The Annual Web Development Contract

We’ve been in business doing web development since 1996, and one of the keys to our still being in business, we believe, is our use of the annual web development contract.

We’ve seen quite a few local web development businesses come and go since we started. There are lots of reasons that web development companies start and stop, in the case of smaller companies some of the reasons may have nothing actually to do with business practices but can be personal issues. But there have been waves of “disappearances” of web development businesses as well, mostly due to larger disruptions to the economy.

We saw one such wave for about a year after 9/11. There was another wave – smaller, but still noticeable – from late 2008 through 2009.

If a web development company does not structure their business with renewable revenue, these fluctuations can be fatal. We watched competitors disappear during those two waves. Without renewable revenue, a business is dependent on new business. Bad economies put a big damper on new web development business. New businesses and organizations aren’t sprouting up as fast. Existing businesses and organizations put less money into IT and marketing. Some organizations fail altogether. In general, it diminishes demand for web site design and development. So… if you establish that your web company focuses on site design only, and site design demand diminishes, you have created your business with a vulnerability.

Because we do annual web development contracts with our clients, we do not specifically look for organizations that only want a “project” relationship. We want a process relationship – we see development on the web as a long-term process, evolving as technology, marketplace and audience evolves, requiring an approach that actually sews a series of projects, from design and hosting and social media and database applications and SEO and so many other things into a stream of progress that can be measured in the long term by such things as sales and revenue and web site analytics and yes, expense.

You have to have a contract to establish a period of time for the process.

We’re not business masterminds, we didn’t come up with the annual web development contract on our own. We came from business experience that did just that in their business development relationships, and applied that experience. We knew there would be slow economic times, they happen with a greater regularity than we realize. We knew we had to protect ourselves from the whims of those slowdowns. The contract helps. How does it do that?

If an organization wants to treat their web site as a project and not as a process, our contract seems like an unnecessary component. They are not thinking 2-3 years down the road, and are looking for lowest price and not a partner relationship. So – we don’t end up with many of these kinds of organizations in the first place. The contract serves as a standard, not only for us but for the kinds of clients we attract.

We spread out revenue over the course of the year with the contract. Very helpful with cash flow management.

It establishes a timeline for discussion for the future. We communicate with almost all of our clients every month, and with the annual relationship clients can talk to us about additional development at any time. But, at very least, with the contract, it establishes an annual contact to discuss the past year and the possibilities for the upcoming year. We can talk with our customers about how their site is doing, what we see as making sense for improvements, what is happening in the web marketplace that they may want to take advantage of, how the web site can better integrate into what they are also doing offline, etc. We want our clients to move forward on the web where it makes sense to do so. If we are not moving forward, we’re falling back – that holds true for us as well as our clients.

It defines the relationship. Our contract is only one or two pages long. But it defines expectations of the client of us, and for us of the client.

So… as you can tell, the contract also is beneficial for the client as well. The client should want a long-term relationship with somebody to help them navigate the course on the Internet. You have to be in business a while to qualify as a long-term business relationship, so what protects you as the vendor also provides benefit for your clients. The contract is a key to that long-term status.