1. Doing Business as a Designer:
The Intensifying Price Wars
(Slide-u-mentary Version - made in google docs)
By Jae Xavier of KnowledgeCity.com
Blog: jaexavier.wordpress.com
Twitter: twitter.com/jaexavier

2. Introduction
Another reason why the “price wars” are intensifying in the
design arena is that newbie freelancers (aka amateurs) don’t
understand the economics of their services nor do they care
to. Therefore they will drop their prices below a de facto
“industry standard.” And of course, the customers win
although the amateurs also “think” they win.
Ignorance is bliss? That’s an understatement nowadays.
Yes, of course this is a huge, broad, sweeping statement
the size of a tsunami. Here’s why…

3. The Professional's View
Professionals know the costs associated with their business:
Cost to acquire a client (Advertising, Marketing, and Sales)
Administrative costs
Legal Fees
Services that support your business
Employee Wages / Your Wages
Business Insurance
Health Care
Taxes
Business Loans
Debt Services
Office Lease

4. The Amatuer's View
Here’s their justification on lower prices:
Lower prices mean more business which means I get richer
I don’t pay taxes
Since I’m a “freelancer”, forming a business entity makes
no sense to me
I‘ll use templates so that makes my price even lower and
services seem faster
I’ll use trendy designs to “wow” my customers so I get
even more business

5. Amateur's View (con't)
My profit margins will be bigger because (see above)
I don’t care if my prices are lower than de facto industry
standard, I win anyway
I’ll undercut any competitor
I care about me, me, me, me, and me
Business economics? LOL! I’m neither Alan Greenspan nor
Ben Bernanke (wait, who are they again?)
“Free” software powers my “freelance” business;
therefore I don’t need business loans
I have no shame in my game, so why you ask’n me?
I don’t care about the nation’s economy, I care about the
“me” economy, me, me, me, me, me, me.

6. Today's Design Game
The design industry is changing rapidly because the barrier to
entry is not what it was in the 1990’s.

7. Today's Design Game (con't)
Here’s a six step “recipe” on how amateurs get into the
design game in 3 months or less:
Go onto the thousands of file sharing sites and download
software
Visit the millions of blogging sites, forums, or just Google
“how to” and consume information on…
How to use the software
How to do certain design effects
How to accomplish certain trends
Faster and efficient production techniques
Current and historical design theory

8. Today's Design Game (con't)
“Innovate” from Deviant Art, magazine or other similar
sites
Download free fonts, free icons, free PSD templates, etc.
Use social media to promote services: Twitter, MySpace,
FaceBook, WordPress, Tumblr, Typepad, Squidoo, Deviant
Art, Flickr, YouTube, Etc.
And sprinkle a bit of “economic” urgency; better yet let’s
take it up another notch and go for maximum greed

9. My Point...
There is no stopping this from happening. A new
“freelancer” is born every second around the world. The
process repeats itself over and over and over again.
What are professionals to do these days? Stop using price as
your competitive advantage.

10. My Point... (con't)
Offer services that are:
Of higher value
Of higher sophistication
Solves an expensive and unique problem
Associate with clients that:
Understand business
Are of higher sophistication
They don’t compete solely on price in their business
Now, go get’em! That’s it, I’m done.

11. Want to know more?
Resources
Small Business Management Online Training
Professional Sales – Online Training
Marketing Concept – Online Training
Articles
Doing Business as a Designer: Getting Started
Doing Business as a Designer: Defining Your Competitive
Advantage
Doing Business as a Designer: The Price Wars
Doing Business as a Designer: The Article Collection at Scribd