I run a couple of companies that offer websites on the leasing model that you discuss, for all the positive reasons you highlight.  I have come to the conclusion that it’s simply the best relationship for both the customer (because they always have the ability to adapt and evolve their site) and for the supplier (because of the predictable cash flow).

The one major risk for the customer that you highlight, we get round by not locking in the customer – we offer rolling monthly contracts, so that the risk is actually ours rather than theirs.  But if we choose our clients well, and do a good job, we don’t get burnt – it is within our own control.  And the customer’s lack of perceived risk with our model does win us business.

With regard to who owns the website, we make it quite clear – we do.  But if the client ever wants to walk away and take the site with them, there’s a pre-agreed amount that they can pay to do just that – effectively they’re converting to one of the other more conventional models – it becomes as if we’d built them the site for a fixed price.  This is necessary because we’re on that rolling monthly contract – otherwise an unscrupulous client could just hire is for a month or two, then walk away with our site.

Anyway, that’s how we do it.  Works for us.

Cheers,
Jake.

Perhaps a good solution would be to charge a certain amount of money up front in order to get a website up and running. This would be less than it would be to just build a site and let them get on with it. Then, because of that reduced rate you agree a contract with them to update their site and tweak it here and there. The benifit to them is that this would be cheaper than a full re-design in a few years time. The benifit to the web designer would be the regular income. Also, you are both winners because you stay in touch and maintain that two way conversation that is key to any working relationship so if they do require a complete redesign for what ever reason in the future, they still have that good working relationship with you.

I am about to start a project where the payment will be a hybrid fixed amount/revenue sharing model. This addresses the cash flow and maintenance issues with the site and client. Hopefully it works out, only time will tell.

In my world this has been key.  Those that do realize their site is never finished have been well rewarded.  Many that do not,  although very profitable in the beginning start the rotting process immediately and one day they have the WT* is going on here response and fade away into the sunset.

- It creates a cash-flow problem for the web designer who has a big upfront cost of development before he starts to see returns. – This can be true for the first few protects, but once up and running the model works well for the designer as they have a regular monthly income from existing projects that helps cover the upfront costs of new projects (this obviously depends on the size of the projects…)

- Unlike a mobile phone where the customer has his phone and can use it from day one, the client has to wait for some time while the initial site is built. – This can be an issue. I agree upfront each client that we will launch a site within a set period of time after getting the go ahead and agree to launch with limited features / content if that helps us hit the target. One advantage of this leasing approach is that the site doesn’t have to be launched in a one-hit big-bang and can (and should) be improved and added to over time.

- The contract ties client and designer closely together. What happens if they fall out? Can the client walk away? Who owns the website if that happens? – This could be an issue, but I’ve (thankfully!) not had a client who wants to walk away yet. If they did our contract is written in a way that lets me recover any lost income over the remaining length of the contract and they get all the source code / artefacts and content backups / etc that allow them to walk away with everything they need to set up the site up themselves, or to give to another designer to do it for them.

- This is a big upfront risk for the client. If they pick the wrong agency they have to live with that for the length of the contract. – This is a very real risk. Most of the work I do this way is done for small clients who I have worked with in the past so the risk is less, but I’ve worked at agencies who have tried to use this approach and who have run into this problem and not won the contracts because of it.

I don’t work on a lease bases with all clients and I’m not sure it would work for everyone, but with the clients I do work with in this way it’s proven to be a great arrangement.

Over the years, we’ve stopped working to fixed budgets, for all the reasons you mention. Instead, we usually agree a guideline budget, which inevitably includes a large contingency, but we only charge for the actual time & materials used. This allows a project to evolve during the development process. During the course of this, it’s up to us to keep the client in the loop on the financials, and let them know if there’s anything that might throw these out. We can then decide together whether to build or shelve that particular feature. It takes some trust to get going, but it also helps to build real trust and partnership between us. It’s the transparency and sense of competence on both sides that ensure it works.

As for planning your budget – I fully agree. We encourage continual investment wherever we can. So, if a client has, say, £10k, we’ll split that into an initial capital investment to get a simple site up and running, then quarterly or monthly amounts to add and improve features. This way, features get up and running quickly, so the client can start to see the benefit of them right away, and we get to see how their customers are responding, so we can continually adjust strategy according to what’s working. This helps to avoid the horrific scenario of a client spending their whole budget on things their customers aren’t bothered about.

We’ve found that this approach also makes it much easier for PMs and clients to manage development in bite-sized chunks, with regular updates and opportunities to tell customers about new stuff. The client has better cashflow and gets better profits, so they continue to invest more over many years. It provides us with a more regular, predictable workflow rather than lots of crazy months followed by twiddling our thumbs.

And interestingly, we find much more natural, satisfying relationships evolve with our clients, which have a huge impact on the work and the value everyone gets out of it.

Have you or other readers any similar/different experiences of this approach?

Nick