the case against crowdsourcing
Out of context: Reply #16
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Competitions aren't inherently bad, it's when the designers are abused or taken advantage of (which, of course, is most of the time) that they suck.
If they insist and you are ok with it (which, if you want to get paid to design it, you aren't), I'd tell them that they need to make a budget for the competition, both for those that enter and the winner.
Ask for RFQ's from people or firms, select 5 or so, give them the brief, pay them once you get the designs, etc., etc.
This assumes your client's business is worth the effort. For example, in architecture, we did this for a $150mil building (and won, and it never got built) because it was worth the financial risk. While we lost man hours, we did get enough to cover printing and misc. costs.
My guess is they just want to save money, not get the best design, so that suggestion of paying people would be money "thrown" away, which would make them not want to do it.