I was reading a news release from a leading web design business portal last week that was dedicated to encouraging web design firms to offer web design products instead of services. The issue outlined a number of businesses that had successfully made the transition from working for an hourly rate in a service capacity for clients to offering web based products instead.

I’ve noticed a trend throughout the past few years of web design firms offering websites and systems for low up front costs but for a set monthly fee. So rather than making their money on hours spent from a service perspective they have been increasing their monthly retainers by charging clients monthly fees on an ongoing basis and effectively locking them into a long term contract.

This particular news release outlined the benefits including giving the web designer unlimited income potential because of the lack of time constraints, affording better opportunity for residual income in continual license fees and providing a better opportunity to sell the web design business that has a product rather than one that just provides a service.

Of course this situation may suit some businesses and may work well for some web developers however there is 2 sides to the argument. I didn’t think it was a coincidence that in the same week of the news release we got 2 separate calls from potential clients looking for a provider that would simply build them a web based product that they could own themselves. They were both in a position where they had been paying monthly leasing fees to their past provider and now wanted to change providers only to find that they could not access the source files for their site and they effectively had to build the site from scratch again. One of these businesses had in mind themselves that they one day might sell their business and a business with full ownership over a well built asset (their website) is likely to be worth more than one that has an ongoing liability of monthly website management fees.

The obvious problem that I see with the above approach is that the benefits are benefits only to the web design firm and not the client business. It results in a situation where clients are paying each month to be locked into the 1 company. The downsides are obvious for the consumer – the provider has no competition and can charge and behave as they like.

In our business we have a policy of using Open Source software to provide underlying functionality and have no lock in contracts for anything. We find that this is good for the client as they have full ownership of their site and they can demand a competitive service every time they want anything done to the site.

I would also argue that it is better for the web design firm. A business that locks its customers in and has no motivation to impress its customers through improved service and innovation is a risky business!