The decision to charge customers NZ$400 to list a website in New Zealand's XtraMSN's directory has been labelled as excessive by one web developer.

LookSmart, the Australian company that runs the directories for both XtraMSN and NineMSN in Australia, has begun charging $400 for placement as well as an annual renewal fee of $400.

The Auckland-based developer, who did not wish to be named, says while she understands the need to charge for the service, the "excessive cost" will mean some small businesses will be reluctant to list on the site.

"It's hard enough for us in the industry to understand search engine placement and how important it is, so imagine how non-IT people must feel about it."

She says the cost is not in line with the expense involved in assessing each site, something she says would only take a minute or two.

"They have actual people sitting there looking at each site, but really, how long does that take? Also, if they reject your site, you don't get a refund. It's $400 even if they say no."

She says that people are "buying a product" and wouldn't put up with such treatment from most companies.

Phil Zohrab, director of Search Engine Strategies says a well-placed search engine listing can be more effective than an advertisement in a magazine. He also says that most hits on sites come from search engines rather than banner advertisements.

"We always tell our clients this is about marketing rather than about technology."

He says businesses can often be listed in directories for free, but he recommends they pay to be listed as it reduces the waiting time from months to days.

"Yahoo will accept your listing locally for free, but it can take up to six months for your company to appear. Paying the $US299 to be listed means it's processed in 48 hours."

He says companies need to be on the first page or so of any search because most people won't look beyond that point.

Zohrab says the most popular search engine in the country is still Google.

"If you look at our logs most of the visits are driven from Google. It's just incredible."

Xtra referred IDGNet to LookSmart for comment.

LookSmart spokesman Damian Smith says the move to charge New Zealanders for the service is "in line" with company policy in Australia.