Your WordPress Business is Not There Yet

Given the large number of WordPress-based discussions on pricing, costs, consultant’s fees and product licenses, it’s no wonder why some people get frustrated about the Community and the understanding of Open Source.

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Other than the mentality and the usual incompetent statements such as: “But WordPress is free!” or “There should be a free plugin to do that!’, there’s another reason why some business owners can’t grasp the cost of building a WordPress solution.

Commodities or Needs?

There are usually two types of things that you need to do, build, use or have on a daily basis:

  1. commodities that just need to do basic work
  2. high-quality goods or services that are simply the best

Take any service or product as an example and try to apply it in two different contexts.

There are cheap and expensive cars, computers, tablets. There’s a low-cost Internet plan and a high-speed one. There are generic chairs and tables and authentic ones, too.

Would you buy a chair for $3000? Probably not since you’re not going to use it that much, or the difference with the $300 chair would not worth the extra $2700. But if you’re equipping an office that is to be rent for $40,000 a month for executives and funded companies, it may be a good investment.

You may need the highest plan from your Internet Service Provider if you make a living off the Internet, work with large files, manage plenty of servers remotely. But if you’re a general user who spends an hour or two on Facebook in the evening after business hours, and goes fishing over the weekend – it’s not worth the cost.

They just target different audience. There is a market for everything, which is why those service or product vendors are able to survive and make a good profit at the end of the day.

Pareto’s 80/20

I’m a great supporter of Pareto’s 80/20 principle and I’m currently listening to an audio book called 80/20 Sales and Marketing: The Definitive Guide to Working Less and Making More. It focuses on that given commodities vs. needs problem, and it also reflects the amount of time we spend on things that don’t matter.

If you’re not familiar with the basics, the short version is – 20% of something is responsible for 80% of something else, and vice versa. Like:

  • 20% of your clients pay 80% of your revenue
  • 20% of your tasks take 80% of your time
  • 80% of your users would use 20% of your WordPress plugin’s features

Now, the spicy thing here is: can you afford working with 20% of your customers if they make 80% of your profit?

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It’s a good philosophical discussion to have, but the answer, as usual, is: it depends. It depends on whether your 80% are higher than your costs, and whether you can spend a few months finding more of the 20%-type of customers. Or, applied to the plugin example – whether your plugin can survive with the essential 20% of the features, or it still needs the other 80%.

Either way, Pareto’s rule is often an indicator that there is a lot of room for improvement for your business. The questions is whether you have the resources to take it to the next level quickly, or take the long and safer route. Most entrepreneurs leverage 80-20 and build massive businesses, but some fail to implement it properly, or don’t do their math right.

Service Costs

This is applicable for products, but services are more interesting since they are often harder to compare on the outside, or assess before spending some time with several providers at once (which is not cost-effective).

And that’s the thing with WordPress freelancers and development agencies. 80% of the freelancers and WordPress agencies out there can handle 20% of the available work – which is setting up new websites, installing some themes and plugins, and applying some basic CSS changes here and there (if possible). And 80% of the remaining features could be built by the other 20% of the service providers. If we apply the math to the other 20%, we can utilize Pareto’s principle in a better way and find out how many of those 20% can work on the 20% of the 80% – which requires some calculations (that are done in the 80/20 book mentioned above).

I like the story of 10up – one of the WordPress.com VIP providers – since Jake shared in an interview that it resembles the “last 10%” – the finest details for usability, speed, security and everything else that make your business shine like a diamond. They work with great businesses around the world and hire reputable WordPress contributors since they provide value. And that value is way, way different than the one provided by a local freelancer with a few months of practical experience.

Whenever clients ask for WordPress development work, they often focus on the low-cost contractors or agencies. Which is fine as long as they aren’t building their business on top of that new site of theirs.

For example, if your 10-year old daughter wants a site where she can write some poems and collect them (and share them with friends) without planning to become a published author, it’s fine to have a cheap solution, or even a simple installation on a cheap shared hosting. It’s not essential – speed doesn’t matter that much, or even a downtime of 30-40min a month is hardly noticeable.

If your friend wants to build a gallery and store some of their old photos, and browse it once a month – it’s not a billable product, a running business or anything like that – it’s a pet project that doesn’t require some top quality.

Building a WordPress-driven Business

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The actual community problem is that business owners look for low-cost quality services in order to build a business that would make a fortune.

If you’ve been following Mad Men or any other TV Show for reputable experts from boutique agencies, you know how much they spend on expensive dinners, office parties, outstanding offices and so on. That presence sells to the high end customers. It conveys trust, profitability and stability, which automatically suggest that those companies are wealthy enough to afford all of that.

The common sense dictates that this economical state is generated by high paying customers who need top notch quality (why would they pay that much otherwise?). And those companies hire recognized experts, conduct internal training courses, take certification exams – you name it.

We’ve received hundreds of requests for completing a website that start with: “Our freelancer went broke”. Reputable companies cannot afford to work with partners and service providers that can’t deal with their own expenses – it’s bad for their internal processes, trainings and reputation.

And it’s important for you to convey trust – which is only natural to successful businesses and entrepreneurs who can afford it since their backlog is full of requests, they decline most of those and work only with the best clients out there.

Every business owner wants to be there. But building that reputation takes time and requires a certain investment. And a potential partner would definitely do a background check of that business, which in the Internet world is usually:

  • who works there
  • what’s the background of the founders
  • what’s the portfolio of the company
  • is the website appealing and helpful
  • is the business reputable – testimonials, social media following and so on

Business owners looking for cheap labor would end up with a cheap solution as well. No one will sell you the latest Porsche for $5,000 or $10,000. Quality costs money and if you need that quality in order to grow your business, you have to spend more, iterate and take it to the next level.

Otherwise your website will dictate “cheap”, and will most likely be much less usable, way slower and rank bad on search engines. Guess what would your potential partners think about how much you value your own business.

Training Courses and Licenses

Last week I took the HubSpot Inbound Marketing Certification. At DevriX I have to manage our team members working on content marketing and social media marketing, and work closely with our designer on our online presence, landing pages, free ebooks and so on. The course is free – so is the exam itself – and it was totally worth the time polishing my inbound skills that I’ve gained over the past two years.

However, I’m not a full-time marketer. I’m a developer by education and I’ve done that for more than 10 years. But as a business owner, marketing takes a consistent chunk of my time and it was rewarding getting certified and learning the ins and outs of the Inbound Marketing methodology.

But I wouldn’t invest in an expensive training or certification on Inbound Marketing. It’s not worth the money for me right now and I it doesn’t fully utilize the 20% of the things I do on a daily basis that brings 80% of our revenue.

You want to play with the ERP big boys (SAP and Oracle), instead of the so-called Tier II ERP providers (Epicor, Infor, Lawson)? Then you better be prepared to pay a lot more ($9 million to $13 million) and plan for a longer implementation (two to three months longer).

via cio.com

I did however invest time and part of the cost of mile2’s C)SWAE training. It’s total cost is about $3,500 now, I got most of that covered by mile2 since I had to train a few teams in Saudi Arabia for a month, but I paid for my certification and spent quite some time learning all of the details.

I received a direct profit opportunity from it – a well-paid training gig and potential training opportunities in other countries – and security is an essential part of the web development work that we have to implement on a daily basis. So it was totally worth it.

There are free solutions and high cost ones, and it’s up to you how much is that worth to you. It’s all a matter of costs vs. reward – is it worth paying $X in the short/long run for something? Take a look at landing page builders, CRM systems, or any other popular product that has a free version or a premium and expensive product sold by a large company. They sell the same outcome, but in a different way. And the cheap (or free) solution is not a good fit for a large business, let alone an enterprise.

There are also $500, $5,000, $50,000, $500,000 and $5,000,000 websites out there. They are built by different people with different processes, skill sets and usually provide different outcome. While it’s often hard for a non-educated business owner to assess the difference right away, it should be more than clear that the $500 solution is much more basic compared to the $5,000 one, and way tinier and generic than the $50,000. But if your $50,000 system automates some processes that could save you hiring three more people dealing with operations and administration, and looks stunning and appealing to larger partners – that brings a tremendous value to your business.

Are You There Yet?

And this is the main question you need to ask for everything around you. Of course, there are some things in the entertaining industry that you just need to decide for yourself – whether you need a large flat TV at home, an expensive car that you don’t use directly for work or an expensive trip to an exotic location.

Everything else falls in the “costs vs. reward” category. Which includes your WordPress website as well.

You can hire a $10/hr contractor for some basic changes, but they won’t deliver the quality that a $150/hr one will bring on the table. While geoeconomics are important to note here, the web development industry is completely international and experts can easily land projects anywhere around the world for any rate imaginable.

Take some time off and think about your business.

  1. What have you achieved so far?
  2. What is the next step?
  3. Where do you see your business in 3 years from now?

All of the above are essential for your growth, and the more professional you are, the easier it would be to grow your business without any unexpected obstacles.

13 thoughts on “Your WordPress Business is Not There Yet

  1. A lot of clients are not sure what they will receive as a service or product and that is why they are only willing to pay an amount they are ready to lose. They end up paying very little for what they are after and hoping they will receive what they are looking for.

    The only thing from your writing I find difficult to agree with is that experts can easily secure projects from anywhere and at their chosen rate. I believe that the web development industry is as competitive as any other industry. Perhaps I’m not looking where I should. If you believe it so, can you point me in the right direction?

    1. Hey Yavor,

      “Chosen rate” is a bit ambiguous (that may as well be $10,000 per hour), but the limits are way higher (10x or 20x) than the average hourly rate. Also, there are different ways to productize that sort of services so that you can scale – which includes ebooks, courses, video tutorials and so on.

      The web development industry is competitive. That wouldn’t be the case if there weren’t millions of projects out there. That said – as with every other field – there are niches, and there are clients that require high quality services. People specializing in different verticals are able to build a decent portfolio and consult customers, and work on high profile projects.

      In the WordPress context there are various niches, such as: membership sites, eCommerce projects, optimizing for scalability or security, or even building sites for a given industry and providing tools for automating the industry processes. The available pool of experts in that niche is smaller, and the average rates are higher. When you don’t compete with the 99% “implementers”, you’re positioning yourself as an expert in a certain niche, and with the right portfolio and marketing strategy (even blogging or events) you’ll likely target the right clients.

      Check out http://curtismchale.ca/ or http://chrislema.com/ or some of the folks I met recently such as http://www.lockedowndesign.com/ , http://wpstudio5.com/ and http://andyadams.org/ – I’m sure that their resources would be of use for you.

  2. Thanks for the mention, Mario. Loved the direction this article took. It expressed a lot of things I’ve thought, but haven’t been able to articulate.

    I hadn’t thought about the 80-20 Rule as it applies to positioning as clearly as this post laid it out. But really, that’s the destination everyone should be aiming for. The lower end of the market is very commoditized, and it requires a lot of education to shatter the preconceptions that many SMB business owners already have about quality. Specifically, the efficiency and utility their sales and marketing platform (their website/s) must have for them to Level Up.

    Ironically, that reluctance to invest in a proper platform is a factor in keeping them at the same level they have always been.

    _________

    “80% of the freelancers and WordPress agencies out there can handle 20% of the available work…”

    So there’s that goal again. Positioning ourselves as specialists in a vertical, or for a certain type of site can bring us out of the hyper-competitive bottom 20% of the market. We can’t position around being the cheapest, or being general utility shops. Being one of the go-to places for a specific task beats the hell out of fighting for air at the bottom of the crab tank.

    Congratulations on getting Inbound Certified! I was actually going through the same training at the same time. It gave me a fresh perspective on moving clients through a process, and led to me adding some to-do’s to my own website list.

    PEACE

    1. Thanks John, glad you’ve enjoyed the article. Feel free to follow-up in a post though, there’s always room for more potential points of view and things that could be done in order to bring your business to the next level.

      I think that being able to build a WordPress website from scratch for free (or at a low cost) is terrific – if you’re just starting to learn, or bootstrapping an idea before it’s validated, and so on. The important bit that most clients miss is that it’s not a professional product, it’s not tailored to their needs, and it’s nowhere near the solutions that they see online on a daily basis, by successful online businesses. It’s like comparing a cheap bicycle to a Ferrari – both would take you from A to B, but they’re not even in the same league.

      Competing on price is something awful, since you have to do whatever you can in order to sacrifice the quality, speed, or anything else that would help a business, just so that you sell cheaper services than your competitors. You can’t get a good margin, you can’t build a team of professionals, you can’t motivate your people (or yourself) by learning new skills – it’s degrading.

      Hey, and good luck on your Inbound certification exam (if you’re still about to take it). I learned a ton for smarketing (sales + marketing) and got some inspiration about the delight phase of the inbound process, so it was totally worth it.

      1. I might just take your advice on a follow-up article. I think I got Inbound Certified a few hours after you did. It was on my checklist, and was really informative.

  3. Awesome post, Mario. As insightful as always.

    I like how you’ve segmented businesses that need WordPress websites into two main groups (at least that’s how I see it):

    1. commodity seekers

    2. high-quality, high-value seekers (the high-rollers).

    It’s the same in every aspect of life, I guess. The majority prefer low cost, cheap, commodities. The minority prefer high value, luxury. That’s because of “their” positioning as customers, and their own perception of self and business.

    A subway (tube) ride is not the same as travelling in a private jet; but they both get one from point A to point B.

    The travel method we choose will depend on who we think we are, and what we think our place is in the world.

    From the service provider’s point of view, a lot of it comes down to positioning, as you very rightly mentioned.

    Services and products will often target a specific audience. This will usually be an audience that the service provider feels they can serve well.

    It may not be the best customer audience to target, but at least its a start.

    The 80/20 analogy in your post is also pure brilliance.

    I’ve found that my highest value work comes from 20% of my client base. However, the 80% might still be useful from a stability viewpoint.

    In order to remain profitable, the 20% has to make it worthwhile for the WordPress service provider.

    Aside: I intend to get and read Perry Marshall’s book on 80/20 Sales and Marketing.

    In my opinion, Costs vs. Reward should be the driving factor for business growth on the internet.

    Not everyone needs everything.

    But… a business should be able to know exactly what it needs, and at what stage of the business life-cycle it needs it.

    It could well be that a startup just wants a WordPress website up and running quickly, to test an idea…cheap package, quick TimeToLive (TTL), disposable solution.

    And that’s fine.

    But even that disposable solution has grades; levels of quality that may eventually determine if the “quick test” will be successful or not.

    On the other hand, a business that has a long-term business strategy to sell physical products on an e-commerce website cannot afford to use a “cheap, commoditized” solution.

    That would just be suicide.

    But here’s the thing…a lot of cottage to mid-sized businesses *may* simply not yet be ready for the open source web (or WordPress, for that matter). They don’t understand it, or perhaps feel they are “entitled” to free, cheap solutions, because afterall, its “online”.

    This is one reason, for example, why serious e-commerce marketers tend to avoid solutions like WordPress and WooCommerce, which in my mind is a mistake on their part.

    The perception that WordPress, or websites, and now even e-commerce is free, causes more harm than good for businesses.

    Freelancers, Consultants and agencies will always survive: either from the 80% or from the 20%.

    It’s the business owners that are the real victims of cheap, commoditised website solutions.

    Education helps…to a point, but it mostly comes down to business goals and aspirations.

    I’m in full agreement with this post, and here are my 2 takeaways:

    1. If businesses want better opportunities on the web, they should upgrade their online budget (especially their website budget)

    2. Freelancers and service providers should always be asking: “what can I do to get into the top 20% in my field of work?”

    Very thought provoking as you can see.

    Congratulations on the Hubspot Certification. It looks very nice in your sidebar!

    1. Thanks CJ!

      Commodity vs. high-quality is totally applicable for every aspect of life, just as 80-20. I’m actually VERY process-oriented and I have a set of general things that apply to everything (just as those two) which makes it easier (and faster) to penetrate a new niche, learn its problems, find the right clients.

      The subway vs. jet example is just what I mentioned in my last comment re: bike vs. Ferrari. In practice, it’s a bit more complicated. For example, other than the “comfort”, there is the “speed” factor, there is the “maintenance” factor and so on. Also, both transports hide different risks. So it’s not just “black” and “white”, but having the right “buyer persona” definition, you can target the right group of clients instead of sending an email blast to hundreds of thousands of random people.

      I’ve found that my highest value work comes from 20% of my client base. However, the 80% might still be useful from a stability viewpoint.

      Right! That’s what I mentioned above as well.

      There are way too many books that brainwash people and say what’s right and what’s wrong. I try to be realistic enough and presenting the “right approach” with a realistic way to get there. Therefore – it’s always good to only work with those 20% kind of clients, but in reality – especially during the first 3-4 years – you’ll have plenty of 80% that would pay your bills until you can filter them out and get a high percentage of the “20% client” type.

      Perry’s book is nice, it applies 80/20 to hundreds of practical cases, and also does (80/20)^2 and (80/20)^3 calculations for better productivity and results. He has a tool that you could use in order to refine your target audience and evaluate pricing as well – http://www.8020curve.com/ – with some samples from the book.

      But… a business should be able to know exactly what it needs, and at what stage of the business life-cycle it needs it.

      And that’s the main problem for the majority of the small business owners.

      The problem with “free” and the penetration of WooCommerce and other WP-based tools is somewhat there, but not exactly. WooCommerce is popular and also stable, but it’s not great enough. I’ve built (or integrated) both enterprise eCommerce solutions, and high-end business ones, and it’s a different thing.

      The only way for WooCommerce to move forward is to land a few large customers and work closely with them in order to improve the core platform, work on stability and scalability, and refine the model. This way the platform would get much better and the top tier clients would serve as an example to other large stores interested in a reliable and customizable solution for their business.

      Regarding the takeaways – Internet has (almost) unlimited potential for bringing more revenue on the table. Smart business owners invest in good solutions and grow their business fast – every aspect of it: traffic, sales, team members (in order to deal with the increasing amount of work) and so on. Buying a cheap website means that you’re limited in your growth, and you fall in the 80% of your category, i.e. the low-cost service providers.

      Thanks re: HubSpot too 🙂

  4. Really great article and analysis as always, Mario! I think that the increased modularization of WordPress services (ie: having clients purchase their own licenses to plugins, themes) will really help a lot of WordPress consultancies, agencies, and even freelancers to “mature” in a business sense a great deal.

    Cashflow and patience are one of the 2 trickiest obstacles to managing one’s own business, and no amount of “wishing” will get you there. Just hard work and lots of conversations with real people already active in your business’ community.

    1. Thanks Lara, great feedback – really appreciated.

      I’m kinda hesitant on the future of WordPress right now mostly due to the popularity of Wix, Squarespace, some other platforms, WordPress.com and tons of local hosted solutions. I see the web market getting even more saturated and more affordable/accessible to general users – which is great in general, but would increase the gap between custom services and DIY/easy solution.

      Totally with you on cashflow and patience, although running a business remotely without an active local community is extremely challenging, and it requires a completely different strategy.

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