When Win Without Pitching launched in 2002 one of the major problems afflicting the creative firms that we then served exclusively was they got paid for their doing and not their thinking.
I advocated for these firms to start charging for the thinking that preceded and wrapped around the doing. Instead of simply acting on the client’s brief like a server in a quick-serve restaurant, we and other advisors pushed designers, developers and agency-side marketers to see themselves as professionals with the same professional obligation to diagnose before they prescribed or acted on the client’s own prescription.
They called this thinking “strategy” and started to move upmarket. There were some missteps along the way, including:
- Breaking out strategy as a line item in proposals (clients would accept the proposal while crossing out the line, saying “we don’t need to do the strategy”)
- Charging for that thinking in units of doing (hours)
- Appending the word “strategic” to their previous service provider description, giving rise to “strategic design,” “strategic branding” and “strategic communications” firms
In the 2010s when I would ask my clients how they differed from their largest competitor, I would often hear “They don’t do strategy.”
In design, as in many other disciplines that have endeavored to be seen as more strategic and therefore more expensive, strategy is simply some form of stopping to think about the goals and context of the challenge at hand.
That’s Enough Strategy, Thank You
I think too many design firms—and other practitioners of all kinds—are trying too hard to raise prices by presenting themselves as more strategic, when they should instead strive to be more expensive by being different and narrowing their focus to solving specific problems for specific client types.
I don’t want you to see this as me advising you to think less and charge less, I’m simply pointing out the market dynamics. Sometimes people just need something designed—quickly, affordably and of good but not award-winning quality. The days of moving everyone up to pay for brand audits first is coming to an end. They have other choices. Your discipline is becoming commodified. If you or your clients see your firm as a provider of that discipline then your prices are almost certainly too high. This isn’t the case if you and your clients see yours as a firm that uses that discipline to solve their specific, urgent and expensive problems.
The Discipline Levelers Are Here to Stay
Today, the simpler outputs of many disciplines are too expensive: web design, software development, accounting, engineering and financial portfolio management to name just a few. They’re all too expensive and the market is saying so, steadily wiping out the overpriced undifferentiated. The two main forces that are piling onto poor economic conditions to lay waste to untold discipline providers are offshore labor and AI.
Offshore Labour is Here For Real Now
The act of sending labor overseas to less expensive markets has been around for years but it’s gotten real in the last two years and it’s getting “realer” faster. Already this year (5 months in) I’ve heard the following from business owners:
“I replaced my $130k-a-year CFO with a certified accountant (they went to school here then moved back to India) for $7.50/hour.”
“These people (developers in Eastern Europe) are incredible. They don’t know what a sick day is and they never want to know.”
“Their english is perfect and they (designers and VAs in the Philippines) work our hours.”
“I’m not hiring any more Americans,” said an American marketing firm owner. “They’re too expensive, too coddled and too entitled.”
I know a handful of firm owners who laid off their entire staff during the pandemic and chose to add none of them back, even when their rebounding businesses could have supported it, if not to the same pre-pandemic level. To a person they claim to be freed of the increasing burden of dealing with employee dynamics. In two decades I’ve always seen a smattering of this—the business owner who wasn’t good at the people part and fantasized about being a solopreneur once more—but it’s endemic today. I feel like I have this conversation with someone every couple of weeks.
When these renewed solopreneurs need help they turn to dedicated overseas contractors where rates are 20%-50% of US salaries with no payroll burden, no “sense of entitlement,” no workplace issues around feeling “triggered,” “othered” or “unsafe—on Slack while working from home!” And—so these business owners all claim—no degradation in quality with a huge improvement in desire and drive.
Don’t shoot the messenger, I’m not attaching any judgment to these statements, just passing on what I’m hearing, verbatim. They are representative of other conversations where similar sentiments have been expressed. Something is in the air.
That’s Not Distributed. This is Distributed.
It’s not hard to draw a straight line from an expensive team dispersing across the country in the new post-pandemic WFH reality to a less expensive team dispersed across the world. What has surprised me, and I expect will surprise you and your team members if it hasn’t already, is just how intelligent, skilled and hungry many of these offshore workers are. We seem to be at an inflection point where previously many Eastern European, LatAm and Filipino developers, designers and VAs were seen by their Western employers as a cheap and easily disposable appendage to the main body, and today they’re fully integrated team members valued at least as much as their Western counterparts. Globalization of white collar work has gotten real.
Now Add AI
I’m not going to rehash the 30 other things you’ve already read on generative AI in the last month. The short of it is people are rapidly becoming more productive which means the cost of the most commodified work is on its way to close to zero.
Back in pre-transformer 2020, an engineer friend and client said, “engineering is going to be one of the first professions disrupted by AI so I might as well be the one to do it.” I praised his ambition and wished him luck.
Meet Prenguin. It’s just the beginning. It’s interiors today but bridges tomorrow.
This type of innovation is happening in most of the professions. AI can do your tax return, write a legal brief, turn your blog post into a podcast in your own voice, create a near-perfect headshot from your selfies, edit your photos, animate your video, balance your portfolio, etc.
You do not want to be in competition with AI. You want to be using AI to help solve specific, complex, urgent and expensive problems. If you have to preface your offering with the word “strategic,” if you include “strategy” in your list of services or if you define your firm by a broad discipline rather than a narrow problem statement then you’re almost certainly suffering today because your cost structure doesn’t allow you to compete with offshore and AI-enabled businesses that can do what you do faster, cheaper and often better.
Once your specialism transcends a discipline (e.g., design) and instead orients toward using multiple disciplines to solve more specific, urgent and expensive problems (e.g., physician recruitment or subscription churn reduction) for specific client types (e.g., hospital systems or subscription-based organizations), then you will find creative ways to use AI and perhaps offshore labor to give you a competitive advantage.
I Have Become Waste, Destroyer of Budgets
I worry I’ve contributed to the mass of practitioners—primarily in the creative and marketing space I have mainly served for 22 years—overcharging for basic services through my repeated admonition to raise prices.
The 10th proclamation of The Win Without Pitching Manifesto is We Will Charge More. When The Manifesto was first published in 2010, the state of affairs among creative firms was an almost universal undercharging. But the first proclamation—We Will Specialize—is the basis for the eleven proclamations that follow, including the 10th. Without specialization—in a narrower discipline or market, or a more specific problem statement about both—there is no basis for charging more. Higher prices without increased value creation and/or reduced competitors (through narrowing your focus) are unsustainable, especially in the era of offshore labor and AI.
Adding “strategic” to your discipline doesn’t make you so and it doesn’t justify the hefty fee both of us would like you to command. But if you’ve made that mistake, you don’t need me to tell you about it now. The market has been telling you for the last four to six quarters. I hope you’re listening.
If you “do strategy” or price strategy as a line item it’s time to stop and look at your own business strategy instead. How will you become, and remain, unique, especially in the era of offshore labor and AI? What urgent and expensive problem will you help your clients solve?
