The irony of what we do with software development is that it is often unfairly considered worthless or disposable until it is extraordinarily profitable in its own right – this is all despite having much lower storage costs than physical things.
Without the context of the efficiencies, reusability, and necessary attention-grabbing that it can solve across an entire brand’s business, group or organisational needs we lose the time-savings opportunities to free ourselves for working on published information quality, which is just so much more important now when your website is such a large part of your overall brand perception and capability.
Motivating creators and rewarding management for investment
To us as, designers and developers, it can feel like trying to build a hotel without getting paid until it has been open for a year, and having no ability to use a mortgage – with the builders, decorators, diggers and cranes all being expected to work as volunteers on the project until it is finished in the eyes of the stakeholders – and then, we are expected to go and find another plot of land to build on until further requests are made – or take a job as in housekeeping and be grateful for the opportunity to improve our portfolio.
Not that we’re bitter – it’s just difficult for everyone on different stages of the technology learning-curve to reconcile something both so new, and historically such a more minor part of life until very recently – so we need to learn and evolve together on this one.
Securing the best designers and developers for a development can be the single biggest factor in affecting success or failure of a brand – far beyond the excellent physical products and awesome human services we may have to offer – so finding a happy marriage in this partnership is essential to free resources for the more personal brand development time needs that you really want to be spending your time on anyway.
We are what we publish
The growth of the internet has come with a dependance for extraordinary access to information online and artificial intelligence expectations to be told, what, when, why, how, where and who immediately via self-service – with the benchmark features generally set by a few enormous highly-capitalised and resourced multinationals now being expected from all websites – because, as a user, we see digital services as copyable, and therefore expect them to be copied and evolved as quickly as the few benchmark sites that become so broadly familiar.
Although, large websites cannot easily evolve as quickly as a network of small sites, so we still have the advantage of room to innovate and improve upon what any site does – and as a development team with a broad range of experience and skills, we take pride in our ability to study the rest, ensure we offer what works and improve upon the features we see the opportunity to make cleaner, faster, simpler or simply exist where others may not have the need to with their narrower domestic-market or primarily retail focus.
This can all be positive for brand perception, valuation and financing – if accelerated or extraordinary development and growth is desirable of course, which in most cases is what everyone is hoping for from website development.
However, often, without any idea how to quantify and qualify the costs or return on investment targets, it remains a conflict of interests from those that expect to benefit from the development, to those that are expected to develop the profits in money, time or other efficiencies – before charging for the development of the digital assets to generate or improve them.
We have seen many single product landing pages become worth many thousands, *per day*, from high-quality design, imagery, information – that will continue to yield and grow sales over time from that up-front investment and very little maintenance – however, we rarely see web pages as assets on balance sheets despite their enormous earning potential.
However, this is an accounting problem and not a development problem – and the whole point of accounts is to summarise and represent the truth in what happens to money, what the use of it is for, and the resulting worth of the overall business from the choices in effective allocation of financial resources.
Digital property assets
The simple solution is to treat every website page as software and content licence assets – with a small amortisation over the typical lifespan of the page for value when it needs to be updated to keep it fresh in the eyes of the audience – which in our experience would be something like a recommended budget of 10-20% annual amortisation of the original creation costs for annual maintenance costs – actually similar to many buildings – that 10-20% equating to an amortisation over say 5 to 10 years. 
And that amortisation should also then have a floor value of a multiple of the gross profits that are generated with the existence of that website and pages as digital assets for income generation based on the expected lifespan of it were it to be completely unmaintained – which also could be another 5-10 years – and often with good web landing-pages, they go up in value over time as their reach grows when people bookmark and link back to it.
This would give us a general amortisation of total creation costs of 5 to 20% – the boundaries of which could be debated – but the exact figure should be agreed by management in their reinvestment strategy for maintenance and ongoing development.
Valuing digital assets
When you don’t design and develop your own website or content – then the valuation can simply be calculated as the setup, custom development, integration and content creation labour costs that are separate from the base-platform licence subscription fee (rent) – which in changing the way they are accounted for – also changes the appropriate words to use for them from cost expenses to investment assets – and just as any stakeholder or assessor can value inventory from a view of the summary accounts financial statements – they can also then value the digital assets and communicate those.
Valuing skilled creators
So, by modernising accounting practices and changing perceptions to recognise the value of digital asset – we create a truer and more representative view of an organisation and its investment in digital asset creation – and we also motivate and reward the skilled creators of those assets in the same way we would pay a builder or decorator for the improvements to our house building ambitions and mortgageability expectations should we wish to leverage standard financial services to create and own something bigger than we could if we were only budgeting for renting a hotel room by the day.
Footnotes & References
- Please check with your accountant and local regulations on their qualifying tests and rules for intangible assets