How’s your business doing? Is it growing? Are you gaining new clients? Or is the opposite happening? Are you finding your clients are fewer and further between?
Last week when setting goals for the year, I talked about my desire to change my business from one offering services to one offering products. The transition has been a recurring theme in my goals the last few years and I said that I’d share some thoughts about why I’m making this transition.
It’s going to take a few posts/podcasts to cover what I want to say. I guess this will be my first podcast series. Today, I want to discuss some observations I’ve made the last few years and why I think they point to a changing market for freelance web design and development services.
I think the market for my services is shrinking and likely to shrink further. I have a hunch many of you play in a similar market. I think most freelancers and small agencies do. Now, I don’t think tomorrow will be vastly different from today, but if we look ahead a few years we will see a different picture.
By no means am I an economic forecaster or analyst. Everything I’m going to say mainly comes from observations with my own clients, people who contact me about possible projects, and listening to people talk on my small business forum. I’ve also seen reports from others in the industry with similar observations.
Let’s start with who are my typical clients and you can see if you recognize them as your typical clients as well.
Who Are Your Clients?
My clients are typically 1–5 person businesses. In fact most are 1–2 person businesses. They’re micro businesses. One might be a two-person start up looking to have their first site built. Another might be a lawyer who wants to upgrade a five year old brochure site.
Here and there I’ve worked for small agencies, usually a marketing firm without an internal design and development person or team. Their clients were still mostly of the 1–5 person business type.
I have clients where I usually deal directly with the owner of the business instead of someone a few links down the chain of command. I chose to work with this type of businesses, because my business is of the same kind. I relate to micro businesses better and understand them more, given my own freelance experience. It’s where I can help the most and where I feel the most comfortable.
At the other end I left the corporate world so I wouldn’t have to deal with corporations and larger organization. I suspect they wouldn’t looking be looking to work with me any more than I’d be looking to work with them.
Listen to Your Market
When I first launched this business I had no idea how or where to reach potential clients. I knew I had to reach them, though. I was familiar with forums so I joined a few. At the time forums were the main social communities online.
I joined a variety of communities, but it was the small business forums that were most important for my business. They were communities of people who were my typical client. Aside from helping me build a client list, they served as a source of market research. I could listen to the problems my market was having and what made them hire one designer over another.
A lot of that choice comes down to establishing a trusting relationship and getting across that you’re capable of doing the work you’ll be hired to do. However, it also became clear early on that my typical client is price conscious and what I charged for my services would be a major factor in the decision to hire me.
I’ve learned to discuss price as soon as possible. It’s better to know right away if you and a potential client are in the same ballpark as far as what they want and what they want to pay and what you need to charge.
Many of the people who contact me have a fixed budget for their site and nothing I do will increase that budget. Instead I have to figure out what of the things they want are most important and how many of them can I do within their budget.
To build my business I needed to reduce costs as much as possible if I was going to attract clients. It’s why I started working with WordPress and open source projects. I still have costs in time to install and configure a CMS and plugins, but it’s a lot less time than building everything from scratch.
The most price conscious among my typical clients will look to free or low cost solutions first. They seek do-it-yourself solutions like the site builders many hosting companies offer or services like Squarespace that offer sites for a low monthly charge.
For years it wasn’t a concern. The DIY solutions weren’t very good, certainly not good enough to use for a business website. They remained below some minimum level of quality. Some people still chose them, but so what. Those people were unlikely to ever hire someone.
Over the years, the DIY, free, and low cost solutions have improved considerably. Many of them are now “good enough.” Not all, but some and I only expect all of them to get better in the near future. I expect many who are my typical clients will choose Squarespace and Wix over me in the future. They’ll choose free and commercial themes and plugins instead of custom work.
I think the custom solution is always the better option, but I completely understand that a custom solution can cost more than a 1–5 person business can afford. That’s especially true when first starting. I know I couldn’t have afforded me when I first started so why would I expect anything different from others in a similar situation.
Again for years it wasn’t a huge problem due to the lack of quality of the off the shelf solutions. It was easy to point to issues they had that made custom the more desirable option. As the non-custom solutions get better it gets harder to point to issues with them that clients would agree are issues. As the non-custom solutions continue to get better, I expect more of my clients to choose them over me.
Remember that many of our clients don’t truly get what we do when we design a site. For many, design is how pretty something is, how it looks. As long as the off the shelf solutions look good enough, they will be good enough when someone chooses one over you or me. As long as they can maintain a minimum level of quality and a minimum amount of basic features that’s where our clients will go.
We can debate all we want whether a service like Squarespace really is good enough when compared to a custom site, but remember this is from the point of view of the people who might hire us. It’s irrelevant what we think. It’s what our clients think that matters.
If the non-custom solutions are good enough and cost a lot less why would clients make another choice? The cost to the client is a small monthly payment of fixed quantity. Hiring us costs much more up front. It’s several large payments against a lot of small payments. The service is also a fixed price where our price begins with an “it depends.” It’s going to be hard for us to compete on price.
Still More Competition
I expect many of the people I call clients today will move to DIY and hosted solutions as a first site. They’ll choose Squarespace or Wix or GoDaddy’s site builder over me. The braver ones will install WordPress and a theme and a bunch of plugins. They’ll have a site and they’ll be happy.
Over time they’ll bump up against the limitations that still exist in some of the low cost options and some will desire a more custom solution. The question is who will they contact?
I think by the time they’re ready to make this choice, their business will be making more money and price will become less of a consideration. Their main concern will be having things done right. While I suspect some will still contact a freelancer like myself, more will look for a larger agency or look to move design and development in-house as they grow.
It’s also likely we’ll have more people like ourselves to compete against. Sites like 99 Designs will allow people to get “custom” work for less money and less risk. People can essentially window shop there.
Not only are the off the shelf site solutions getting better, but the tools to create sites are becoming easier to use allowing more people to join the industry. Think of an application like Macaw that lets you design entirely in a visual interface while it produces some pretty good code for you.
Then consider how much more information there is online about how to design and develop websites toady than a few years ago. I know there’s a lot more now than when I first started.
You and I face more competition today than we did last month, last year, or a decade ago. We’re going to face more competition in the future.
It’s Not Just Me
Most everything I’m saying stems from observations I’ve made about the people who potentially become my clients. I’m just one person and I realize my situation doesn’t speak for everyone else’s situation. However, I’m guessing many of you have clients similar to mine and we both serve similar markets.
I have seen reports from others suggesting I’m not alone in my observations. Here are a couple I remembered to collect.
- The Shift Away from Design Agencies Has Started in San Francisco
- San Francisco Design Agencies Feeling the Squeeze
Here’s a quote from the latter.
What’s actually happening, according to friends at agencies, is that client’s willingness to buy design from agencies is decreasing, and project budgets have been shrinking. And the prevailing theory is that this is happening because companies are building in-house teams, and that’s where their ‘design budgets’ are going. Whereas in the past, a company might spend 20% of a design budget internally and 80% externally, that’s now swapped.
I wish I’d grabbed more URLs, but I promise I’ve seen more than the above two articles. I have a feeling I’m remembering podcast conversations, which probably explains why I didn’t grab URLs at the time.
The market for design and development is expected to grow for another 10+ years. It makes sense. The web is still relatively new even if it feels like it’s always been there. Many businesses still don’t have websites, certainly not good ones.
The technology is constantly changing as you know. People are now redoing sites so they’re responsive. Tomorrow it might be a desire to have the latest aesthetic trend. There will likely be a quicker cycle to replace sites or, even better, a greater understanding that sites need to be maintained and iterated.
The thing is, I don’t expect the growing part of the market to seek freelancers for hire. I don’t think it means freelancers will become extinct, but I do think it means we’re going to need to change if we want to attract new business and hold onto existing business.
I want to leave you with that thought, that we need to change the way we do business to compete in a changing market. Next week I’ll continue and with a possible reason for what I think is happening. It points the way to what I think we need to do to change with the market for our services.
My apologies if this post/podcast has focused on the negative. I promise we’ll all be ok if we want to be. None of my observations mean our businesses will disappear over night. However, I do think we’ll need to change how we do business to meet the changes of the market.
Next week I’ll start offering solutions to the problems I talked about today.
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