Walk out your front door, lift your hand, and whatever you’re pointing at will probably promise you the lowest price on whatever it is that place sells.
Some places do this better than others. Wal-Mart utilizes economies of scale to get suppliers to exchange volume for price. Amazon forces prices down thanks to low overhead and a vastly superior shipping infrastructure. The trick is always just finding how to save money somewhere.
Wal-Mart and Amazon are two examples of many, but they share a few common traits. They both have company cultures that eschews costly things. Amazon famously made desks out of doors that Jeff Bezos bought at the hardware store because they were cheaper than actual desks. Sam Walton famously detested fancy cars and fancy office buildings and for a long time worked out of a room above another building and crammed as many people as he could in there — including himself.
I ran across this story earlier, from the wonderful blog by David Airey [I’ve converted pounds to dollars]:
“One of my clients, a small design agency of five people, was asked to quote on a piece of work. They’d not worked for this client before. They took the time to carefully cost the project, based on their normal charge-out rates, and the time and level of commitment required. The price came to $165,000.
“At this point the agency experienced what I would describe as a ‘slight degree of nervousness.’ It seemed like a big number to them; a lot of money. It was. In fact as a project it would be one of the biggest they had undertaken. But, they took a deep breath and sent the proposal off.
“The client came back the next day with the following news: “We’ve only got $82,000 in the budget.” The agency rang me. Their first reaction was, “There’s $82,000 we could have.” Mine was a little different — we couldn’t accept a $165,000 project for $82,000. They were initially hesitant to accept my advice to turn away $82,000. I reminded them that we had carefully worked out a financial plan for the business based on sound principles and we should stick to it.
Things did go quiet for a couple of days. But then the client picked up the phone and said they’d found some budget for the project and could pay $157,000 if that was acceptable to the agency. Which, of course it was.”
Everyone needs to make enough money to live comfortably and continue their business. I just don’t understand why some places don’t work harder to keep their prices down. In this story about this one agency, why didn’t they look at that $165,000 and think, “How can we make it $125,000?” Wouldn’t saving the client money be a great way to provide them more service? They obviously have their costs and business model, and we have ours, and I’m glad they were able to find a customer that wanted to pay for their services. I’m sure they’re worth it. I just see a lot of people forced into spending many thousands of dollars on services they aren’t getting much value for in return. It’s not honest, fair, or right. It’s also unfair to people who just need something else.
“But Justin, what kind of businessman are you that you want to keep prices down so much?” To which I reply: the kind of businessman I myself would want to do business with.
I’ve taken the effort to locate this business in Indianapolis, a city with the best of breed affordability. It keeps my property rates low, my taxes low, and my cost of doing business low. Natasha’s based in Missouri, with equally affordable living arrangements. Tristan’s also here in Indy, and we all work from home. I don’t have tons of money lying around (I don’t think any of us do), but I have enough to pay my bills and groceries and save for a rainy day and I think a lot about how I can make sure they do, too.
For instance, I don’t drive a car, instead preferring to ride my bike and a few times every couple months to take the bus. Why? Because it’s good exercise and good for the environment, but also because it saves me $10,000 a year. It also saves me money on gym memberships, keeps me from getting sick, and lets me clear my head while I’m biking. That’s hundreds of dollars a month I don’t have to charge our clients. I don’t have any credit card debt, student loan debt, or any other revolving debts, which keeps costs low.
What if more places in all sorts of industries didn’t build extravagant offices, or reduced their transportation costs, or stopped putting money into places of questionable value? Why not use just-as-good and lower-cost cell phone services like Ting? That alone saved me about $500 a year. Does every tech startup in the country have to be located in the most expensive part of California?
It just seems to me if you’ve got a potential customer, you ought to try and sell them something. In this case, if they wanted a $165,000 solution for half off, that probably won’t work. But what would? If someone wanted a website for $2,000, how much website could they get? If someone came up to me and wanted a website for $5,000, but the work would really require $8,000, I’d do my best to get them the most for their $5,000 as opposed to just sending them away.
We quote our services on what we know is the best value. We’re not going to be doing any $10 logos or $100 websites anytime soon but that doesn’t mean we’re going to shut out everyone who doesn’t have a big budget. Someone asked me last night for help building a site for a small group of people. Rather than saying, “Yeah, we can do that for $3,000.” I said instead, “It’s probably easier and better for you to just build a Facebook group. It’s free, easy, and uses what people already know and use.”
Why does every design and marketing agency want to serve huge brands in California and New York? Why is everyone seemingly obsessed with replicating the market success of companies like Apple? Affordable design should be available to everyone.
Not everyone can be Apple. Not everyone gets to work for and cater to big names and big companies. We want to help the rest of us. Give us a small company or small brand and we’ll make it into a big brand.