The trouble with price drops, and spec works

Are you currently having trouble with the abundance of competitors, and the decrease of business revenue? I believe many of us have, or had, and it’s not because there’s lack of demands (in fact there’s even more), but it is simply because there’s too much of designers now competing on the same market.

And what’s the consequence of a surplus in offering? A decrease of the supply’s commercial value, and devaluation of your work efforts. In the design world, those emerges in form of price drops, and spec works.

01. Price drops

I once asked by an artist with gorgeous paintings here in Bali if I could design him a website. Hearing his request, ideas were sparkling in my mind on how the concept would be, and how a website could help him sells his painting to a wider audience with good profit. I even imagine that perhaps a barter would be okay; a working website for him, and a painting of me and my wife for us.

However before I could proceed further with sharing my excitement, he mentioned that he already had an offer of doing it for the cost of IDR 750,000 (USD 80 more less), and this is for a project that would take at least two weeks to concept, visualize, develop, and review. Needless to say I keep my mouth shut and erase the imaginary painting in my head. Though he may agreed to the barter idea, with his such low valuation for the design service, I doubt it would be a good painting anyway.

The sad fact is, with current market situation here in Bali, he has the right to value design services so low, given that there are other designers out there who is willing to work for less payment – regardless of how the result’s fitness later on in term of UX (User Experience) quality, SEO, conversion rate, marketability, or even creativity.

This is due because with the abundance of good (and free) design resource over the internet, now almost everyone with knowledge on how to use Photoshop and Dreamweaver (and buying pirated copies of them) can claim the title of a Web Designer, and got a job.

Not that information sharing is bad, as it enables the general population to get smarter and more knowledgeable, but this is a bad news for those who have to endure 3-4 years of formal education — beside of various workshops and extra courses, and money to spend on books and obtaining resources such as legitimate license for the softwares they uses — to compete head to head with the instant designers, which has almost no overhead cost to maintain their business.

While true experience and craftsmanship might shines through, but creating a good looking website nowadays is no more a tough job, and good looking website is mostly what the design buyers think they need.

Therefore, low spec requirements + easy entry to the profession = a match made in hell (or heaven, depends on who’s looking).

Beside of the price drops, another not so immediate result is the devaluation of design efforts emerges in form of a speculative work.

02. Spec work

According to About.com, Spec work (short for speculative) is any job for which the client expects to see examples or a finished product before agreeing to pay a fee.

This is the most common type of scam in the design market, which has already becoming a standard business process for many of the design buyers here in Indonesia. While for the buyers it provides an opportunity to see what’s available for them for free, on the other hand for the designers then they have to spent times working unpaid, which makes the overhead cost of running the business even higher.

About.com further stated that:

“This type of work is widely considered undesirable and immoral by the graphic design community, as it requires the designer to commit time and resources to a project with the chance of getting nothing in return. While a client may feel they don’t want to invest money until seeing some work, designers should not have to prove their worth to get a job. Instead, clients should choose a designer based on their portfolio and experience and commit to building a working relationship with him or her. Only then will both the client and designer see the best results”.

Though I mostly agree with what it says, specifically related to the word “should”, personally I believe it’s the market behavior that dictates the clients’ action mostly, otherwise to conscious or business’s good practice. Hence with everybody else is doing it, they see a small reason why they should not do the same.

As for the designers, it’s hard to say no to a spec work ; because it’s the path of least resistance, regardless that there are unpaid efforts that you have to put upfront. Therefore for the most companies I’ve been working with, they just sees it as an unavoidable spending and just treat it as a business running/overhead cost, since mostly spec job is the only way you can do it anyway.

However while it might cost almost nothing for big agencies with numbers of designer staffs and cross funding scheme, for a smaller design house and stand-alone designers this is a significant burden.

And so with the confusing market situation nowadays, what can we designers do?

An answer from http://www.winwithoutpitching.com/we-will-specialize might be interesting to look at;

“We Will Specialize

We will acknowledge that it is the availability of substitutes–the legitimate alternatives to the offerings of our firm–that allows the client to ask, and compels us to give, our thinking away for free. If we are not seen as more expert than our competition then we will be viewed as one in a sea of many, and we will have little power in our relationships with our clients and prospects.

~ wwp ~

The world does not need another generalist design firm. There are enough full service advertising agencies and marketing communication firms. The world is drowning in undifferentiated creative businesses. What the world needs, what the better clients are willing to pay for, and what our people want to develop and deliver, is deep expertise.

Expertise is the only valid basis for differentiating ourselves from the competition. Not personality. Not process. Not price. It is expertise and expertise alone that will set us apart in a meaningful way and allow us to deal with our clients and prospects from a position of power.

Power in the client-agency relationship usually rests with the client. His power comes from the alternatives that he sees to hiring us. When the client has few alternatives to our expertise then we can dictate pricing, we can set the terms of the engagement and we can take control in a manner that better ensures that our ideas and advice have the desired impact.

When the alternatives to hiring us are many, the client will dictate price. He will set the terms of the engagement. He will determine how many of our ideas and how much of our advice we need to part with, for free, in order to decide if he will choose to work with us. It is first through positioning our firm that we begin to shift the power in the buy-sell relationship and change the way our services are bought and sold.

Positioning is the foundation of business development success, and of business success. If we fail on this front, we face a long costly uphill journey as owners of creative businesses.”

Specializing

I remember the management class I attended back at the college by the late Prof. Harry Lubis, which discuss about a very similar case. We discussed about how the traditional ATBM (Alat Tenun Bukan Mesin – Non Machinery Weaving Tools) textile manufacturer from Majalaya, southern of Bandung, Jawa Barat, Indonesia, could survive against the much bigger and more technologically advanced manufacturers emerges in the recent years.

Well in fact they can’t, due to the lack in production capacity and inability to compete in price with those giants, which resulted in many of those traditional textile manufacturers are closing down its business.

However we also noticed that the incompetency mostly lies in their inability to pick their battlefield correctly, in which they tries to compete with the giants head to head; on the same level, on the same products. It was due because most of the traditional manufacturers can’t think of other ways of doing their business; if it’s burlap they  made, then its burlap they will make until their last breath — regardless that now there’s a great supply of cheaper burlap out there created by the giants.

Furthermore, based on his study Pak Harry finds out that in fact, there are some markets which those traditional manufacturers might competes well with the giants; sarongs.

Sarung

Elder wearing sarong

Unlike those fabrics that has becoming standardized commodity able to be produced in mass quantity, sarongs require more art than technical or production capacity prowess; this is where the traditional manufacturers can compete well. And it’s been proven that with the gigantic market value of sarong in Indonesia, some of the traditional manufacturers which dares to change has managed to survive, and even grow.

Just as a side note, sarong in Indonesia (as in most of SE Asia’s countries) is not a mere beach property worn by women, but it’s considered as a mandatory requirements by this country’s 200+ million Moslem’s population for praying attire, and it has been used everywhere also as baby’s cradle, baby’s carrier, room divider, body covers during public bath in village bath spaces, and much more. While it might be not as big market as for shirt or t-shirt, it is highly sizable nonetheless.

And with the close distance between Majalaya in Bandung, with the Tanah Abang central market in Jakarta, the situation further promotes Majalaya as ideal source of sarong for this biggest textile market in Indonesia (perhaps in SE Asia also), which caters not only buyers from Indonesia but also from neighboring Asian and more far African countries.

Reflecting to the Majalaya case, then why can’t we do the same with the design market?

I believe here the strategy is fairly the same: to beat the competition and devaluation of design works, specializing might be the only way out;

“Do only one (or very few) things that you’re good at, in which you may encounters very little competition thus giving your clients a very small chance to look for alternatives.”

Ditch the dog eat dog competition and aim for a niche. Analyze your own strength and strategic advantages, and continue building your competency based on that uniqueness which sets you apart.

Standing Out

While your products or services might already have strong positioning, but it won’t sells well until you get noticed. Therefore, specializing must also be accompanied by your ability to stands out from the crowds to get noticed.

Seth Godin has a very good book on this matter; “The Purple Cow”, which dictates that in order to stands out from the crowds and get noticed, you have to be different from the rest of your competitors. He’s also confident to suggest that being a little different will produce more significant result in getting notices, than a little better, or a little cheaper will do.

Therefore gaining from the wisdom of the masters, we could fairly conclude that in order to beat the competition, against the devaluation of your service, and spec work demands, designers must specialize their service, and be different; make yourself stands out from the competition.

Kindly share your thoughts on this issue; comments and inputs are greatly welcomed. (byms)

Sarong image from http://www.saudiaramcoworld.com/issue/200403/sarongs.from.gajah.duduk.to.oey.soe.tjoen.htm

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