My First E-commerce Site

What should I charge?

[lazy_guy]

Grettings,

I have been asked to create an on-line site for a surf shop. I've known the guy for close to 20 years and he always knocks off a few bucks when I buy something at his shop. A good guy. I've got a degree in IT from a good school in CA and have made a few sites that were primarily front-end. I know I can do this but I'm doing all of it by myself... even contacting the companies for them to send me their product cds.

I plan on setting up the site with yahoo store for the shopping cart and backend... but what do I charge this guy? The site has the potential to be huge and he has already said he wants to hire me part-time afterwards to maintain it.

Any advice is appreciated. Personally, I was thinking 5k, and I know that is still really low, but the guy is computer illiterate and will probably scoff at that. Thing is, I really want to get my foot in the door with the surf industry and I feel I may have to under-charge to pay my dues.

Any advice?

[Feydakin]

I hate charging by the project.. I prefer charging by the hour.. When you charge by the project someone always looses.. Either you over estimate the time required and your client pays 'too much' or you under estimate and you find yourself working for free..

Just charge your hourly rate, and if he's a good friend knock a bit off the top.. But make sure he knows that you are giving him a discount.. I invoice out the stuff I do for free with my hours, normal rate, and then discount it to zero.. This way the customer can put a real value on your work and not just assume it's "free"..

Steve

[lazy_guy]

Thanks for the reply Steve.

My only problem with charging by the hour is that some of the stuff is going to be brand new to me. I'm going to be learning on the job so to speak. Would I charge the guy half-price for the stuff I'm learning?

How should I go about this?

Thanks again.

[Automan Empire]

You may feel "new" but don't let your client sense that- even this friend of yours!
Billing all hours at the regular rate then discounting it, even to zero, is a good idea!
As far as your pay while you are learning, try to quote a reasonable flat-rate of hours for the job or subtask. If you figure it will be a 10-hour job once you are up to speed on that particular task, bill 10 hours at the regular rate. Keep track of the flag time (actual time) spent, to help you refine future estimates. You may take twice as long to actually do the job as someone experienced would, but the customer doesn't need to see either that, or your "discounted training rate," for this would only diminish your professional stature. While you are learning, you "eat" the excess time that goes unbilled. When you are really good, you can consistently beat the industry-standard flag times for jobs, but you don't LOWER your rate then- that is your PROFIT for having paid your DUES.
Building or repairing a complex thing, be it a green widget, a website, or a program, is the sort of task that inherently defies estimating accurately how long it will take. Experience in the business makes the process smoother and more accurate. While you are gaining that experience, don't be afraid to ask for, and receive, adequate compensation for your work!
-Automan

[lazy_guy]

Automan,

Thank you for taking the time to educate a noob.

Most appreciated.

[Axession]

This might be a bit late for my input but what I have learned over the years in this field is that one always has to consider, that businesses with online shops, ecommerce or simple static sites in the end are there to make money. So going on about making things cheap is not the answer.
I have learned not to be shy about asking a good price depending on the product, availablity, type of customer etc. These are the key-point. Don't think too technical, but be a marketeer - therefore a solution for a work shop selling custom made tables might not be as expensive as for a company selling fashion hats, even if the amount of work is the same.

[lazy_guy]

Thanks for the replies.

I think my problem is two-fold in that 1) I've never created an ecommerce site before and therefore have nothing to compare with and 2) I truly don't know how large the site is going to be. It could be 20 companies or 60 companies products that I have to plan for.

Also, the shop owner isn't web savvy and I'm not getting much input from him. He wants the site but doesn't know quite what's involved. Thus, I'm doing doing the entire thing... front-end, seo and marketing of the site. If I'm looking at roughly 200-300+ pages plus the above included, and he's a friend, what do you charge for that?

I'm just looking for general numbers from all you folks that have been so kind to answer a noob's questions.

Thanks again.

[johntabita]

Nobody can really tell you what you ought to charge, but let me give you another way to think about it.

When I hired a gardner, I didn't ask him how long it will take him to cut my lawn. I really don't care if it takes him 10 minutes or 2 hours, so long as my yard looks nice and don't have to do it myself. That's the return on my $60/month investment I want.

What's involved, how long it will take you is not really the issue. People buy because of real and/or perceived value, not based on how long it takes a vendor to produce something. If that were the case, Nikes would cost less than $20. Simply put, what is the worth of this site to your client? How much does he stand to make from this site over the next year? Your cost ought to be based on that, not on your time, IMO.

Of course, you have a break-even point to consider, so taking all of your time into account is a necessary internal processes for you to go through. Knowing this will at least give you the minimum price that you ought to charge. If the value of this site is below your minimum ability to produce it, then you have a losing proposition, don't you?

[Axession]

johntabita - I totally agree on that point you made. Fact is that people buy not necessarily what they need but what they want and if they want something they money is no object.

Regarding the time issue: I have this photographer friend that shoots wedding pics and after every shoot he needs about 2 weeks to edit and fix the pics up. Basically he makes a loss of each job since the hours he spends to fix are almost exessive. So if you feel secure about the technical part and only are worried about the amount of products you are on the winner's side.

[adamnichols45]

I would also charge by the hour

[MrPatate]

I may be late for a reply, but here is another way of seeing it :

If it's a project that you think might become big, why not "invest" in it? The investment would be your time. You could negotiate a percentage?

[rkangrah]

I have a question:

if you charge by the hour, how the clients believe you if you really spend 10 hours on a project?

You can really apply hourly rate for onsite project (and onsite services).

But what happen if you don't work side by side with the client? let's say you work at home. the website can be finished in a week (about 40 hours for full time workes). but you only spend about 2 hours a day during the week (makes a total of 14 hours)....

hmmm..? Do clients really believe you?

[gpilling]

You can 'prove' the time you spent on the project by documenting you activities as you go. This is a VERY useful way to avoid disputes later. In the case of the surf shop, if your work log shows that you worked 50 hours, and only billed him 10, then you will appear to be a good guy.

But I agree with the idea of taking a percentage. If the site is profitable, then why miss out on your slice of the pie? If it is not profitable, then your friend will be upset at you for the loss. If he reduces the price for you on a regular basis, why not take 10% of the sales. This profit will cover your time to set up the site and the maintenance on it.

Just make sure to put your agreements in writing. Profits have a funny way of changing peoples memories.

[lazy_guy]

Thanks for all the responses.

I have given serious thought to asking for a percentage of the online business. I was thinking 25% for busting my butt on the site along with the marketing involved. I don't think he'll go for it because I don't think he knows what goes into developing an ecommerce site. My only fear with that is that it won't make much at all the first year or so... I may be better off getting a salary the first year and then getting a piece of the company the second year. The owner isn't giving me any energy as to what he wants on his website and how he will distinguish himself from the other online shops. Because of this... the site is still in the talking stages. I may be better off starting my own business.

Everybody wants a website but most are so clueless as to what's involved.

[nuttymarketer]

My Advice is, if you are sure of this man as businessman, you should charge a retainer fee as low as a little higher than your running cost and have aprt in the revenue. Revenue sharing is a great way to do business in long term and people who start business find that good as it lower their initial cost. But in long term your profit is mind boggling compare to your fee on regular time.

Take caution in deciding on this.