We’re well known in New Zealand for having the most affordable business websites, and despite the price of pretty much everything going through the roof, we’ve kept our custom-designed website packages at the very cheap price of just $299, and when you see how much you get for that, you’ll be amazed how a kiwi website designer can offer a complete website that cheap.

And, while we’ve done a great job of providing a very affordable option for NZ business owners by trimming unnecessary costs and developing a fast, efficient service, offering the cheapest website packages in NZ, we haven’t stopped there. We also offer the cheapest NZ domain registration and renewal fees, and very affordable managed hosting.

But just having the cheapest prices in town is not the simple recipe for success you think it might be.

The downsides of having the cheapest website packages in New Zealand

So, what could possibly go wrong with offering a great product at unbelievably low price? Well, just that. It becomes unbelievable. We’ve had many clients come to us and comment that they feel ‘it’s too good to be true’. They feel like there must be a catch. They’re almost disappointed when they find out there’s no catch, that we just found a way to offer the service at what we feel is a fair price.

Unfortunately, the rest of the market (in New Zealand anyway) continues to charge anywhere from double this to 10x our price. We’ve talked before about website prices, and possible reasons you might get quoted a high price, but in general we feel a lot of this pricing is inflated because customers will pay it, customers feel this must be the going rate for website design, and subsequently don’t contest it (see the next section on the psychology around pricing) which is great news for web design companies in NZ.

For us, it means we stand out, but not necessarily in a good way. We can easily be dismissed as being ‘too good to be true’ and someone could start to imagine a website project that quickly turns into a slow-motion train wreck, dealing with people who don’t understand you and can’t speak your language. Maybe they’ve been burned with cheap website projects in the past. This all plays out in their mind without even contacting us, and they’ve already moved on to the next agency on their list.

Aside from the ‘too good to be true’ thinking, many people also subscribe to the ‘you get what you pay for’ mantra. This is not necessarily a bad motto to follow, and in my experience is definitely the case with furniture and footwear, but it’s not always the case with other things, and the smart cookies out there know the difference.

One example of this is how fast our websites are! Even though WordPress is maligned as being slow or not secure (we know that’s not true if you set them up correctly) we are building very fast websites for less than $300 (see the speed results below).

You can test the speed of your current website using this online speed tool, and see how it compares.

Sadly, the majority of NZ business owners out there looking for someone to help them build a new website (or fix their current site) won’t see this; they just see our very cheap website prices, get nervous, and don’t investigate further.

The other potential downside is that if price is your only unique selling point (fortunately for us, it isn’t), it’s easy for a competitor to just come in and undercut you, even if it means a loss for them, to price you out of the market. We see it all the time. And once you’re out of business, the competitor can raise their prices again.

And, while most of your customers are grateful for how much they’re saving choosing your affordable website design service, there are a few who feel it gives them license to expect a lot of extras for free, without appreciating the true value of what they’re getting.

So, if you have plans to set up a business and compete solely on price, keep in mind it’s not necessarily the best option and there are drawbacks. Maybe review your potential market, the current competition and the way customers think about pricing in your line of work.

The psychology of pricing – How customers think

I often browse forums looking to help train other web designers and entrepreneurs and one of the most common questions is how much should I charge for designing or building a website. The comments vary wildly, but it seems a common response is to charge as much as the customer is willing to pay.

While this might seem unfair to the consumer β€” charging whatever you can get away with versus charging a reasonable price that reflects the true cost of providing the product or service β€” think about how often this happens in the free market we live in.

For example, do you know the real cost of making that bottle of coke you bought? Probably not, and while there are a lot of costs associated with it, everything from raw ingredients, manufacturing, distribution, sales and marketing, for a large company, the actual cost per bottle is most likely just a few cents (I’ve seen online estimates around 15 – 20c).

So, it’s relatively normal for businesses to price things according to the market, not what it costs them to produce it. And when it comes to websites, while in the past it could be a very manual process, these days there are a lot of tools that make it a lot easier, and I believe these savings should be passed on to the consumer, but that’s not how capitalism works.

But there are a few tricks businesses use to make it seem like their prices are more reasonable than they are. You might have heard terms like “framing” or “anchoring”, which refer to the way prices are presented and influences how you, as the consumer, interpret them.

For example, if you see three separate options to choose from, which one do you go for?

Credit: Psychological Pricing Tactics

This is an example of anchoring. Your brain immediately compares the options and concludes the Basic option is cheap because it’s less than half of the Deluxe package. The trick here is that your brain isn’t thinking “is $699 a good price for what I’m getting” … it’s switched to comparing the available options shown on the anchor. The trap is that the anchor doesn’t reflect the actual market, it’s a trumped-up piece of fiction the seller has created with the sole aim of making you feel like the Standard or Basic packages are great value (they might be, but you might also find if you explore other providers, that these prices are horribly overpriced).

You can read the article to learn more about some other tricks that sellers use to influence your opinion of what’s good value.

This pricing psychology means that website design agencies like us that have the cheapest prices in NZ are, in many cases, resulting in more business for the agencies that are somewhere in the middle (maybe we should be asking for commission?), since, psychologically, consumers feel more comfortable choosing an option somewhere between the two ends of the pricing spectrum.

Will we increase the price of our very cheap website design packages?

So, if offering website packages at the very cheap price of $299 is potentially hurting our business, will we increase prices? On the surface it makes sense, we would earn more for doing the same thing, while potentially making customers feel they are getting “more quality” because they are spending more. Will it help us avoid being lumped in with cheap and nasty website offers from overseas that really are too good to be true?

In the short term, we have no plans to increase our prices. We are comfortable with the amount of business we get, and the good reviews from customers happy with paying a lot less than they would elsewhere (especially in these financially tough times).

But who knows, maybe we’ll add a $5,000 Super Grande Deluxe package to our list of available website packages, and see how that goes πŸ˜‰

Are our websites too cheap?