Designer economics, here's how it works (re: good, cheap & fast)

[DamageX]

Alright, there was a thread by LadyMischief the other day where some designers kept arguing that cheap is not necessarily bad. I'd like to argue that, in most cases, it is. Either that or the designer is dumber than a brick. Which isn't exactly a good alternative.

So let's pose the following situation. You have one REALLY cheap designer doing REALLY great designs. The guy busts his ass and knocks them out super fast. All his clients are extremely satisfied with the work he does. Some clients will be selfish and will not recommend him to any other people, in hopes that he'll always have time for them. Some will be less selfish and help the guy get some more business, by recommending him in designer request threads. We've seen those and we've seen recommendations. Which will result in more clients for the kick-ass, super-fast designer, which in turn will give him more testimonials and get the wheel spinning getting him even more clients. This cycle works in an accelarating manner, pretty much like any sort of viral marketing does. So before you know it, the super-fast, kick-ass, dirt-cheap designer is booked solid and has his hands full.

At this point he may implement some sort of scheduling (if he wants to keep a constant waiting time for all clients), while perhaps keeping his prices the same. This will split his client base into different types, those who can wait for a design, and those who can't (or don't want to). Additionally, those who won't wait will be split into two additional categories. The first one will approach the designer offering him a premium on his list prices, in return for letting them cut in front of the line. The second one will look elsewhere for designs, also paying a premium (compared with our case designer's prices).

Now, our designer is busting his ass for peanuts, but all of a sudden he's in such a high demand with buyers that they're throwing more money his way. He realizes his work is off the hook and he realizes that he'll keep enjoying a steady influx of clients, thanks to the quality he provides. How stupid do you think he'll need to be, in order to keep his prices at the same level? I'd say dumber than a brick. He will, without much consideration, raise his prices, because he'll work just as much, but for more money. Furthermore, he'll keep raising them till the point where he still enjoys a fairly steady influx of orders, but no more people bothering him on ICQ every day about when he'll be available to take on their order, for peanuts.

Bottom line? A good designer may be cheap, temporarily. But a cheap designer can't be good, if he stays cheap. There's enough business in this industry to go around to all designers. The smart ones will choose their target segments and work towards higher revenue, providing quality and fast turnaround. The ones that keep using low pricing as a strategy to compete are either not very good or not very bright. Or even both. Otherwise, being good AND cheap simply defies logic and simple demand and supply theory.

[gfx3]

You forgot to mention the decent designer who works for a decent price and sticks to his price no matter what. Not all designers are just interested in money. I know a incredible graphic designer in the UK who works with Z-Brush and who's hired by big corporations like sony but still handles very modest prices and anybody can hire him. He just has a waiting list + he wants time for himself to keep working on his skills. If you can't wait to bad.
Not every person is a money wolf, some folks just like what they are doing and are happy with what they earn.

[DamageX]

Originally Posted by gfx3

You forgot to mention the decent designer who works for a decent price and sticks to his price no matter what. Not all designers are just interested in money. I know a incredible graphic designer in the UK who works with Z-Brush and who's hired by big corporations like sony but still handles very modest prices and anybody can hire him. He just has a waiting list + he wants time for himself to keep working on his skills. If you can't wait to bad.
Not every person is a money wolf, some folks just like what they are doing and are happy with what they earn.

Thanks for helping me make my point. Any good designer either charges premium rates or is hardly available. So the ones who want work of the same quality either wait (many times not an option), turn to the competition (paying premium rates) or try offering him more value (often financial) in return for being let to cut in front of the line.

[$tandaman]

Very well put.

Speaking from personal experience. Just can't charge same rates we did 2-3 years ago.. it doesn't make sense. And everyone wants their salary to keep increasing the longer they work for you.. so the prices are rising.

[LadyMischief]

I'd have to say that I agree

[blazi]

very true indeed!!

[woj]

I'm not sure I agree, smart designer adjusts prices as demand shifts... It doesn't make ANY sense to build up a 3 month waiting list, when you can just raise the prices a little...

[DamageX]

Originally Posted by $tandaman

Very well put.

Speaking from personal experience. Just can't charge same rates we did 2-3 years ago.. it doesn't make sense. And everyone wants their salary to keep increasing the longer they work for you.. so the prices are rising.

Well, you can never justify the price increase to clients by telling them your costs are increasing. Especially with such fierce competition these days. However, you can justify it by arguing an increase in demand and/or quality.

[DamageX]

Originally Posted by woj

I'm not sure I agree, smart designer adjusts prices as demand shifts... It doesn't make ANY sense to build up a 3 month waiting list, when you can just raise the prices a little...

You just agreed with me.

[jack.nasty]

I have to agree with most of them. But anyway, the big jungle of cheap designers bring all prices, in a global level, down. Some people/companies did fortunes in the past with webdesign, but today the market reacts different. Today we know is not like that anymore. So, in that case, could sense very wise and strategical to find a point in between the peanut and premium ... Its something that should be considered in this discussion.

[fris]

Originally Posted by $tandaman

Very well put.

Speaking from personal experience. Just can't charge same rates we did 2-3 years ago.. it doesn't make sense. And everyone wants their salary to keep increasing the longer they work for you.. so the prices are rising.

ya true, but i use about 3-4 diff designers charge all different rates, all are great designers, when i contacted you, you totally turned me off even though your portfolio is amazing. $1500 for a blog design simply is out of the question for a 1 page template. i actually spit up my drink.

[sfera]

very well put buddy

[woj]

Originally Posted by DamageX

You just agreed with me.

I just read the first 3 paragraphs, didn't expect there to be a twist ending.. heh

[2HousePlague]

lol -- i thought it said "dinner economics" --

[DamageX]

Originally Posted by woj

I just read the first 3 paragraphs, didn't expect there to be a twist ending.. heh

Hmmm, I think you just wojowned yourself.