The Pricing Wormhole
As the market of available designers continues to inflate, many desperate professionals begin to work for pennies on the dollar. They’re shorting themselves, and they’re eroding the industry.
Not too long ago, when I was freelancing full time, I received a call from a medium-sized real estate company in Florida. Having produced a lot of work in the Realtor industry in the beginning of my graphic design career, they got my name and number from a former client. This new company wanted a new website with Flash and buzzwords and scrolling things. Needless to say, their existing site was lacking, so I drew up an estimate and comp detailing a complete overhaul.
Days went by and I never heard back. After about a week, I called the head of marketing to “make sure they received everything.” Our conversation was brief.
Me: “Hello, Mr. Marketing, this is Kevin. I am just calling to make sure you received my estimate.”
Him: “Yes we did.”
Me: “Would you like to discuss them?”
Him: “Actually, no. We found someone else.”
Me (surprised): “Really? Was my design with the Flash and buzzwords and scrolling things not what you wanted?”
Him: “Oh, it was perfect, but we found someone who is much more in line with our budget.”
It went on, and I discovered they posted the job to Elance, and the winning bidder “more in line with their budget” undercut my price by about 75%. My price was fair, better than normal in fact since it was a new client, but the other designer’s was ludicrous. Unfortunately, this has happened more than once, and over the past several years, similar stories have filtered in from colleagues.
The residual effects of the dotcom meltdown still pollute the design industry. New start-ups have much tighter purse strings and are wary of exorbitant spending on design. The massive layoffs that shook the industry left thousands of designers — both print and web — jobless with very few options. And while the economy continues to level out to its current lethargic state, design schools churn out new graduates in unprecedented numbers.
But this isn’t a diatribe against students wanting to excel in the arts. Rather, it’s a statement against bad business practices that have appeared in the wake of the bubble burst.
There are more graphic designers, web developers, art directors and programmers than ever before. But there are not fewer companies, only fewer (read: none) companies with millions budgeted for superfluous funding. New start-ups guard their cash tightly and look for deals; companies that survived the downturn learned from their mistakes and no longer contract ridiculous promotional pieces and gaudy, expensive websites.
Because of the swollen talent pool and perceived lack of work, designers and developers have begun to work for a fraction of their value. This practice has accelerated for several years and shows little sign of abating.
Look no further than Elance.com (“The Better Way to Buy and Manage Services”) and ContractedWork.com (“Exceeding Excellence is the Standard”), two sites that offer an online marketplace for finding and supplying freelance services. Here, a full-color tri-fold brochure costs $125. A full website runs $400. An illustration can be had for $75. A corporate logo design with lots of first round drafts and “unlimited revisions” can be contracted for less than $100.
Read that again. $100 for a logo design. Untold hours of work and creativity compressed into a sickeningly low sale tag more suitable for a third world sweatshop than a “design professional.” What makes the situation even more depressing is the shameless modes in which designers and design companies whore themselves out, some claiming they have been in business for years, others claiming they work in shifts around the clock, others throwing around a useless eBay-style “feedback rating” as if that somehow justified their cutthroat tactics.
These sites and the unabashed devices they promote are trivializing the design industry.
And it’s easy to pretend that this alternate-universe of design pricing exists only online. Unfortunately, it doesn’t. More and more, clients expect these lower prices, and more and more, designers are giving in. New generation patrons consider the pricing schemes of the dotcom boom as inflated, when in fact the current pricing model is deflated.
Take the price of a logo design by a freelance designer. For arguments sake, we’ll say the average price is $2,000, depending on market, client, experience, etc. Take the average price of an Elance logo design: $125, which takes none of those things into consideration. That’s an unapologetic 94% discount.
There are several moving targets to point fingers at. First, the flood of new designers has upset the balance of supply and demand in the industry. Every graduate is looking for a job, either full-time or freelance. To get a job, they need to build their portfolio. To build the portfolio, they go onto Elance and slave away at a few design jobs for pennies on the dollar.
Second, the economy in general. The recently laid-off designer that has experience but can’t get a job. Desperate to eat, she creates an account at ContractedWork and becomes exploited talent, developing a killer website or brochure or identity program for a fraction of her usual price.
Third, globalization. Visit either site and you’ll notice one thing: the majority of the suppliers are from India or Eastern Europe. The recent trend of offshore outsourcing has come to roost in the design industry, and the lower cost of living outside the United States and Western Europe allows these companies to offer prices previously unheard of.
Unfortunately, none of these problems — if they can judiciously be called “problems” — are easily solvable. It is easier for a graduate to build a portfolio through Elance than intern at an ad agency or development company. For the out-of-work designer, these sites offer an easy means of meager cash flow and client leads. And for globalization, that is a simple fact of the changing world. As the planet shrinks, adjustments in service pricing are to be expected.
Rehabilitation and Clean Up
One means of retaining a proper pricing model is through client education. While some clients expect these lower prices, they also expect to receive a second-rate product. They accept the work as suitable, as presentable, and some — delusional as it sounds — as professional.
Designers have a responsibility to show the value of good design, just as a car dealer sells the highlights of a new model automobile. Cite branding campaigns that were a success because of professional logo and identity design. Or a well-designed catalog that generates more sales than its shoddy brethren. Or a website redesign that holds customers longer through intelligent navigation and better usability in the shopping cart. Clients must understand the differences between a Lexus-class design and a used Saturn design, and how that value can affect their bottom line.
Designers, especially new designers recently out of school, must be shown the value of a structured pricing model. Designers must charge what they are worth. Working ten hours on a $100 logo is a paltry $10/hour. If you think that sounds like good money, you’re better off working at the Gap.
The client comes to you as the expert in design, just as they go to a lawyer for knowledge in copyright laws, or an accountant for expertise in business taxes. You are a service professional, so bill like one. Resorting to drastic price cuts, exorbitant promises and flashy references are the tactics of a desperate salesperson. And if that’s the position you’ve been put in as a designer, perhaps its time to reevaluate your career.
An experienced designer or design group that resorts to cutthroat schemes is as bad as a designer out of school that doesn’t know what to charge for freelance work. It cheapens the industry as a whole. It tarnishes the professional image, and no other service industry allows for such nonsense.
Charge as a professional, not a hack. Get off Elance and ContractedWork and get real clients, because buyers on those sites routinely select the cheapest price anyway, and there will always be someone cheaper than you. Think like a lawyer. Bill like an accountant. Use your talent to live. Don’t try to scrape out a living by dragging your talent through every scrappy $100 logo job.
Design is what we do. It’s our business, our life, and at times, a reward unto itself. Talent should not be taken for granted, especially by ourselves.