It's never right to look for the cheapest options when starting a business, as the success of any business is down to having a good product or service, good customer service and a strong identity.
The latter can only be achieved with professional work and that commands a higher price tag. In a sea of cut price design, how have business owners been affected by this? Well, cut price means lower quality in the long run and less time spent creating for your business. For example, do you know anyone that has spent £50 on a business logo? Needless to say that the end product will be an inferior one and will give a negative impression to potential customers. This budget design would only have a few hours design time given to this, where a professional business identity should deserve much more man hours to ensure a high quality end product.
The question is how much you value your customers. Can or should you risk your business reputation with cheap design or does your audience deserve high quality attention. I sincerely hope that most business owners would say yes to the latter.
Creative business owners like myself are seeing more and more dilution, with ridiculously priced design and very poor standards, and this causes harm to our reputations and damage to business owners that take the risk.
Creative skills like graphic design are the result of many years of study and learning and are professional skills that are of a huge benefit to the business world and the economy.
Would you risk your business buy paying for cut price design?
The saying buy cheap buy twice springs to mind, I'm sure I have been guilty of it as most people have but you inevitably end up spending more in the long run getting these things sorted out.
Personally, I never market my business as "cheap as chips", and I don't buy cheap as chips either. I'd rather focus my energies on providing a quality service, than trying to do twice the level of business for half the money. I expect the same from my suppliers too!
Every year a businessman used to spend an amazing amount of his time trying to reduce the costs of printing his business cards. He would send the artwork around to all of the local businesses and always go with the cheapest, he would never stay with his present supplier.
This guy was a lawyer, and charged his time at over £100 per hour, and he would spend 5-6 hours on this issue, and every year was pleased that he had saved the company £20-£25 in printing costs!
Someone pointed out to him once that if he spent that 5-6 hours on chargeable work.......
It often pays to focus on what you are good at, and not spend the time looking for the cheapest!
Every year a businessman used to spend an amazing amount of his time trying to reduce the costs of printing his business cards. He would send the artwork around to all of the local businesses and always go with the cheapest, he would never stay with his present supplier.
This guy was a lawyer, and charged his time at over £100 per hour, and he would spend 5-6 hours on this issue, and every year was pleased that he had saved the company £20-£25 in printing costs!
Someone pointed out to him once that if he spent that 5-6 hours on chargeable work.......
It often pays to focus on what you are good at, and not spend the time looking for the cheapest!
Yes thats exactly it, he could have also ended up with rubbish cards and ended having to pay again in order to get decent ones.
I have found that lower priced products can in fact create a lot of work and be less profitable in the end. I would rather have half a dozen quality profitable projects than 3 dozen cheap and time consuming projects even if they amounted to the sales gross sales, the former would be less time consuming thus in reality actually more cost effective.
The figures vary wildly from sector to sector, and even company to company; however I was recently shown a graph produced on behalf of a printing company
It showed that if they reduced prices by 15% they would have to increase turnover by 80% to maintan profits, wheras if they increased prces by 15%, they could afford to lose 50% of their clients.
You'd still have to offer the 50% something more though, wouldn't you?
Value for money is what you need, not cheap. I am amazed at how many business people focus on price without reference to quality or service issues.
The trick of professional buying is not just to focus on the price, but to ensure the service or goods match what is needed. Sure, negotiate on price. But be certain what you get is what you need.
Will that £100 website really do the job? Will that cheap logo design represent you adequately? All through your business, ensure you are getting what you need, not just the cheapest deal.
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Paul Norman - OrangeTree Development
A great philosopher (or was it a bloke in the pub?) once said
If the customer's first question is 'What does it cost?' he is telling you that he either doesn't understand, or isn't interested in what you are offering.
To follow this line of thought, think of any hobby or interest you have and how you purchase goods to do with that. at what point do you start to discuss price?
I had an interesting discussion with a guy in the call centre when I renewed my car insurance recently...
He asked why I wasn't renewing with them, so I told him that I'd found better value elsewhere. He asked if he could re-do my quote to reduce my premium! He didn't like my answer very much...
a) why didn't you give me that price/cover option in the first place instead of trying to rip me off?
b) better value meant I had actually paid more - but got more for it!
Offer good value to your customers and you'll succeed, but if you're rubbish then you'll lose business no matter how cheap you are!
Often part of the issue here is (as others - particularly Sara - have mentioned) value vs cost.
Is £1000 a lot of money? It depends on what you get for it.
Ensuring that clients understand the service you will deliver, and how it represents excellent value for money is pretty important here.
That said, you'll always hit the bargain-hunter mentality. One of the most dangerous moves some businesses make is to bring prices down, and down, trying to win business..
Is what you offer the client worth more to them than the money it costs?
Reduced prices can sometimes give the perception of reduced quality - that's why list prices rarely come down but car manufacturers offer cashback and discounts.
In reverse it's why luxury brands can charge a premium, because even though the profit margin is increased dramatically, the perception of value in these brands makes people comfortable about paying out. Reassuringly expensive?
I often tell clients that I may not the cheapest solution, but that the reason clients come back to me is that I provide a service that delivers for their business making it very good value for them.
I could do it cheaper and cut the time I spend on what I do (proposal development), but the work I provide wouldn't be as good and the clients would potentially lose more of the work they are pitching for.
I've always been told that positioning yourself as the cheapest is dangerous as there is always someone out there willing to do it for next to nothing. Kwik Save springs to mind. Also offering a better (not always best) promotes a sense of loyalty as customers will want to come back. After all, word of mouth is the best form of marketing.
I agree that value is more important than cost. I've just had my logo done professionally by Mark and I'm chuffed to bits with it. I reckon I could have got a cheaper logo without too much trouble, but then I would probably never have been happy with it. Therefore the cheaper logo would have been a waste of money, however much or little it cost.
However, I think it's worth bearing in mind the different costs of living around the world. Some people (such as those in India) can afford to do a professional job much more cheaply than someone in the UK, because they don't have the same overheads nor the same basic costs of living.
Some people actually think some cheap logos are great looking as with cheap websites and do not recognise what impact their choice would have on the potential customer.
I think you can seek out cheap but good design but it takes alot of research - looking at portfolios etc and recognising what is good quality and what isn't.
I'd say around 50% of our clients have said to us they have a website already, paid naff all for it and now want something better.
But not many people are in the situation where they can afford to buy quality from the outset, even if they want to.
I don't necessarily think it's a bad thing to buy cheap when you first start out, within 6 months of starting our business we realised there were so many things we wanted to change we had to do a complete rebrand anyway.
Had we actually paid for a lot of stuff we had in the first place we would have had second thoughts about the rebrand, stuck with it and I'd probably be stacking shelves in a popular supermarket right now.
I think the mistake comes when more established businesses keep the mentality of not paying more than a tenner for anything just because it doesn't interest them. Even if paying more could win them more business.
That's my two cents anyway!
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Matthew Jones|Director|BlueStagStudio - Web Design Cardiff
I agree with Matthew above. Sometimes it makes sense to start out with cheapies or freebies. It's horses for courses and depends on what kind of image you want to present.
I've just had some of my websites redone very cheaply (less than a dollar a go for a photo to stick in the masthead). I think the sites look as though they've been done on the cheap but it doesn't matter, we're not trying to attract clients or actually sell anything. These sites are just MFAs (made for AdSense).
I care more about my Not Delia site, but even that one started out as a free WordPress template. You can get some quite good freebies WordPress › Free WordPress Themes
Edit: I was referring to some of my other sites, not the ones in my sig.
It depends totally on what each individual/business is trying to achieve. In the past I've advised a couple of people to go with "free" (or very cheap) DIY website providers, even though I detest them if I'm honest. Best option for them.
Others have tried to do the same to cut costs, and found that it wasn't appropriate at all!
Agree with much of the comments here, there's an old adage that is often used for something else that being "Its not what you've got, but how you use it!"
I've seen Etch-a-sketch art thats better than people with a pencil, boats built using nothing but hand tools, chairs with turned legs made in a forest using a bench and tree as a lathe. Having the tools is no substitute not having the knowledge, ask any commando, they wouldn't survive unless they understood nature and the pallet of useful stuff in the wild.
Seeking prove of the creator/providers skills is worth its weight in gold, those who can don't tend to have to look too hard for work, if the guy you want is busy and has a waiting list, chances are they are pretty good too.
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A Trades person advocate, do the right thing in the right way, for the right reasons and you've found a friend.
Value for money is what you need, not cheap. I am amazed at how many business people focus on price without reference to quality or service issues.
The trick of professional buying is not just to focus on the price, but to ensure the service or goods match what is needed. Sure, negotiate on price. But be certain what you get is what you need.
Will that £100 website really do the job? Will that cheap logo design represent you adequately? All through your business, ensure you are getting what you need, not just the cheapest deal.
I think this hits the nail on the head: it's more about value than price. For example, most of our users start out paying us nothing (free is cheap and great value!) but as their demand for data grows, they trade up. The same is true for web design - if you told the client to start with a template but explain to them you can offer a whole lot more when the time is right for their business. That way you're building a long term business relationship, not peddling cheap wares.
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Direct mailing lists of startup companies in the UK. Try us free at www.michrome.com
The thing with using the "cut-price/cheap" angle is managing customer loyalty.
As soon as someone enters the market at a lower cost than you, your previously (satisfied) customers will flock to your competitor.
Value for money is always one of my key aims, which is totally different from cheap. They get fantastic service, good quality products at a reasonable price, but never intentionally the lowest market price.
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David Shaw - Affordable Point of Sale Material for retail. Follow me on twitter?
Every year a businessman used to spend an amazing amount of his time trying to reduce the costs of printing his business cards. He would send the artwork around to all of the local businesses and always go with the cheapest, he would never stay with his present supplier.
This guy was a lawyer, and charged his time at over £100 per hour, and he would spend 5-6 hours on this issue, and every year was pleased that he had saved the company £20-£25 in printing costs!
Someone pointed out to him once that if he spent that 5-6 hours on chargeable work.......
It often pays to focus on what you are good at, and not spend the time looking for the cheapest!
This is defo one to remember! I was recently taught a lesson by a fellow print/designer, never sell your business cards cheap, they take me hours to design (I am a perfectionist afterall) after i get the right idea, I will not print something I am not happy with, even if the client is, I know its about the clients image, but its also about mine and the pride in what i do, whether thats cooking for the wife or designing business cards or flyers, it has to be perfect!
I had a long discussion about this with a Client the other week. Everything I have heard says don't drop your pricing, charge a reasonable price, and as long as you can justify that, you are okay. The strategy we decided on in the end is to have two proposals, one which is everthing the Client asked for at the normal rate, which does represent value for money. We can then discuss with the Client what their budget is and show them which elements they can lose to achieve that price. Yes you can have it cheaper but then you won't get the full product.
As start ups many of will be in the position where we need to find cheaper alternatives at the outset. I went for a monthly rental website with my web designer, with the intention of when I can afford it, going for the grown up website, with the CMS etc. which is what I want, but just cannot afford at this time. I haven't gone for a free option, but one that offers me the best value for the money that I have at the present time.
One thing I have learned is that whilst it is tempting to take that quick cut price job is that it will often stop you getting that proper full price job as you no longer have the time to do it, and that sometimes, what seems to be a quick easy job ends up being a huge drain on time and resources.
Consider your pricing well, does it fit with what you are offering, what your competitors are charging, and more importantly what your customers are willing to pay.
One of the ways I came up with my rates is to review what others charge, but also to carry out a survey and see what people thought was a fair rate, as part of my business plan. Yes there are some VA's who charge upwards of £20 per hour, but the area I am in would not support that, and I really couldn't justify it. Also the feedback from the survey was that the majority thought my current rate was correct. (I hadn't told them when they took the survey what my rates were so these were unbiased responses.)
You have to look at what you need to charge to break even each month and make sure you cover that within your pricing schedule, I heard about a company the other day who had a 90% mark up on their product but still managed to make a loss as they had not done a business plan or cash flow and had not considered their break even point. Turns out there were several products that were making losses and needed to be dropped. It's all about keeping on top of the accounts, reading the information they give you, and questionning your accountant.
There is a way to get things done more cheaply, however there is always a sacrifice of some sorts.
In the business start up sector, sure someone can do it themselves. However, we have found in Australia that it will take them an average of three months to do what we do in just two weeks!
Further they do not get the advice ... and sometimes end up paying more (as they end up using dodgy people).
The number of people we have to hep fix up problems caused by DIY or cheap and nasty solutions is saddening.
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Cut price or professional?
