Free Web Design Deflates the Industry Profit Pool
An industry profit pool is the total amount of revenue available across the whole value chain. The bigger the profit pool the more money that can be made by more businesses. But we have a problem in the web design industry and it’s time that we took some responsibility.
The problem is that we are unlike most industries in that we actively send interested applicants away until they have developed a portfolio of commercial websites. This does not happen in most industries for a reason – these free agents working at no cost and often for little or no reward are low-end competitors. That, on the whole, is a bit of a web design industry problem.
Imagine that the profit pool for web design related businesses is a giant pie. The pie includes web developers, graphic designers, information architects, usability experts, hosting providers, technical support people, receptionists, managers – and a whole lot more. The pie, however we like to imagine it, is nevertheless finite in size. Or, more accurately, it has a maximum size that is limited by the number of potential clients requiring our professional services.
We shrink that profit pool by actively encouraging low-cost competitors to come back to us with their commercial portfolios.
We also encourage in that ‘web designer’ culture the plethora of bad products sold into the marketplace by untrained and low-skilled future professionals. At the same time, we actively engage in a practice that detracts from consumer confidence in our value proposition.
Consumers think less of our abilities because they get free second rate products built by low-end unprofessional competitors.
In a sentence: we trash our industry brand through our continued exploitation of the employment model that expects our future employees to be pre-trained high grade experts in their parent’s basement.
I want each and every web professional to think about this for a minute. A few years ago Molly Holzschlag started a web professional organisation… they also need to consider these points.
Ours is a highly competitive saturated market with the public perception that it can be achieved by a 15 year old on the weekend.
So now you – the web designer reading this – know where that large slice of the profit pool is going… why there is less business than there should be… and why there is so much crap work on the Web. Take your part in that responsibility and stop complaining about it. Who plays your part in that problem? Oh you do.
April 9th, 2010 at 10:16 pm
Good call mate, this one has been an industry killer for…*thinks*…well, since Web Design started (and it’s still a very real problem today). I’m not sure the Web Professional Organisations, or even the Design Associations, take the matter seriously enough do they?
>>”Ours is a highly competitive saturated market with the public perception that it can be achieved by a 15 year old on the weekend.”
This sentence alone effectively sums it all up! There’s always going to be a group of Professionals that will try to improve the situation – but they’re up against a wretched battle, largely un-supported by the whole industry. In fact, the term ‘industry’ itself is starting to look a bit flaky when referred to Web Design (sadly!)
April 10th, 2010 at 9:07 am
True Matt, the industry is highly fragmented and seems to be reasonably combative (behind a smile and a hello). Building web design community goes a long way toward that.
I think a key component of being able to differentiate as a ‘web professional’ is that the next time we see a spangly good design we redefine the way we look at the work from an industry perspective.
Oh nice work – what was the business case? Oh no business case? KPIs? Oh then how do you know if it will turn a profit for the client? What were the objectives? SMART Goals?
Because at the end of the day there are only technically proficient or shoddy, or aesthetically beautiful or shoddy continuums… unless it also meets the business outcomes of the client and meets some kind of goal or objective as an actual design.
We need to stop lauding and rewarding the pretty work as ‘professional’. However, technically proficient. When we can get the industry looking in at itself using that bar as a measure then we might be in with a chance.
But currently, we’re shooting ourselves in the foot just by demanding these people exist to feed our industry with instant talent. What is that cost?
Yeh I’m like you, skun my teeth the exact same way…
Industry – step up to the plate, hire talent and train them like any other decent job! Oh there aren’t many self-training professions in the world unless you still rank prostitution as a profession ha ha…
April 10th, 2010 at 9:12 am
Also one of the draw cards of web design is some romantic delusion people get that its an easy way to make lots of money (with something like Frontpage to begin with)…
There must be a lot of failures crying into their pillow cases on that broken dream. The bottom end of the market is over-flowing with competition to the point where price pressure dives towards an expectation that clients will get work for AUD$5 per hour – FREE.
April 13th, 2010 at 10:52 am
Yeah, sadly, all quite realistic statements.
April 14th, 2010 at 12:21 pm
Steven your thesis rests on a premise which I believe to be flawed.
‘…The pie, however we like to imagine it, is nevertheless finite in size…’
I suggest ‘the pie’ (to the extent the analogy is applicable) has the potential to grow many thousands of times bigger within the next 10 years. Exploitation of web technology for personal and business use is still at an emryonic stage-we aint seen nothing yet and it is still the wild wild west out there.
Many of today’s wannabees are tomorrows business success stories and are adding value to a booming market.
April 14th, 2010 at 1:11 pm
Hi Pete, no you misunderstand me – the pie at this point in time is finite in size (or generally finite in size). In other words there is a maximum possible profit pool that exists for our products and services today, another pie exists tomorrow… naturally. So of the total available work that our industry can be paid for today is the pie (including that which is ferreted out by FREE workers building portfolios).
I don’t doubt that there are many wannabes that are tomorrow’s business success stories (and 10 years is 10 years away)… in fact we’re a part of the problem and like any broken system the people within will mostly see that its correct as it is.
But we’re shooting ourselves in the foot to believe that sending people away to do free work will not chew at the bottom end of that profit pool. Every free job is someone not getting a paid job… and free puts economic pressure on what clients are willing to pay (it affects the branding of our industry)…
… and every piece of crap we complain about out there is partly because we perpetuate the myth that anyone can do it. Hey if you can get something for FREE then what’s it really worth? I mean from a customer’s perspective.
So if we want to be “professionals” in the industry we need to differentiate ourselves and stop mixing up “proficient and aesthetically beautiful” as the measure of a good website. That’s one step. Instead, when you’re shown a website ask how “effective” it is…
The industry won’t just right itself over time Pete, as much as it sounds fair. My post is to ask you to rethink the wheel as you know it… and to think how important it is to hire these young wannabes (with talent) early in their career like any other business would do.
As long as we base our premise of what our industry does on the freely trained labour force that made its bones on FREE websites or cheap websites we’re going to have this issue.
The profit pool in any industry is not infinite. Only so many will donate to charity today for example, more charities = less money each gets today. Its a simple enough concept.
I understand your response but I hope you reread the article from this perspective. There will always be people making free… but we’ve got to stop seeing that as our easy way to train recruits. Part of that is because it trashes our brand of what we do in consumers eyes.
Of course they think anybody can do our job – we’re perpetuating that belief ourselves by what we do!
Sorry, long rant reply to your comment but I don’t think you quite understood what I was driving at. Infinite profit pools do not exist. Less paid work available is less businesses making a living.
April 14th, 2010 at 1:23 pm
The short answer: I apologise because I should have better explained the business theory of a profit pool.
Sorry but the thesis isn’t flawed in that regard.
April 14th, 2010 at 6:02 pm
I think it is part of a larger problem of professionalism within IT as a whole. If the IT industry ever gets to the stage where consultants are chartered and professional bodies are enshrined in the law (e.g. the ability to suspend or exlude members from practising) then things might move on within the web design and other related industries.
Perhaps we need to go back to the master craftsman/apprentice model, which has sadly disappeared in most areas of life these days. A Seven year apprenticship could be a good model.
April 14th, 2010 at 6:50 pm
Richard, I’m not sure it even needs to get that far… but the idea of businesses recruiting talent and nurturing it through to professional status in the industry is a good direction… maybe a three year apprenticeship scheme with certified best practice orgs.
As it is any of us can call ourselves experts in anything without much of a question mark within the industry – how much more confusing when designers walk into their door promising $10 per hour and claiming expertise across the board.
But I would like to see players within the industry start to focus on the whole picture a little more. I’d like to see people ask about web designs, for example, what are the KPIs you are using to measure success, how successful is this site… what ROI did the client receive.
Instead we seem to say WOW that looks fantastic, or that’s technically great or that website is accessible. Whereas a “professional product” should be all of the above including and foremost a success for the client.
The first step is actually with us recognising hobbyist versus professional. Yes we all came from that exploited system, but really why should we be unlike other industries.
We should catch and kill our own recruits, so to speak. Rather than “encourage” (and that’s my big problem) anyone interested to go and compete in the bottom end of the market with a hacked copy of DreamWeaver.
As the industry specialises more we need sub-areas (for example accessibility) to train, certify and acknowledge. We will never put free out of business, but we can at least assert the hobbyist as a hobbyist until they can actually do the work.
Today, this very minute, somebody is probably installing DreamWeaver after 1 intro class and is calling up the local restaurant flogging themselves as a web designer. No we’ve got to start self-educating and pass that onto the client base.
I’m hoping that the professional associations will start to discuss this aspect of the industry over the next few years. It doesn’t seem to get talked about at all.
Its absolutely crazy that we get jobs in large orgs only to find some dick running the team who absolutely has no clue (speaking from several experiences there). We need to educate those orgs that there are professionals out there.
The big question is how do we assess them. My answer is by their products – not just visually, not just technically, but in all aspects.
Apologies for the rant, but I get a little verbose on these topics.
April 14th, 2010 at 6:55 pm
We could alternatively put a cap on “professional” – such as you are recognised as a professional when you make AUD$30000 revenue (a living) from your work…
… whereas the hobbyist or freelancer doesn’t make that test.
We can’t have “professional” actually mean anyone who reads the correct blogs even if they know the bible backwards (by the way I’m an MBA student nowdays and fail that test myself).
But its something to think about. Someone can indeed stink at web design but be professional. At least if they’re competing on a wage the industry more likely blossoms. As you can see I don’t really have all the answers, it just needs to be discussed and pushed forward onto the agenda.
April 14th, 2010 at 7:12 pm
Here’s a catchy tshirt acronym:
FREE, as in FREE work, means Fuck Real Education & Employment
- so could everybody stop doing it, stop promoting it… stop supporting it.
April 14th, 2010 at 8:36 pm
There are few paradoxes in your article. I will try to be brief about them.
1. This happens in every industry (e.g. building trade)
2. Clients in every industry generally don’t know about products/services they are purchasing, hence the sales/marketing pitch works here to buzz them up more about one thing than the other.
3. If we value people’s experience and track record the most, rather than skill and knowledge (which tends to happen in capitalism), then those with best track records and with most experience will be able to command best prices and best clients.
4. If you think about Agile approach, a new client who has never done a site before will probably want to learn through their mistakes about what web sites are, just like they learn about marketing, accounting, etc. So they might start with 5 page ‘Geocities’ site or a FaceBook page, then work out that is not enough and put up £300 for a small site with a n00b. After working out that’s not good, they might shell out another £2000 for a ‘full’ site and so on. It’s ‘Agile’.
Case closed.
April 14th, 2010 at 9:01 pm
Jason, nope sorry not case closed
But you make very valid points, although not exactly what I’m talking about either.
1. Building trade does not have a culture that “hey it would be so cool and easy to be a DIY plumber I’ll go shake a tree and say I’m a plumber”… we have a particular problem in that as an industry we are promoting FREE as a way of getting cheap pre-trained recruits instead of investing in them ourselves. This has the follow on effect that we send people away to make shoddy crap until they learn better independently – which floods the market with FREE and $5 per hour.
Yes the client will (hopefully) learn better from the experience. But probably not, from experience. Because as professionals its our role to educate the general public that we are different than the hobbyist. If we don’t differentiate ourselves we can’t complain that people undervalue our skills and think anybody can do our jobs.
I am not saying FREE won’t exist… but its not our position to keep pasting that up as the path to a career as a web professional.
2. True clients don’t know about the industry, probably any industry. But again, we’re shooting ourselves in the foot by not educating society continuously about our value. I don’t care if a site is technically or visually excellent (I like it but its not primary)… its a melding of those things PLUS business success for the clients outcomes.
Its that which we need to educated them about… and normal everyday people about. That there is a body of professionals out there and a larger body of hobbyists.
I’m talking about trying to change the “public perception of web workers” as anybody can do our jobs. Nobody really thinks they are a doctor, lawyer, plumber, electrician do they? Seriously. If they pass themselves off as one they don’t get instant industry acceptance… which is what we’re doing.
Get your second cousins kid to buy DW tomorrow and advertise as a web designer for FREE – there you’ve got an issue.
I just don’t think we need to be a part of the problem by pushing that out there.
3. Entirely accurate. But again not what I’m talking about at all. The problem is we’ve come through FREE and become experts on something and because we’re in a broken system we don’t see the problem with that. Better will always hopefully command better prices. But FREE will always put pressure on the industry as a whole because it reduces the profit pool by losing a slice of businesses who would otherwise be employing somebody.
FREE has its place, just not in taking commercial work out of the game.
4. Yes the evolution of clients. Unfortunately while that sounds right its probably rarer than the restaurant who is sucked in over and over by free or nearly free because they don’t get the business case. Why don’t they get it, because as an industry we aren’t hammering the pavement continuously telling them our real value – that we can make them richer or better off, while FREE probably won’t.
So I’m not sure your case is actually closed Jason. Rather, extended into new territory. The premise of a decreasing profit pool is the whole industry’s potential profit throughout the value chain, its not just about the cream still getting paid, if that makes sense.
We do nothing to dissuade FREE and we do everything to encourage and promote it. Again, we need to recruit and train our own industry members instead of expecting that they make their bones and come to us as freely trained experts. Like other businesses do, including the building trade.
April 14th, 2010 at 9:09 pm
Another reason we need to frown on FREE is that we should never, if we’re professionals, make any bones about the fact that it is wrong and exploitative for anybody to work in our industry for FREE.
With or without the expectation that they may have a future in the industry.
FREE work for any commercial entity on anybody’s portfolio should raise eyebrows of disapproval. Free for NPOs – not for money earning cheapskates.
There are a lot of good NPO causes out there who “volunteering” can be argued for… but never a FREE business site.
April 15th, 2010 at 2:54 am
Your theory of a ‘Profit Pool’ is a reasonable generalisation, but far from completely valid. We are all human beings, and as such our spending does not match our budgets as closely as they should. This therefore rather taints the rest of your argument.
However, I cannot think of any other industry where there is a single pricing structure – good plumbers might be expensive, but cowboys survive by being cheap, and then there is loads of DIY. Why should web-design be any different?
April 15th, 2010 at 8:24 am
Jimmy. First, its not my theory of a “profit pool”. That is a long standing business theory you should understand from Bangkok to New York to London if you are going to be in business. If you were an airline company you would know your profit pool, or a manufacturer of garments or a web development firm… or at least you would have a ballpark idea of how it works… before you entered the industry – its the amount of money your industry (nah I don’t need to explain that simple concept again, do I?)… so its not my theory. Google profit pool in Google Scholar and you will find something useful.
The alternative you suggest is there are infinite customers with infinite cash at all times… nope… thus there is a finite profit pool. There’s no avoiding it.
No I don’t suggest at all the industry has a single price structure Jimmy. Where did I even move into that area? Of course there’s a roaming scale dependent on quality, skill and market forces. Where did you come to that conclusion, I’m interested?
Because the real problem people are having seems to come from several sources in these comments… one is lack of knowledge of business theory, which is understandable. The second is that we came through this broken system ourselves so of course we naturally think this is the correct way – its always been like this, right? So I get that angle – others should suffer the same way we did… paying their dues.
The third issue is that even the idea that we, as an industry, might dare to put ourselves out there as “professionals” is… well… scary. It means doing more, each and every one of us, than just saying to each other “hey we’re professionals”.
WIPA and AWIA are actually there for a reason, and I’m just suggesting we move another prong into our industry strategy.
Another thing that is becoming obvious…there must be a lot of web professionals who actually know squat about business. How about we also look at an industry plan to educate on that level, too? We are mostly small to medium enterprises (SME) operations.
But no Jimmy, while I appreciate your input it is neither my profit pool concept (as much as I’d like to take credit for all the books on it over the last 100 or whatever years) nor have I stated a one price fits all paradigm for the industry, any industry.
DIY is cool. FREE for a charity is fine, its called volunteerism, should be more of it. But FREE as in people we encourage as an industry to go out and do FREE commercial work chews at our industry profit pool… at a certain point denial of that becomes more than resistant.
April 15th, 2010 at 11:39 am
I’m reading Clay Shirky’s ‘Here comes everyone’ at the moment. He makes some points that are relevant here.
Journalists once existed as a professional class, but now that anyone can publish ‘news’ the definition of journalist is getting very fuzzy.
The same could be said about web development because almost anyone can get access to the required tools and publish a website. These websites might be ugly and broken – but by other measures, could still be a success (ie meet a business case).
Even though we may want to preserve our incomes from web development, we may be fighting a losing battle.
If the trend toward social network sites continues, this may be even more true – as the existing reliance on websites will diminish.
April 15th, 2010 at 3:25 pm
Gavin, Clay Shirky’s “Here comes everybody” is on my bookshelf so I know exactly what you mean. But again its not quite what I’m driving at in this article, although there is a lot for web professionals to think about in that direction, too… for example, if you can code a coder then who gets the long term job security out of that. We’re always redefining as a society around new tools and ways of thinking.
My article is about how we are structuring our industry thought – in a conversation about our industry today… as any industry must. We say we want to be web professionals – then we need to STOP telling the world, encouraging the world to believe that anybody CAN do our jobs.
Or stop complaining about that perception. And accept that there will be less and less of that profit pool available for actual businesses to make income off.
The sad thing is while we could be working towards changing the perception of society – and dare i say our brothers and sisters in the trenches – about concepts like FREE we’re actually resisting the notion in an active manner that we do have economic value.
That free kid, the one training to be you… how economically successful will his websites be for the client? Probably not so hot. Why? Because he doesn’t know a bunch of stuff.
Yet you offer economic benefits (I hope) because you understand and design sites that meet the clients business objectives. That makes you a professional… not a hack… not a kid with DW in his bedroom… you add economic value to the clients business AND THAT’S WHY THEY PAY YOU MONEY.
Until we can accept and believe there is a difference between what we offer and what the hobbyist or the $5 per hour undercutter on a learning curve offers… well we ain’t got no industry dude… just little pirates everywhere…
Web professionals… just believe in yourselves. That’s all I’m saying. Why is that so hard to accept. Stop encouraging FREE training… start recruiting and hiring like real businesses… its exploitation. I’m shitfully aware how many days weeks and years I pissed away working in that paradigm with no guarantee of a career with anybody.
But it all starts and stops with what you believe, what you say, how you react to FREE. I guess its up to you after that point to believe what you may…
As Clay would be the first to point out our industry is in that dynamic shift like any other… but its not what I’m driving at here. That’s a related but different issue.
Thanks for commenting though, intelligent input definately.
April 15th, 2010 at 3:29 pm
Or on the other hand – the next time you see a nice FREE website in a portfolio just smile and say great work, hire the bastard and get on with your life…
… its your industry people… your futures.
April 15th, 2010 at 7:44 pm
[...] days ago I wrote an article titled Free Web Design Deflates the Industry Profit Pool and which Russ Weakley posted in his Some Links for Light Reading (14/04/10). It concerns me there [...]
April 15th, 2010 at 8:07 pm
While I don’t mind digging into this subject with you all I think its detracting from the article’s message.
Read it a couple of times… maybe you’ll get it. I hope so.
But this is a major reason why I am not planning to utilise my new found MBA at the end of this year in web development… I need a sea change.
So I’m going to have to turn comments off and get back into my project workload.