Am I ruining the industry?

I'm currently building/running a 'digital marketing agency' from home with my partner. We provide websites (business card sites, CMS-driven sites, e-commerce etc), hosting, email services right through to graphic design and so on.

I can afford to massively undercut pretty much everyone in the market (or so it seems). For example, a lot of agencies will charge £200-1000 for a basic, static 5 page website. Whereas I can create a nice custom design in around an hour and create nice, tidy, clean, semantic html and css for said design in another hour. Then it's simply a matter of arranging the client's content on each of the pages. Even at a rate of £25/hour, meaning I can do the same for £50-70.

Sure, I'm working from home so I don't have the overheads of offices and the associated costs (insurance, bills etc), but even if I did have those costs to take into account, there is plenty of room to play in £25/hour before it became not worth it.

I've largely automated things like payment processing and my paperwork/job/customer management side of things so there is little time spent there.

Am I ruining the industry? Should I undercut my competitors a little less? This industry feels a lot like people are charging so much for their services 'because they can'.

Thanks.

No, it's not possible for you to "ruin the industry". Your business will not scale, and the total number of web sites you can handle is so small as to be neglible.

Your question implies a naive belief that the more expensive firms doing the same thing as you must be rolling in profits. That's simply not the case. There is competition between these large firms and they can only charge what they need to cover their expenses and a reasonable profit.

Your assumption of how to do this business misses a number of expenses including:

1. Initial consult to gather the information needed to build the web site
2. Your hardware and software expenses
3. Your business location expenses
4. Legal fees (you do have a contract??)
5. Insurance (what happens when a customer sues you?)
6. Long term support (Many people uses services like yours and expect you to be able to change the phone number and address on the web site 10 years after you put it up.)
7. Product delivery and modifcation (what customer is ever 100% satisfied with your first effort.)
8. Numerous other items I don't have time to list

Any competent designer can crank out one web site for a bakery. It takes something entirely differnt to make 50 bakery sites and 30 hardware store sites and keep them running and updated for years. This is the difference between a hobby and a business.

Do it. That's the whole point of entrepreneurship.

Of course, don't get too far ahead of yourself here. Assuming the quality of your service is equal or superior to the market's (which is a big assumption), you won't be able to scale or market to the same degree that the competition can if you're operating alone. How are you going to manage customer service? What if someone wants ongoing service or is dissatisfied? Did you ever consider that the higher margin the market makes make is so that they can handle more customers by hiring and delegating tasks to contractors?

You won't ruin the industry. When I started Web Ascender in 2005 it was almost exactly the same concept you are talking about. We did a lot of legwork to be able to provision a CMS install with one click, and had made a lot of great templates that we could easily modify.

We figured we would just make small websites real quick and do them very reasonably. In fact we set it up so after we did the look and feel the client could do their content on their own if they wanted.

Our business immediately changed. No one wanted a simple website, no one wanted a cheap website, no one wanted to do anything on their own.

We quickly adapted, we quickly learned and we quickly became the company that you would consider charges a lot of money for their services.

Building small cookie cutter, cheap websites are fine when you get started but are you going to say NO to them when someone wants a 6th page? Or wants a discussion board? Or they want an e-commerce store? Maybe, but I doubt it. You'll agree, you'll charge them more, you'll make more money. AND if you do a great job that person will tell their friends and business associates and you'll continue to get bigger and better clients. And you probably won't say no to bigger more lucrative opportunities. Or, perhaps you'll have luck convincing them that all they need is 5 pages ;)

Most agencies don't want that work anyways so you are probably doing them a favor. Plus I get calls everyday from people wanting to upgrade from their 'starter' website or when they want a bigger company because they can't rely on their freelancer.

I say go for it - you have nothing to lose.

Then it's simply a matter of arranging the client's content on each of the pages. Even at a rate
of £25/hour, meaning I can do the same for £50-70.

You forget:

• You are not 100% busy without a sales person running around getting all the work. Sadly that sales person will need to be - you know - PAID.
• You are not 100% busy even then. Sorry.
• Have you ever dealt with clients? Where do you get the idea they take your 2 hour work and are NOT going to add another 2-3 hours discussion, planning, presentation to that?
• And you really are sure people will like that? That is basically a business building websites the business do not need ("internet business card" style). The moment you get more in - you need more time. In your cheap area you compete with every student wannabe that undercuts you.

And - seriously... 25 an hour? What is that - Junior Web Developer? Do you have an idea what freelance people get paid? Sure you can work for that - which is not that much once you remove office costs, software costs (unless you steal it), reserves for bad times, reserves for sickness and holiday. Rule 1 when I am offering my services is that if I am not in the top 20% of the price range then I am not interested doing it, because I am underpaid.

25 pounds is per month, taken 20 days at 8 hours: 4000 pounds. This is a VERY good wage - somewhere in Poland, Ukraine etc. It is not exactly a decent freelancer rate in the UK. The last junior position offering I saw was in the 250+ range - and it was insultingly low. And again, you assume you will be busy 100% of the time - point is, you will not, and then you suddenly earn quite little. Basically so little it is better for you to be employed than to run that business.

You say in another answer:

I'm not sure what more a competitor could do for a client that needs a basic 5-page static
website.

Compare that with - if you have any decent skills - just skipping the "business" part and getting freelance jobs and you are a lot better doing the later.

Or you just forget all that running a businss and just work for 2-3 times that as decent freelancer ;)

Scalability! Thats the key.

You are not ruining the industry. [Weebly][1]

[1]: http://weebly.com offers websites for free. You would not be able to ruin them. As Henry said, do it, enjoy while it lasts and you would realize how costs go up.

If you still are able to keep these price points at a bigger scale, then probably you have a model which others have not hit upon, and then you have a winner.

More business owners should read the final two or three pages of "Steve Jobs" biography. Apple accounts for 13% of the computer industry's revenues and earns 45% of the profits.

Are they ruining the industry?

There will ALWAYS be someone who can do whatever you do for less (for nothing!)
So why be the absolute cheapest?
I don't buy the premise that everyone wants to spend 200 vs. 8 for a bordeaux. I'll spend 50.
You've found your niche. Now go exploit it it! Just be the best at it. Thats the free enterprise systems as we Americans practice it.