Is Logo Design a commodity?
As I was getting ready to start my daily project assignment, this morning, I got a call from Isaac Iren. Isaac was our very first client back in 1998, when I had set up a logo design company. He was in town in and wanted to touch base with me. I was happy to hear from him and was quite surprised he has remembered me and called me.
Later in the afternoon as I was munching on my sandwich, I reflected back to the humble beginnings of SpellBrand and how far we had come. SpellBrand started out in Sarasota, Florida, as a two man company. Today we have 23 full time designers and have worked on 1000s of logo design projects.
In those days there were just a few serious logo design companies online. One of the leading companies, introduced the package system of selling logo design services. We were also among the more prominent logo design companies and in those days packages were priced much more than what they are now. Then came the boom in the logo design industry and by 2002-2003 there were 100s of logo design companies mushrooming online.
Due to the increased popularity of this service and the perceived notion that Logo Designing was an easy business, we now have 1000s of online companies and freelancers offering logo design services. Due to this intense competition, pricing became the focal point of differentiation. Anyone who has access to Photoshop or Illustrator or CorelDraw now sets up a website and goes for a share of the logo design business. While this kind of entrepreneur ship and competition is healthy, it is the low standards that these so called logo design companies set that actually hurts the business as a whole.
That is what made me think that perhaps logo designing has become a commodity. A commodity is defined as anything for which there is demand, but which is supplied without qualitative differentiation across a market. Just as milk or rice, people tend to go for the shop or supplier providing it at the cheapest price. Because of the hundreds of logo design companies online, price wars have led to a state where, talented designers are plying their trade for peanuts.
Right now, your website, your logo portfolio gallery, your logo design process or even the fact that a client can call your company and talk to a logo designer, have ceased to be differentiating factors. Small businesses looking for logo design services, tend to search for the cheapest service around and even though, the company offering the cheapest logo design service might be doing so by offering clip art based logo or sometimes software generated logos, buy their services.
This of course leads to misery and we have seen our share of customers who come to us after they have tried the $30 or $50 service and having been disappointed realize the need to pay a fair amount for the right kind of service.
Having said this, I must admit, we are also part of this price war scenario. We too offer a logo design package system and price our service at a ridiculously low amount – just to survive and continue doing what we love the most – create logo designs. Many times I am tempted to change our pricing structure, remove the McDonald fast food type packages system (with fries on the side) and introduce a quote based system. But fear of loss of sales and the realities and necessities of running the daily business and paying the bills prevents me from doing so.
Every day I would wish for a standard being established in the industry – by the leading companies that would set the tone for turning this industry around and making it possible for talented designers to be paid what they deserve. I know this is wishful thinking. Everyone, including the “big” companies, is afraid of losing market share if they increase their prices.
But I am working on a long term plan that hopefully would help us raise the standard and go after the right kind of market that except high quality and professionalism and are willing and have the means to pay for such a service. Till that time, I guess we would have to continue offering a high quality logo designer service at rock bottom prices and in the process make no profits at all. Years pass, and in the end we have nothing to show for all the projects we have worked on and the 1000s of logos we have created.