One of the things I’ve noticed while quoting projects to various people lately, is that it’s extremely hard for an American to compete with Indians in the same forums. The reason for this is that most people looking for quotes either:
- Don’t have the slightest clue what web design work costs
- Have no budget or a super small budget
- Make the incorrect assumption that American designers are quoting too much, or are greedy.
My goal with this article is to help others understand how web design pricing works from the perspective of an agency setting prices based on its costs and salaries. I also want to point out that there is indeed differences in pay and skillset of web designers and web developers, but the salary range here for designers is accurate to describe web developers at the lower end to midrange. This means that it is accurate enough to understand pricing for most projects, as the folks you’ll come across that are quoting projects are probably not the people charging the higher developer rates.
I’d also like to point out that there is a similar disparity between European agencies and Indian agencies (or any countries where there are drastic differences in cost of living).
I have used the following data combined with Google’s currency conversions as posted on 12/26/2016:
Average Annual Salary Range: $30k-$79k (Est. $2500-$6600/mo)
Average Salary: $48k Annually ($4000/mo)
Average Annual Salary Range: 100k INR to 500k INR (Est. 8333-41666 INR/mo)
USD Equivalent: $1474 to $7371 (Est. $123-$615/mo)
Average Salary: 225,429 INR (18,785.75/mo INR)
USD Equivalent: $3323.16 ($276.93/mo)
A project that would take 15 days of dedicated work to complete would cost a US agency $1250-$3300 ($2000 average) while it would cost an Indian agency 4167 INR to 21k INR (9392.88 average) to do the same. USD Equivalents are $62-$308 ($138 average).
But agencies generally do not work on projects from open to close unless it’s either a really large and well-paid project, or they are behind. Usually, it’s based on 2-3 hours a day over the estimated period of time. Let’s assume the a project was quoted for 15 days and the agencies intend to work on the site for 2 hours a day, M-F.
To be able to calculate the actual costs, we need to establish the hourly pay based on a 40 hour work week at both agencies. The entire month has 160 hours of paid work (not counting overtime). To simplify the math, we will work on the average salaries in their USD equivalents. We are dividing that number by 160 hours a month to get that hourly cost.
Great, so now we know the hourly rate. If you didn’t notice it before, this is a HUGE gap. For every 1 dollar you spend with an Indian agency, you get the same value from a US agency by spending $14.45.
Let’s revisit the project specs of 15 days at 2 hours a day. This is a 30 hour project (120 hours if it was fulltime dedicated).
Mind you, this doesn’t include tasks such as graphics or content creation, which can add hours to the project. Whether or not an agency uses the markup to cushion the additional costs, or if they just include it, doesn’t matter for this discussion. What does matter is realizing that when you get a quote from any agency, these costs will be considered. However, for the sake of conversation, we are going to assume these agencies are including it, and so naturally we need to mark these costs up. A good markup is between 200-300%.
US: $1500-$2250 ($1875 average at 250%)
India: $103.80-$155.70 ($129.75 at 250%)
So before you just assume this is what websites will be quoted regardless of what agencies you go to, consider that half of this article assumes the posted averages. Recently I’ve seen some job postings for Indian agencies advertising lower than that, 8k-12k INR ($118-$178/mo) which is definitely lower than the average which would yield lower numbers.
The simple explanation isn’t necessarily that Indians are willing to do it cheaper to take business from American and European agencies, it’s actually due to cost of living. You can look at the CIA World Factbook and other resources online to discover that it costs less to live in India than in the US. However, be aware that it’s not necessarily equal living conditions, and fewer people live on their own there than here. The cultural and economic differences aren’t even something I want to even dig too much into, but the info is out there if you want to find it.
So while I certainly don’t want you to make a decision on who to hire for your web project just based on the info here, it is my hope that you understand what you’re actually doing by going the cheap route with an Indian. Having said that, there are amazing and talented professionals in both countries that are worth a look.