Why Does NorthMac Services Sometimes Charge Setup Fees?

by | Price & Process

At NorthMac, one of our goals is to be transparent as possible about our pricing, whenever possible.

We believe this instills confidence in and empowers our buyer to make an informed decision about working with us, even before jumping on a sales call.

If you visit our pricing page, however, you will notice a small disclaimer that reads: “Setup fees may apply depending on your project’s requirements.”

Exactly what kind of requirements would require a setup fee? What might that setup fee look like? And how soon will you know whether one applies for your project?

First, Some History

We transitioned to a subscription model in mid-2016, not very long after we started the company in the first place. Our reasoning at the time was flawed, but it turned out to be a blessing in disguise.

The honest truth is that, at the time, we were a solo shop and I didn’t feel like my work was good enough to command thousands of dollars. I was very green in the business world, and didn’t even know how to ask for that kind of financial investment from someone.

My logic was very basic: “Surely, I could get someone to add my web design services as a small monthly business expense?”

Again, my motive was far from ideal, but once I made the leap from treating this as a concession and turning it into a strategic advantage, everything changed.

As I clarified the right reasons for this model, the logic evolved: “We’ve seen our share of hacked, dormant websites that get abandoned and blacklisted by Google, and we never want that to happen again.”

Which was 1000% true.

That made sense, until I started to grow the team.

BeHan’d Solo

(Ok, that’s a really bad joke. 10 points if you get it. Hint at the bottom of the post.)

Once I started introducing team members, the numbers didn’t make as much sense anymore. At that time, the most I was charging for a website was $224/month, and that was admittedly a bit rare. Many were below that, due to differing project requirements, affiliation discounts, etc.

It was impossible to work with a team using such low monthly numbers. The only real solution to that problem while maintaining the subscription web design model is (1) go up on monthly price or (2) add setup fees. (Or both.)

Given that some projects had tougher requirements than others, going up slightly on our base pricing solved the problem for standard websites.

Then, we instituted setup fees for websites that have advanced functionality such as online courses, memberships, and e-commerce. This sweet spot has allowed our business to stay profitable, provide better service than ever, and offer a unique business model that is truly better for all parties involved.

What Types of Projects Require Setup Fees?

Glad you asked!

As I mentioned above, the most common sites we see that require additional fees are:

  1. Online course websites
  2. Membership websites
  3. E-commerce websites

The simple reason is that each of these take a disproportionate amount of time in the beginning to get working (lots more moving parts!) compared to a traditional brochure website.

Additional project types that could require setup fees are directory websites, order-taking websites, scheduling websites, and sales funnel websites.

How Much are Your Setup Fees?

In the past, we have attempted to standardize these. Perhaps we could return to that again in the future; as of now, it depends.

Projects of the same nature tend to vary greatly in size and scope.

For example, it makes sense—in the majority of cases, anyway—to charge the same monthly amount for an e-commerce website regardless of whether the client has 5 products to sell or 500.

The ongoing maintenance and visual design pieces of that equation just don’t vary much, regardless of how many products are in the store.

However, the same cannot be said of product setup. Setting up a store with 5 products is a completely different animal than setting up a store with 500.

Now in this example, you may wonder why we simply could not set a standard per-product fee. And given enough data and research, we potentially could.

The problem is that the type of product also matters a great deal. It is physical? Virtual? Delivered on site? Will shipping be involved? Is there advanced download settings or access control involved? Et cetera.

At this time, it makes much more sense to evaluate each client’s needs on an individual basis and make a good decision about the price point for a setup fee from there.

With all of that said, typically, our setup fees range between $1200-$2500 as of this writing.

Can the Setup Fee be Paid in Installments?

As the purpose of the setup fee is to cover the time spent and materials needed at the very outset of the project, any and all setup fees assessed for the project will be due upon signing your contract.

Assuming your site requires a setup fee, then, this is a rough fee schedule:

  • Month 1: Setup fee + first month’s payment due
  • Month 2-18: Additional monthly payments due, per contract
  • Month 18+: Month to month payments due, unless and until cancelled
  • Month 36: Monthly payments continue and website redesign takes place. A new setup fee will not be required unless additional functionality that would, on its own, require a setup fee is requested. (Example: Adding a full-scale membership solution to a site that currently only sells online course access.)

How Soon Will I Know Whether a Setup Fee is Required?

If you’re reading this post (presumably, you are :]), and your website falls into one of the categories mentioned above, there’s 90%+ chance your site will require a setup fee.

When a potential client engages us for work, the first step is to fill out the request a quote form.

The first response you receive from us will be written. It will:

  1. Confirm the details of the quote
  2. Ask any clarifying questions we have
  3. Provide articles/videos for context if necessary
  4. Move to schedule a time to discuss the quote

On the call we schedule, that is when you will find out whether or not a setup fee is required for your project.

Can a Setup Fee Ever Be Waived or Financed?

Although we are a subscription web design company, it’s important to clarify that we are not a financing company.

We do not offer in-house financing for any of our programs. Our services are tailor-made to work in the subscription web design model. It’s not a creative way to pay for an existing product—it’s a new product altogether.

That, taken together with my above observation about the purpose of the setup fee, and the answer to this is no. If the project requires a setup fee, that is due to the nature and scope of the project. The setup fee can be negotiated by negotiating the nature and scope of the project’s requirements.

And, of course, we will not finance it, because we are not a financing company. We do accept credit cards, though, if you need to spread out that cost, which we totally understand.

The Necessary Evil

To be very transparent with you, I view setup fees as a “necessary evil.” I wish we didn’t have to charge them, because I love how clean it is to dive right into a subscription. This is why we only charge them when necessary.

However—it is not an exaggeration to say that instituting setup fees has completely transformed our ability to deliver great work for clients on complex projects we’d have to otherwise turn down!

The reason is very simple! I can afford skilled, radically overcommunicative team members to get the work done for a minimal up front investment, while still building the profitability base of the business on the subscription model we love and our clients have come to adore.

Ultimately, it’s a win-win, and I’m so proud of the work our incredible team is doing. Bottom line, it’s a worthy investment.

Would you consider working with us to bring your idea to life? If so, just fill out the quote form here. I am looking forward to working with you!

Hint: Star Wars


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