Design Bureau: Economic Model
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- mranon60
"The part of the problem is that normally services have standard rates..."
Have you never seen the many "What is your rate?" threads on QBN.com? Or are you completely, completely ignorant to anything about this industry?
Just about every professional designer has a standard set of rates, which they can easily use to quote a job. These rates are usually honed by years of seeing what the market will bear...what the clients have normally paid, what the clients say they are expecting or their budgets.
You have to be an idiot not to realize this.
- mranon60
And dude, this is my last burn on you, because you so richly deserve every piece of shit I've thrown your way.
You started this thread by making analogies to commodity trading and toilet paper. I guess in order to highlight your own ignorance? And then admit you have no clue when it comes to the service sector....great, so we know you're a moron, and yet you argue with us anyway.
Here's the bottom-line. You have no idea what you're doing, you're coming to an INTERNET MESSAGEBOARD to try and get your education. When really you should be taking an accounting class.
There are 3 major types of cost: Direct Materials, Direct Labor, and Overhead. The service sector's primary cost-centers is overhead and direct labor. Direct materials rarely if ever factors into the equation.
Overhead can fall into one of two categories: Direct and Indirect. Direct overhead is any overhead generated from the *direct* creation of a product or service. When NoPattern is masturbating on photoshop for a client, the direct overhead is the electricity he uses. Indirect overhead is every cost you incur regardless if NoPattern is masturbating or not....lease for a space, manager's salaries, etc.
And just a final burn for you....here is an article detailing cost allocation for Lawyers...yes, probably the most profitable and together set of cretins in the service sector.
http://www.olmsteadassoc.com/Res…
Gee, so many similarities to design. Maybe our industry isn't some disparate mess of liars and con-artists as you have tried to make us out to be, popovich?
- mranon60
Seriously, I'm still just amazed how you think the design industry sucks because 3 diferent designers might come up with 3 different prices.
Like, blows my mind. Mainly because price disparity is the nature of any industry. And that it's usually a very positive force within a capitalistic society.
You need to go read your ass some "Wealth of Nations"
- popovich0
mr anon, are you done yet?
seriously, man, you probably haven't read the thread or just haven't got a clue about what I am talking about here.for one, I am not a financial analyst like you thought I am not. "manager job at a trading company" and "calculating economics" for my own fun has nothing to do with a professional accounting.
I also hope, that you are being paid for your attitude, otherwise you are just wasting your time with the job you have. Financial analysts are paid for the attitude. The worse the attitude, the better and more cars they drive! If I were your client (god forbid) and you would come justifying your work with the words "cool", "inspiration", "my own", you would get your check and I would never call you again. As a toilet paper manufacturer, I am absolutely NOT impressed with coolness and uniqueness of your designs if they are not pushing my sales. This is the base of the relationship between a client and a designer. Nothing else.
And of course, it is absolutely "unique" to come to a potential client and NOT tell him exactly that what you offer. "Webdesign" is a product as much as a toilet paper. Or do you come saying "I just do cool thinigs which are unique and oho so inspired"? Good luck trying!
And by the way, why does grocery store has different prices for different fruits? Rottten included? Exactly because Mr Grocerystore knows how much each fruit had cost him (direct materials) and he wants to make profit (direct labor + overhead). What about a designer, then? It's not about how much overhead one dares to charge. A designer cannot charge 300$ per hour? Of course he can! And there will be clients, who will pay him his rate. The question is —how many times will he get called to have the jobs done and if this is the right way to go? Or should one offer a business card and website design for 25$ and get 1000 jobs a month?
"What is your rate?" threads? Sure, I've been reading them for the last 7 years here. Guess what — everybody is talking "hm, you know, just charge what you think you can, add electricity and that coffee you've been drinking all day and here you go." Sound exactly how you see it. And this is for sure the clearest answer I've heard. I am not asking what the market will bear. I am asking how one should plan to enter and stay within the market, for starters.
You are a moron, dude. Apart from being blind and reading with your ass, you seem to be thinking with that same ass, too. You've been asking about going to design school http://www.qbn.com/topics/594401… ? Ohppp pplease, go to business school instead — as I said, bad attitude is rewarded elsewhere, not in this industry.
- vaxorcist0
argh, a potentially useful thread went into never-never-land....
- cannonball0
How about: just do it and stop being such a pussy.
- I like the approach, cannonball! but I have a family to feed, so I can't "just" do it.popovich
- and it's not just about doing it, too. I still hope to gather some useful knowledge on the subject.popovich
- Waah waah my family waah. Thats fear talking. All those answers you need come from just doing it.cannonball
- maybe you are right...popovich
- sorry for the tough lovecannonball
- Pupsipu0
I like where this thread went, I think it has potential for more drama.
- popovich0
The drama is not this troll, who thinks the design equals sticking to the screen for the whole life for $30K year. The bad news until now was that it seems that the ones who practice design and read this thread are the ones, who rely solely on the intuition and good luck. It makes the resources where answers are born even more limited and the question even more spiky.
I'd be glad to see this thread revive, though. In a good sense.
- gung_hoek0
at my place we do ok without a business model, studio of 6 (interactive/online field). we don´t have a real strategy, we take every kind of job that comes across, be it small, be it large. if i could choose, i´d go for as many large corporate accounts as possible, for they provide good money for long periods of time, better from an economic perspective. a healthy part of our work is not direct clients but commissioned by advertising/pr/interactive agencies. good money, no exposure though.
entering the market: having a network of people ready for jobs outside your area of expertise and for projects too large for your start crew, so you can take on everything. starting with the lowest possible overhead. bringing in work is the hardest part, connecting like crazy is the best approach from what I know.
- Pupsipu0
here is a thread about a book about design businesses
http://www.yayhooray.com/thread/…
As far as intuition and good luck, most businesses rely on that, even if they color things up with numbers and charts.
If you want to know whether it's more profitable to make a lot of little things for cheap or one big thing once in a while for not so cheap, you can make those estimates with a calculator.
Doesn't mean you'll be able to predict some sudden rise in popularity of crowd sourcing, templates, or automated design programs, that might jeopardize your business model.
- yeah, I've seen that book on yay. Now that you've linked to it again, I've purchased it. ;)popovich
- mranon60
Popovich, you don't know what you're talking about.
You start a thread, and then you used it as a platform to basically call designers a bunch of charlattans, con-artists, and scammers that charge clients exorbiant amounts, amounst that are pure fiction.
You know what? That is absolutely insulting. You are insulting our industry. I have read the thread, and I have quoted your ignorance. Don't think I am not aware of what you have stated.
You've claimed this industry is in shambles because we don't have a "standard product" (Like a client ever needs the same thing twice!)
You've claimed this industry is bad because we don't all charge the same amount (Wtf, what a stupid, stupid notion)
You claim that because there isn't a magic calculator to come up with an hourly rate, we're somehow con-artists (You're an idiot....no industry that charges hourly is completely based in hard facts and reality....every contractor can come down on their prices, or inflate them when the moment is right....yes, even Doctors, Lawyers, Architects)
You say you seek some real way to determine pricing and revenue vs. expenses. I'M TELLING YOU. We already HAVE such a mechanism! It's called the free-market! We thrive and die by it. We might try and charge $300 an hour, but you will get very, very few clients, if any, at that rate! You fucking moron!
Have you even WORKED in design before? Or are you just a student?
- Scotch_Roman0
About having a certain range of products offered (e.g. annual reports, websites, motion graphics, identity, etc.). I'm reading a book called The Designer's Guide to Marketing and Pricing. It's worth its weight in gold. The authors say that for a very small studio, you'll be most effective in your client-finding efforts if you pick a couple of industry niches to work in, but market yourself as being vertically diverse within those niches. What I mean by that is that you might only be targeting potential clients in the museum world or the food industry, but within that niche offer full-service design across print, web, and graphics for built environments.
Otherwise, you cast a broad net but one that never goes deep. Granted, if a client outside your niche comes along and you want/need the work, take it, but don't paint with too broad of a brush in your marketing efforts, even if you once worked for agencies that boasted a broad range of client sectors.
- popovich0
Scotch, that's an interesting idea. Ze Germans particularly like (or liked) to show this off and I could never really grasp why it would matter. But then after seeing this kind of specialization from the other side, I think it makes sense. However, I agree, that this applies only to small workshops. As soon as you are gaining big clients, they would like to have you for them exclusively, within the industry (sector, niche).
I'll check out the book, too. Thanks for the hint.
And, yes, nice site you have there ;)- by Ze Germans I've meant the german design studios.popovich
- cannonball0
The lack of interest in reading paragraph flatulence aside —
Why start an agency if you don't believe in design as a service industry?
- d_rek0
mranon6 = Rob Benjamin.
Thanks for ruining Everything, Rob.
- popovich0
Cannonball, I do believe in design as a service industry! Moreover, this is the industry where I would like to start my own business. I just wanted this thread to grow into an expereince and thoughts sharing, not a troll feeding and flood thread.
Oh, and gung_hoek, I believe what you have described is basically your business model — to live off the big agencies which cannot afford (or do not want finance) their own creative departments. For a small bureau, this might be a good way to go, if you have the needed connections. Gaining exposure and getting to a client directly might be your next objective, which should be based on your portfolio and experience. The already mentioned Attik has done it like that for years, and I am sure they were not alone in this thinking.
- Keenan0
In the case of large design companies, business people do run the business. But I don't think it's a bad thing necessarily. They push designers to work faster and smarter to increase the bottom line, and that makes the creatives fight for quality over quantity. It can really suck, and can put a lot of pressure on the creatives, but it seems like that those pressures that force designers to fight for their work help them produce better work, as long as the company gives them some power to push back. It is key that in a creative firm, the creatives are not slave to the business, but are on equal footing and share the same goals as the biz dev. guys.
In a smaller firm, that dual attitude and motivation has to rest on each member of the team.
- j2appleseed0
I think the one thing everyone can agree on is that we are living in a very interesting time. Not only in our industry, but life itself. After working at larger agencies for more than a decade, I, along with my business partner, left to start our own gig. We hired a great production / IT person and off we went. Four years later, we are still that same group of three. Some of you may see this as a failure, but given the current downturn that has been happening, it has proven to be one of the smartest decisions we have made. Not a month goes by that we don't hear the unfortunate news of fellow creatives being let go at one agency or another. Followed by comments like, "you guys have positioned yourselves perfectly". I make no claim of being perfect, we goof up our fair share of things.
As far as limiting the range of products we offer, that is definitely not the way to go. The X-factor in that is you have to have the knowledge and ability to deliver a great product to your client regardless of what it is. We have found that, if your services and quality are comparable to a larger agency, and you don't have the overhead, you stand a good chance of winning the business. Smaller firms are also much more flexible in what they can deliver, how fast they can deliver, and also what they can produce in-house.
I am not a Darwin fan, but he hit the nail on the head with this one: "It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change".
- sandymiss0
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- akrokdesign0
"How much is a business card?
How much is a logo?
How many times can you actually sell these services?.."why would it be set prices. if you want that, you have to work it out your self. then how you going to solve that some clients has a ton of cash to re-design their logo meanwhile the start-up has pocket change for their new one. flexibility is key.