust bigger and established companies even if it means paying the premium.
- Freelancers often do not have a minimum reservation price and with the use of templates they can also design an awesome website at a reasonable price thus offering value for money. However the risk of the outcome is usually considered higher.
- Companies competing for business at the top (top 10-15 in Vancouver) charge anywhere between $2,500 and $10,000. So if a customer wants to avail services of a reputed company that has credibility then there is no choice but to pay in that range.
- A few established players offer packages of SEO and Web design. This allows them to charge premium as they serve as a one-stop shop for their client who wants to grow his business online.
- An interesting fact is that companies that focus on value selling and building their brand rather than price competition, are able to charge premium.
The final outcome of this research is: Web design unlike it is usually perceived is still not a commodity business, provided the company builds a strong brand, internet presence and is able to showcase an accomplished portfolio to its prospective client.