How to lower your price without killing yourself, your business, the market or bringing on the ire of other designers
Recently in a Facebook group I belong to, an interesting discussion thread was started by my former creative director. The discussion revolves around a designer’s ad promoting his web design services for a low price of PHP 5,000. That’s USD 113.27 by today’s exchange rate. Not a few members reacted that designers who price their services this low are undermining the market, a fact which I agree to.
Last night I was mulling over this situation. He is not the first case of low-priced designer I have encountered, and definitely he will not be the last. I have also lost potential clients to other designers who undercut my quote. And I fear that designers who offer lower than prevalent rates are no longer confined to just within developing countries like the PHL or IND. I had a prospective client shoot down my proposal saying: I can get that project done for your price in Australia. In Australia! Really.
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The Philippines’ golden age of web design business
Sorry but it’s over.
There was a golden age of web design biz in the Philippines, about ten years ago, when you can design a website and charge as high as PHp 2,500 up for a SINGLE PAGE for your services. But that age is long gone. One reason that fueled such high price was the fact that there were only a handful of web savvy professionals back then. Not even professionals in the real sense–(profession) an occupation requiring special education (especially in the liberal arts or sciences)–since many were not schooled in web design from a college or with a diploma to back the claim as “professional” (I hold a double degree in Med Tech and Fine Arts, weird mix I know). But eventually everyone got wind of this lucrative business, even the schools, and they created IT and multimedia departments to churn out hundreds of designers every year.
Then there is the outsourcing trend. Riding on the wave of ever increasing internet speed, tools were created that finally allowed real time collaboration between clients and suppliers from opposite sides of the globe. It enabled people to work outside traditional venues, and soho/remote working became a possibility. Online services sprang up around this new work paradigm–oDesk, eLance, etc.–and a client can now go online to find a supplier for almost any work required, from anywhere around the globe. He has the power to shop for the lowest price range he can get for a project. Designers everywhere logged on to these services, and there began a race to the lowest hourly rate just to attract clients. I have seen rates as low as USD1/hr, but that designer is in IND, and perhaps USD 1/hr is more than enough to live by in that part of the world.
Which brings us to the present. A saturated market with more designers coming in–not just local but global–more than willing to undercut the others to get a client.
The bad news: Cheap is in
Nowadays, the business news on tv center around the almost daily rise and fall (mostly fall) of US and EU economies. Should Filipino designers be worried? Frankly, I am. Most of my clients are from abroad. And if feedbacks from recent quotes I made for prospective clients are any indication, my current pricing rates seem unsustainable.
But I am not going to lay the blame solely on designers with lower-than-market-average rates. I believe that clients gravitate to them because current economic situation demands it. Everyone is looking for ways to cut overhead cost and stay afloat. Even big companies are cutting costs, so shouldn’t our clients be?
The good news: There is a market for affordable design and services
At least we can rejoice in the fact that the web design industry is not slowing down (at least I don’t think it is, I’m still getting a lot of inquiries just that more clients are turned off by my quotes). It’s just going to the lower price range. Our clients are rushing to the cheapest designers they can find. We can go into denial-mode if we like, but unfortunately that’s where the market is going. So should we join the rush and lower our rates? This is where things get touchy.
But I believe there is a proper way of doing this. And most designers are doing it wrong, mainly because they simply look at the competitors’ pricing then undercut it mindlessly. This is the practice that is undermining the industry. What I am going to present here is what I think to be the proper way of lowering one’s price.
The price i$ right
I am not going to teach you how to arrive at a quote. There are many tutorials for that, and there’s not one standardized way to do it. When I compute the cost of a project, these are the basic variables that I consider:
- Design and features;
- Hours to be spent;
- Extraneous expenses;
- The client;
- My monthly overhead and how much profit I want to make to live according to my set standards.
Looking at these variables, I know that I can control nos. 1 to 4 to bring my pricing lower without compromising on no. 5 (which should be non-negotiable if you want to maintain a certain standard of living).
I am not going to teach you how to present your quote to the client either. Let just jump to the point where he says: it’s too high, I can get my grandson to do that for USD —- (insert some bullshitty price here). If you get this response, just walk away. I’m not kidding. But if you find yourself with a more reasonable client who understands your work but just doesn’t have the budget in this tough economic times, then try these suggestions on where to cut hours and arrive at a lower rate:
Design and features
Does the design require all the bells and whistles? Identify the must-have’s from the nice-to-have’s design features, and try to stick only to the absolute necessities. Same with site functionality. Sometimes, the client is not aware that what he is requesting will take a long time to build without adding much to the website’s usefulness. Communicate this clearly to the client and see if you can get him to take unnecessary embellishments out of the project scope.
Make your development process more efficient. This is a touchy topic to some–and there is also a right and wrong way of doing this, something I will blog about for next time–but I found that using frameworks and even commercial themes significantly decrease dev time. If you are against using frameworks and commercial/free themes, how about starting your own? Maybe you work in a niche market where clients ask for websites with similar layouts and features. Then start a base theme with all the similar layout and features built-in and use this for all your client sites. Offer clients a lower price if they agree on using the base theme with minimal modifications. You can even sell this as a commercial template and earn extra without you doing actual work.
You can also outsource parts of the project to someone with a lower hourly rate than you! Hire the guy who’s advertising his services for PHP 5,000 and let him do the boring, repetitive tasks like adding content to completed pages, etc.
If your client demands face-to-face meeting, tell him you can lower your rate by doing Skype conference instead and save on gas or transportation expenses.
Need stock photos? There are still cheap stock photo sources out there, or look for willing suppliers from flickr. There are still people who will not mind you using their images in a design for free as long as you give them proper credit. Same for other media resources. But whatever you do, don’t steal other people’s work in order to save on expenses.
Go over your pricing. Maybe you are charging too high for your target market/prospective client. You cannot give the same quote for Aling Nena’s Online Sari-sari Store like you did for SM Supermart. Aling Nena will need a more modest set of features, so trim down your proposal and lower your quote.
Your monthly profit goal
Like I said this should be non-negotiable. After all, you cannot negotiate for a lower condo dues or apartment rent when times are tough. But if you must lower this (maybe you’ve done everything but still you lose out to Mr 5000), then you know where to cut corners: like don’t upgrade that iPhone until gen 10. Stuff like that.
Killing me softly with your price
And then there is Mr 5000. But maybe we are being too harsh on the poor guy. After all, I have not really seen the deliverable included with his price range. I can think of various cases where PHP 5000 is reasonable.
But if, for example, you have gone ahead with the cost-cutting steps I outlined above and somebody else came along and offered to do the same set of features for some ridiculously low price, what should a designer do? Well if your client went along, and the designer did deliver… then god help us all but I guess this industry IS in a downward spiral and will not be sustainable for long. Time to look for a new job.
BUT. The forums are rife with situations like this:
Client X gave his project to designer Y because he offered such a temptingly low price. Designer Y was ok to work with at the start but as the project dragged on he started to get flaky and ultimately disappear and the project not completed.
I can imagine designer Y’s nightmare scenario playing out behind the scenes, unseen by the clients who decide to work with this guy. Designer Y has to pay the rent like the rest of us, so in order to stay afloat he has to take on more projects, double than what the rest of us handles at a given time. Often he delivers sub-standard work. By juggling simultaneous clients, more than he can handle, at some point the balls start to fall. With too many projects going on, he burns out bringing his clients down along with him.
I should know. In a past freelance life I was a Mr 5000.