How much is a brand worth to you?
Let’s start with an easy question and one that probably has the same answer no matter what type of econonmy we are living in. Have any of you been experiencing that more and more clients are willing to spend less and less money for your quality work?
At Business Logs we seem to be encountering this problem and it is starting to get on my nerves. You want clients coming to and you especially love it when they heard about your work through the grapevine, but for some reason it also got passed down the grapevine that you do work for $5/hr (exaggeration). We are in the business of building and nurturing brands through communication. A company’s brand is the last thing they get to hold onto, yet it seems it’s the first thing they are willing to skimp on.
Now I am not talking about throwing out a $15,000 proposal for a $2,000 job. I am talking about $3,000 jobs being knocked down to $1,000. There is always some bartering involved.
We are run by two millionaires, but seeing that we are a young company we don’t have that much money.
My personal fave will always be:
But we found someone else who can do it for $xxx, but we really love your guys style.
I am going to start a new strategy and markup 50% higher than usual and when they scoff at the price drop it down to what we usually would charge and they will think they are getting a deal. Branding is not a used car dealership. Sure, design isn’t the only part of a brand, but it can play a major role in it.
Maybe we do charge too much. Maybe competition has gotten so fierce on the web that beggars can’t be choosers. Who knows.
Whatever. Frustration has gotten the best of me and I need to rant for the 87th time this year. I am going to work for Template Monster.
“Well tell me how that goes for you. I’d like to see the job company $xxx does for you. And don’t forget to take this card…you’ll be needing it.”
I have used phrases like that in the past. Chances are you just changed their mind, and if you didn’t; when they need it done right now they remember about the cocky asshole that gave them a business card.
By Ryan Latham on September 13, 2005 3:30 pm
Haha, well I have seen the jobs that company $xxx does and it makes me laugh. I think that last company that did that to us was MySpace and they didn’t earn anything off their design…
By Scrivs on September 13, 2005 4:07 pm
We live in a time where everyone is a web designer; the potential clients brother-in-law, friend, aunt, son, etc. Some truly believe that regardless of a price tag the end result will be the same.
To them it is just a web page. Often times when they have decided to go with this they come back and find a real designer(s) to clean up the mess that little junior son of a bitch left for us because they didn’t get the results that they wanted.
Well really? And you paid your last designer what? A carton of Newport’s and a case of beer? And you expected to have a high class, elegant solution that gets maximum results?
That is the best pitch you can give anyone. I used it a lot in the past. Cockiness and arrogance can help prove a point in situations such as this.
“Looking for a cheap design solution? Take this card…now here’s mine…I’ll be talking to you soon.”
By Ryan Latham on September 13, 2005 4:26 pm
I’ve noticed that the clients who heard that the site could be done for $xxx amount and wonder why your bid is $xxxx, are generally clients who are going to give me the most trouble. And after I lower my bid to get the job, they end up being in the 20% of my clients who take up 80% of my time.
When decent designers lower their bids to get these type of clients, I think THAT might be hurting the designers more than they realize. It sends a message to the clients that your work is indeed worth what you lowered your bid to be.
That being said, I should probaby take a second look at a bid I’ve been working on…
By Kyle Posey on September 13, 2005 4:58 pm
No, branding is not a used car dealership, but as you’ve suggested (albeit hyperbolically) above, giving yourself a bit of room to move on price at the get-go just makes sense. This is something I’ve learned the hard way myself as I deal a lot with government and education who are so accustomed to getting a discount that when you can’t/won’t offer it you just come across as being not in the game. So, galling as it is, you have to see things from their point of view, and play the game.
The trick that I still struggle with though is that when you increase the price, with the intention of discounting, you must not become mentally addicted to this new price, and start grumbling again when you are focred to discount :-)
By Maxine on September 13, 2005 5:49 pm
My employer is moving more and more towards web application work these days, and their background being in web design, they are used to making these arguments, and continue to undercharge for application work. They’ve had to eat their shorts a few times, I wonder if they’ll wise up and listen to me now.
OK Scrivs, you gotta fix the damn tab index on these comment forms! In the textarea, I should be able to hit tab, enter and submit the form. Third time I fell for it!
By JohnO on September 13, 2005 6:20 pm
This is always a problem, and maybe more so when you have a lot of clients who aren’t referred to you by someone you actually know personally (whether through being a friend or colleague, or having worked for them in the past).
My clients are usually not terribly web savvy, and I’ve heard a lot of horror stories. This is why I am completely up front with a new client: I explain to them that good design costs money; that I will do an excellent job, better than anyone charging less; that it is worth it, but if they disagree, they’re welcome to go and find someone else–I won’t hold it against them.
Communication is all-important, and I’ve been lucky enough to work for a number of people who listened to what I said to them. I would go so far as to say that you probably shouldn’t take a job from a client who won’t listen to you, no matter what it may pay; it’s just not worth it.
By Benedict Eastaugh on September 13, 2005 7:46 pm
I absolutely agree with what Kyle Posey and Benedict Eastaugh have said.
I’ve also had the misfortune in the past of not being able to be choosy with any new clients and thus have been stuck with ones that have that special combo of afflictions which can drive a designer insane: They don’t trust you as a designer to know what you’re talking about (despite sterling references, testimonials, et cetera) and also seem to think that the brother of the friend of the CEO’s cousin’s mother who charges $xxx will be able to do the same job even though his “business” web page is on Geocities.
I still struggle nowadays with trying to find a way to explain seemingly trivial concepts such as requiring web hosting in addition to a domain name let alone why having a site done entirely in Flash is a bad idea with regards to accessibility.
By o-juice on September 13, 2005 10:34 pm
I think it’s just an education issue. Clients don’t know much about the wild world of web design, and it’s up to us as professions to explain how a $500 website will probably damage their business more than help it.
At Forty Media, we actually wrote client education into our business plan as a fundamental marketing strategy, and it’s been working great.
In general, we don’t barter on price — unless we barter on scope as well. If the price is to too high for them, we scale back on scope. If it’s still to high, we thank them for their time and refer them to someone else.
Don’t worry about convincing your clients from where they currently stand. Move them to where they need to be to understand what you’re offering, and then give them the price.
By James Archer on September 14, 2005 12:30 am
You see this attitude by clients at all levels of the marketing discipline especially on the creative side. It is always undervalued because of it’s intangibility. At the moment my friends in traditional advertising/creative agencies are getting viral campaign requests from clients who want to pay next to nothing because what they’ve heard on the grapevine is that it is low cost. They just don’t understand the process involved. That’s why I agree with James that the best way to deal with it is via client education.
By Anthony on September 14, 2005 5:35 am
James,
I would love to see an example of that education. That would be awesome man. Our business is definitly on the higher value side and we lose clients all the time becuase they think we are too expensive.
If you have a downloadable PDF or anything, that would be awesome.
Thanks
By Bryan on September 14, 2005 9:29 am
Years ago - back in the days of sending out type to be set using Picas and such, I got some advice from the typesetter’s delivery guy (an older man). I remember his words to this day:
“Figure out your price, then double it, then add a little. If they complain about the price, take off the ‘add a little’!”
By Dean on September 14, 2005 9:53 am
I’m with James. The onus in on the designer to educate the client. I like to use offline analogies to make my point. For example, you could hire a top end law firm, or you could hire the lawyer from the Simpsons. Which will cost more in the long run?
Quality costs more up front. Full stop.
My feeling is that the price is the price. I don’t pad our estimates, but I don’t budge on them either. To me, going down that route seriously undervalues your work. If you’re willing to budge a little, why not push for a little more? Estimate fairly, and stick to it.
By Peter Flaschner on September 14, 2005 11:36 am
Interesting you think that Peter considering you were offering a design package that includes:
a consultation to determine client needs
2 rough design concepts
1 polished design comp
1 round of changes
standards compliant code
install and setup of a blogging platform
an instruction manual for the blogging software
very-quick turnaround
All of that for $199. I am guessing your stance has changed since then.
By Scrivs on September 14, 2005 11:47 am
Well design rarely derives real value for a company. Wait, let me finish. Most small companies see a website as a necessity, not as a tool of self-promotion - its something they need but they can’t explain why. Its up to the designer to demonstrate the value of a well-designed and coded website. Good design isn’t even recognizable to these people. You have to be an educator and salesperson to really succeed and earn what you’re worth.
By Fred Simmons on September 14, 2005 1:09 pm
Most everyone has been mentioning, education is key. Although, I think one of the biggest things is educating our own industry peers of their value and worth. So many people low-ball out of excitement (first timers) or desperation (gotta pay bills).
I mean, we’re entrepreneurs partly because we got sick of a low salary ceiling. It’s counter-productive to continually bend over backwards all the time just to appease a potential client and re-build that low ceiling in your own office!
It’s been mentioned elsewhere, but it’s still good advice: you are also interviewing the client They approached you because they have an obvious need. Estimate accordingly. Now, it’s just time to educate them that it’s actually worth a lot. :-)
I say reward returning clients with surprises (whether it’s a discount or an extra feature, etc.) occasionally, rather than slitting your wrist for an unknown potential that isn’t willing to listen, learn, or negotiate fairly.
By Lea on September 14, 2005 1:31 pm
Ah Scrivs, I know you’re a busy guy, so I’m not going to give you TOO hard a time for not reading the whole article you’re quoting.
Let me save you a second and paraphrase: I was considering several options, one of which included hiring a junior designer in much the same way that a salon hires junior stylists. As a client, you have the opportunity to get a discount by letting the junior stylist cut your hair under the direction of a more senior stylist.
Again, lemme stress that I was CONSIDERING several options. As you know, I’m pretty free with sharing ideas on my site, and was just throwing thoughts around. I also pretty clearly stated that if (IF) I were to go ahead with such a scheme, it would be for a very limited time (like a couple of weeks tops).
That thought process, btw, came from looking for a way to generate sufficient volume to keep the theoretical junior designer busy for a bit while the business ramped up. It’s just a couple of months later, and we’re at the stage where we’re actively looking for designers to come on board on a full time basis. Keeping busy is no longer the problem. Keeping up is.
Again, this is all done while maintaining our standard external rate ($80/hr), and without negotiating on price.
By Peter Flaschner on September 14, 2005 1:31 pm
I think almost all freelancers and companies go through a phase like this - I know I’ve felt it. I’ve also heard and/or read before that if you never get price objections, you aren’t pricing high enough.
To me the difference is what you are charging for. Design is still seen by many as a commodity that you are purchasing rather than a service. Consulting, on the other hand is rarely seen as a commodity, and generally, higher rates are expected and accepted.
Would it help to present the service as “brand consulting” rather than “design”? I’m curious to know if, perhaps, you already are? Would that weed out the clients that see it as a commodity?
By Derek Featherstone on September 15, 2005 1:11 am
Derek, your comment sparked a few questions in my mind. This is just me thinking out loud, so please bear with me.
When someone is doing the design work on a brand–creating logos, choosing typefaces, and generally forging the visual identity of a company or product–are they performing a service or providing a commodity?
On the one hand, there is clearly a product provided at the end of the day. On the other, the entire process of consulting and discussion, aimed at bringing out (to some extent) what the company or product is about, and how to proceed with marketing it, resembles consultancy more than anything.
So: is it (the distinction between commodity and service) real, and does it matter? I think the answers are no, and yes. Some things are more clearly commodities or services than others, sure, but in general it’s more blurred than that. A car mechanic is providing a service, but also a product: a fixed car. You have, physically and tangibly, something you didn’t have at the beginning. The distinction is one of convenience, created for whatever reason and prevailing because people are usually not given to questioning received wisdom.
It matters, in fact, precisely because people don’t question these categories. So, the way that a client thinks about the work you’re doing for them may very well be influenced by whether they view that work as a product or a service–as consultancy, or “making something”.
At any rate, something worth thinking about, so thank you for suggesting the notion.
By Benedict Eastaugh on September 15, 2005 6:06 am
I was recently introduced to a professional “business coach”, one of those guys that has worked in the corporate world, and has decided to “give back” by helping others succeed.
One piece of information he gave me has some relevance here: the first thing he does when working with businesses and entrepreneurs (that means us freelance designers), is raise their prices, then he works to improve their business.
His reasoning is simple: if you value what you do then charge for it and this will send a direct message to your clients that you’re product/service is valuable. If the client cannot appreciate the quality you offer, then you don’t need them. Indeed, some clients will walk, but that’s ok because they are getting in the way of you working with clients who actually do value you for what you’re worth.
In the end, not only will you make more money, but more importantly, you’ll be happy because you feel appreciated. Your clients will also feel they are getting something good, provided you deliver, which is always a good thing.
An analogy: just like a used vehicle, the price of design is really in the eye of the consumer. If you feel that beat up old VW Bus is worth something (and many people do) you’ll pay good dollars for it. Design should be no different. It just requires that the designer to also be a sales person, and a teacher at times.
By Terry Evans on September 15, 2005 11:08 am
I think you have hit upon a much bigger problem in the “industry”, which I will enjoy reading your rant about in due course.
By Tom on September 15, 2005 7:49 pm
never change rates, only change scope. bartering makes you look like you have overinflated your prices, an dmakes it hard to get the price to where it should be on the next gig.
That said, the market sets your value. If you have a large number fo people commenting on your prices, either you are charging too much, or you’re explaining your value badly. A friend recently went into freelancing from being in-house. He raised his rated steadily from job to job until he found the breaking point. Daring, but he knows now he is paid what he should be.
It’s also possible you are charging too little, i.e. you are in the top end of the little guys, rather than the bottom end of the big guys.
By christina on September 16, 2005 11:50 am
I like the idea, but i have a refinement - when you give the client the final bill, knock off the extra money. Call it a discount for being an excellent client.
Now *thats* how you delight the customer ;)
(Of course, if they were a complete pain, enlarged the spec constantly, wouldn’t provide material and generally made the budget overrun… we’ll just call it the contingency margin, eh? ;))
By Lea de Groot on September 17, 2005 8:26 pm