looking to form start-up and outsource web services but all local web design firms have quoted me too much

Here are some of the things I tell my web development clients when they need to cut costs:

• Use open source wherever possible. There's no reason to pay to develop a login system, search capabilities, common blog features, etc. from scratch when it's already been done and you are free to use what exists. Using open source lets you focus your development dollars on what is unique about your site.

• Compromise on your look. With some color alterations and your own logo, a generic, professional theme can be "good enough" until your funding comes in. This can save big money, just be careful to choose a quality base theme so you aren't eating it on search-engine friendliness, speed, etc.

• Order your feature list by priority, then have your web dev. group those that are less expensive if done together. This well let you select the most cost-effective way to do what you need to do. There's nothing wrong with setting up the basics, then adding on as funding becomes available.

• Be a low-maintenance client. There are clients who take the time to figure out what they want, answer emails promptly, and look for timely updates from their developers every couple of days. Then there are the ones who forward 200 badly put together .pdf and .doc files and expect the developer to sift through and put together coherent content, call the developer twice a day to check in, breaking the dev's concentration and eating up 30 minutes of time talking, and refuse to make decisions in a timely manner. The former end up paying me about half as much for the same work.

• Focus your dollars on development, configuration, and training. Trying to do some of the dev and config yourself usually costs more money (in the form of inefficiency, insecurity, and breakage) than having the dev do it, but on a good CMS-powered web site, you should have no problem entering your own content, creating menu items, etc. Instead of paying a dev or the dev's lackey for data entry and other similar tasks, get an hour of training from your dev and do these simple things yourself.

• Be a fill-in client. For small shops like mine, last minute project cancellations and postponements can really shake things in a bad way. This week a client of mine became ill and had to postpone the project we were working on, so I dropped a note out to other clients offering 20% off any work that could start in the next 5 days. Additionally, I sometimes take on small projects with extremely soft deadlines (something that would normally take 2-3 weeks but can be done in 3-4 months) and then do them when there's a pause in a larger project, or as part of training a new hire. It's a little obnoxious for the client, as they need to respond promptly to feedback requests, and they don't know when I will be calling/emailing about their project, but in exchange for the unpredictability and slow pace, I give a sizable discount.

• Quality over quantity. It's better for your users to have fewer features, but have them work flawlessly, than to have more, buggier features. It's better for you to have a solid, simple foundation upon which to build your web presence one piece at a time, than to have something put together by an incompetent dev who cut corners and/or ignored best practices, which will have to be completely replaced when you are ready to add or change functionality.

If all that isn't enough, you have to look at ways to raise capital before you move forward.

A lot of people on shoestring budgets go to something like oDesk or another middleman site, or look at bargain basement overseas shops to help meet their budgets. When this works, it works. However, this is not how the most qualified devs operate. You need to consider whether the possibility of getting more for your money is worth the risk of getting nothing for your money. My advice (biased though it may be) is that bargain basement works when you are doing a quantity of work, and hit-or-miss is fine -- you can afford to play the percentages. When you are putting 100% of what you have available into a single site, go with an experienced, reputable dev. At least that's closer to a sure thing.

P.S. -- I'm not in your local market, I'm in Indianapolis, Indiana, but if you want someone to look over your plan and help shape it into something you can better afford, drop me a message using the contact form at my personal blog. I don't check work email on the weekends, but I'll check that and see if we can hook up by phone tomorrow while I'm babysitting servers or something. I know if you are new to all this it can help to get advice from an expert who is not the person trying to get your business :)

however, all the web design firms in my area I have gotten quotes from have quoted me around 25k, which is out of reach

I also look for something like that - basically a catering service for my christmas aprty that works for 1 USD. Sadly, all quotes I get are too high. Can you recommend one?

Or: If everyone in the area asks for more moeny than you have, maybe the problem is the money you have, not the price.

Is there any way via the internet to find a firm relatively close to me(Los Angeles area), which could provide a more affordable rate without compromising quality?

Yes. Look up all companies on the internet, research them etc.

But you will be out of luck - going rate is going rate. Your two possibilities are to compromise on LOCATION and / or QUALITY. Why should any developer work cheaper for you than for any other paying customer?

Look for some cheap shop in India / Russia.

If you're happy with your concept, you've road-tested the business plan by engaging prospective paying customers and convinced you have the specification nailed, minimising cost may not be your best focus.

If you do want to do cost minimisation, if you're technical I'd +1 for http://www.odesk.com - for me, I like their way of creating a virtual team, whether your associates are half a city or half a world away.

My practice is generally to get a site up to test my idea. That's not always the famous 'minimum viable product,' but I definitely expect there will be a lot of change between what I know is a great idea and what customers agree is a great idea.

So if it were me, I'd probably use the learning so far (on the proposition and on the build costs) to pare back.

However, if I had already done the work and knew what I had was already as lean as I could live with, I might look to negotiate.

An interesting follow-on conversation with the design firms you've already reached out to, who've convinced you they're competent to do the job, and who seem actually excited to get involved could run like this:

"I love your proposal. And I'd love to find a way to work with you. So here's my ask. You've seen what I want. That's where I'm going. But I won't commit $25k to my first step. I've set aside $10k in the budget, plus the time I'm going to commit building the relationships with the retailers that will bring the site to life.

"So, could you give me a new proposal for $30k?

"Step 1 will cost $10k. It will maximise my go-to-market and really show off your talents. It will capture all the data I need, even though some of it won't get used to start with. It will make sense for its users. Step 1 will bring my vision to life, and will get us working together.

"And after that there will be two more steps. That will get me nearer to, and then right up to the whole vision.

"I'm looking for a partner. But I'm not asking anyone to share my risk. Would you be able to work like that?"

Check out odesk.com, click on 'hire', then search for your city and state. It's not always accurate, but most of the results should be in your area.

Alternately, consider breaking the job up into pieces, and letting non-local people do parts. Consider running a design contest on 99designs.com, or similar site, then using another service to convert from PSD to html, such as http://www.psd2html.com/. You'll still need to get the backend coded, but it should save you a lot of money when compared to having a local shop do all the work.

The only advantage of hiring in your city is if you can meet with the person and spend lots of time face to face. That's unlikely to happen unless they work for you in an office.

So if you are not working face to face, why not hire from anywhere in the world? Basically when I hire from Russia or the Philippines I get staff at a much lower cost and if you spend enough time interviewing, very good quality.

Use services like Remote staff to hire them or Odesk or Vworker. Remote staff is great because they handle everything for you (including the hiring) and at the same price or better really than Odesk. But for project based work vworker and Odesk is best

And use software like Time Doctor to manage and monitor the remote staff members

Here is how to pick the best developers on sites like Elance, Odesk et al:

1. Look for completed jobs similar to yours
2. Review the feedback left for providers who did the jobs and choose those whose feedback you love the most
3. Once you have created this first list, look through the portfolios of all the providers to see if that are done other similar jobs and take note of the feedback left as well. (<<<--- This way you are screening to ensure that it was not a one-time thing, that they do have mad skills doing the work you need them to do)
4. Create a more refined list once done with step 3 above
5. Post your job onto Elance as a private job
6. Invite all the providers from step 4 to apply for your job

This way you will have done your screening before hand and you won't be bombarded with so many time wasting requests to do your job. When you select the best person for the job in the first place management becomes a lot easier (<<<--- it never becomes hands off or automatic either)

Mark, let's ask one fundamental question.

What are you hoping to accomplish in contracting out this work, vs. identifying a partner who can bring web development expertise to your startup?

The thing lacking from your question is why you want to subcontract this work.

The statement "company based around a website" is screaming at you to keep your strategic talent close at hand. This is exactly why businesses hire employees - it's uneconomical and very risky to use outsiders to perform core work for the company. An outside vendor is going to charge commercial rates for you to keep coming back to them with new ideas, reworks, and tweaks.

If you don't want to be directly involved with the complexities of site development, you should not start a company based upon a web site.

Another aspect of this is that the right person close at hand who can iterate through trial implementations can probably identify labor-saving tools. For example, you could use an off the shelf content management system that may provide most of the functionality that you need for your site. A web design company working under a fixed price bid will not provide you that flexibility. They will want you to throw the exact specification over the wall and then implement what you asked for.

I don't think contracting out the project is the right answer here.

And if you still insist on contracting out the work, then "the price is the price" is pretty much the case. Web design companies have to pay their employees, pay the rent, taxes, etc. Your best bet will be a local resource that is proven and highly recommended. And if you subcontract to an individual or unknown entity cheaply, you sacrifice having any substantial proof of their ability to perform (they will be cheap because they are unknown), and then you will probably be forced to take a more active role in project management. You simply don't get something for nothing here.

I would suggest you not to limit yourself in finding web design firms in your area only. Try to venture out somewhere. You may check on odesk and elance. Here in the Philippines, there are a lot of good design firms outsourced by start-ups in the US and Europe. Low cost but same quality.