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  1. #1
    SitePoint Evangelist adesignrsa's Avatar
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    Is Website Design (as a business) Ultimately Doomed?

    I hate sounding like a pessimist, but today I lost another two possible contracts to someone underbidding me.

    I know we're not supposed to talk pricing here, but how can someone run a sustainable business by developing a full content managed website with custom flash elements and a complete custom design for less than 4 digits ($US)?! I know if you're living in a 3rd world country where you only need 50c a day to live you can, but these people aren't!

    There are so many school/college leavers, secretaries and house wives that get their paws on a copy of frontpage or dreamweaver and after 5 minutes of using it their email signatures suddenly acquire the title of "expert web designer".

    If it's not that, it's some free, or ridiculously cheap "design your own website" solution offered by a hosting company or ISP.

    I've been in the industry for 8yrs now, and built up a credible client list including some large international brands. We've taken clients from nothing to number one on Google for very relevant search terms and they're now conducting millions in revenue attributed to their sites.

    Why do I feel that this industry is so undervalued, and what can be done about it? I think some level of certification above the small grassroots standards projects that concentrate more on code than anything else is needed for this industry to not become just a hobby for those with spare time to spoil it for the real experts.

    Am I off the mark here, or do others also see what I'm seeing?
    Ross Allchorn
    Web Consultant
    www.allchorn.com
    Twitter - @allchornr

  2. #2
    In memoriam gold trophysilver trophybronze trophy Dan Schulz's Avatar
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    This has been going on for years. Rather than gripe about it, why don't you just work on continuing to build bridges and relationships by thanking these two prospects for their time and inform them that you'll be available should they have any problems with their current "providers" instead?

    There is an interesting article on this very subject here at SitePoint:
    The Big No - How To Turn Rejections into Sales by Brendon Sinclair

  3. #3
    SitePoint Evangelist adesignrsa's Avatar
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    I know it's been going on for years, and I have done what you say with those prospects.

    The one was pleasantly surprised, and maybe we'll hear back from them once their cheaper company likely stuffs things up.

    As I said, I've been in the industry since 1999 and lately things seem to be getting a whole lot worse! Everywhere I look there is a new free publishing tool, or someone has given up butchery/plumbing/exotic dancing to become a web designer.
    Ross Allchorn
    Web Consultant
    www.allchorn.com
    Twitter - @allchornr

  4. #4
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Wasn't there just a huge, tedious thread about this old issue? The industry is very competitive, and there are few barriers to entry. So, prices are all over the place and you have to differentiate yourself to do well.

    If, after 8 years, you are still struggling with being underbid perhaps it's not the industry to blame but your own business practices - could you develop a specialty or strength that makes your higher rates worthwhile? Or, perhaps it's your client base that could be adjusted - if your clients are shopping offshore for projects and leaving you out, perhaps there are other clients that would value you more.

    The reality is that the industry isn't DOOMED, it's exploding. It's exploding so much that people are jumping in all over the place and making this a noisy marketplace. Still, there is plenty of room to do very, very well.
    The fewer our wants, the nearer we resemble the gods. ó Socrates

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  5. #5
    In memoriam gold trophysilver trophybronze trophy Dan Schulz's Avatar
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    I'm sure these "Me toos" and "Johnny Come Latelys" come in waves (I'm almost positive of it). The best you can do is position yourself to take advantage of those who get burned and tough it out while taking on new clients and getting your existing client base to refer work to you.

    If you don't mind me asking out of curiosity, how does most of your business come in? Advertising, traditional makreting/promotions, or word of mouth (especially referrals from happy clients)?

  6. #6
    SitePoint Evangelist adesignrsa's Avatar
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    Dan, most of our business comes in as referrals. All our clients are happy and the only ones we've lost I either had to fire, or they went off because of something cheaper. The only bids we lose are those based on price. I don't think we've ever lost a bid to someone more expensive.

    Sagewing, you are most likely right about the market we're being exposed to. I think we're attracting the bottom feeders for some reason. It's a difficult rut to get out of, and in the meantime, I think our rates are viewed as expensive since their nephew's best friend can do it cheaper.

    Being in South Africa, overseas clients expect us to charge the rates of someone living in India or Vietnam, so I don't even bother with international markets at this stage.

    Sagewing, your idea to set us apart is a good one. Perhaps that will help, but I think we need to reach a more influential market before that will have any effect.
    Ross Allchorn
    Web Consultant
    www.allchorn.com
    Twitter - @allchornr

  7. #7
    I hate Spammers mobyme's Avatar
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    We have just turned in our most successful year ever with profitability up by a staggering 16% so I just don't buy into the doom and gloom. Why are we doing so well? It's certainly nothing to do with price as clients often tell me that our bid is the highest as they try to reduce the price, to which my stock answer is "Sure; what do you want to leave out?" I believe it's because we have put together a very slick "user friendly" service which never takes anything for granted and works as hard to keep existing clients as it does to gain new ones. One of the biggest hurdles in any business is learning to sell yourself; because despite what people say it does not matter how good a mousetrap you build, the world will not beat a path to your door.
    There are three kinds of men:
    The ones that learn by reading.
    The few who learn by observation.
    The rest of us have to pee on the electric fence.

  8. #8
    SitePoint Wizard silver trophy
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    This is the same old thing... it has been a revolving argument for YEARS. First the hosting companies started offering web design services for fairly cheap (in those days) to occupy their staff when they weren't doing design changes to the company site. Then a few years later FrontPage and Dreamweaver hit big, so thousands of moms, nephews etc started making websites and decided they could make a "business" out of it.

    Then a few years ago open source CMSs got popular... just install Joomla and you're done... for free.

    There is always a quick and easy way to build a website. And there's always a right way. We have clients beating down our door, and we do zero advertising. We have local clients, referrals, and even big national (Fortune 100) companies.

    I think those people are great, actually. Most people spend a few hundred dollars to learn a life lesson. You get what you pay for. When they finally realize this and decide they are serious about getting a website that will be an asset to their business, or make them money, the call the professionals... us.

    Don't sweat this kind of thing... that client that went with the low bidder would've been an incredible hassle anyway. If they need a good price so badly they'd probably have been a nightmare client anyway.

  9. #9
    Word Painter silver trophy Shyflower's Avatar
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    Quote Originally Posted by mobyme View Post
    We have just turned in our most successful year ever with profitability up by a staggering 16% so I just don't buy into the doom and gloom. Why are we doing so well? It's certainly nothing to do with price as clients often tell me that our bid is the highest as they try to reduce the price, to which my stock answer is "Sure; what do you want to leave out?" I believe it's because we have put together a very slick "user friendly" service which never takes anything for granted and works as hard to keep existing clients as it does to gain new ones. One of the biggest hurdles in any business is learning to sell yourself; because despite what people say it does not matter how good a mousetrap you build, the world will not beat a path to your door.
    I so agree. I'd also like to say that it's easy, once you've achieved some success, to tout your success and forget to implicitly work with your clients' needs and selling them on the value of your services and the unique package of benefits they get from working with you instead of someone else.

    Don't give up! Look back to the things you did to acquire your success and make sure you are still doing them. There have always been nephews, neighbor kids, and housewives that call themselves web providers and work for free or for peanuts. You overcame that obstacle once, you can still do it today.
    Linda Jenkinson
    "Say what you mean. Mean what you say. But don't say it mean." ~Unknown

  10. #10
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    Please know that I am writing this genuinely trying to help you, NOT to attack you.
    Youíre a professional who has been in business for 8 years but your site does not reflect it. Why are you using a free wordpress template that someone else designed? I saw your old portfolio and your work is clearly high quality and fantastic but your site looks like you are a high school student just getting into the business. People arenít going to pay higher prices unless they think you can give them something more than the guy who is charging them $500.

    If you reflect a quality image in everything you do the people just looking to get things done dirt cheap will not be knocking in your door in the first place.

  11. #11
    SitePoint Enthusiast imagineinternet's Avatar
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    WOW adesignrsa, I could feel the frustration in your first post. Been there.

    My observation is there is no shortage of new business. We are constantly getting folks that tell us they don't get call backs, that they only got 2 proposals submitted for their project, or that they get screwed by someone, sometimes more than once. I truly believe there aren't enough good companies out there.

    My suggestions: Figure out your strengths, and PLUG THEM. Find out what makes you better/unique etc., and push those puppies. Also, get a hold of your current clients and never let them go. Show them the love, and collect the referrals. Lastly, don't sweat losing some jobs. It's a numbers game - you will win some and lose some, but the other 2 suggestions will greatly tip the numbers in your favor.

    May you oooze success, my friend. Keep your head up.
    Uptime + Quality + Keyword + Popularity Monitoring
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    Go Web Solutions - LOVE your website!

  12. #12
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    Apply the same concepts that make for a successful online marketing effort to your web design business - niche marketing. If you've developed a website for a particular industry, you've just done the hard work that could sell the site to any number of other similar businesses. Market your site to that niche and see if you can attract new clients. You can sell the site for less than the original, since you've already done the backend work, it's just a matter of customizing for that particular client. You don't have to reinvent the wheel with every site, you just need to market smart. That's one way to compete with the cheaper alternatives.

  13. #13
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    Quote Originally Posted by webrehash View Post
    Apply the same concepts that make for a successful online marketing effort to your web design business - niche marketing. If you've developed a website for a particular industry, you've just done the hard work that could sell the site to any number of other similar businesses. Market your site to that niche and see if you can attract new clients. You can sell the site for less than the original, since you've already done the backend work, it's just a matter of customizing for that particular client. You don't have to reinvent the wheel with every site, you just need to market smart. That's one way to compete with the cheaper alternatives.
    I think this strategy will conflict with marketing to higher price customers. Why should one guy pay less for their website if it delivers the same value. That it has made one guy successful should be an indicator to sell the second version at a higher price.

    HTH, Jochen
    http://www.automatem.co.nz
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  14. #14
    SitePoint Member
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    Good point Jochen. I guess I was thinking more from a $/hour point of view rather than looking at the project as a whole.

  15. #15
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    Is it doomed, I don't think so. But I think the market is about to change radically. I don't care if you call it a tipping point or a crisis, or whatever cute and sexy term the advisor du jour pops out, but I think it's about to happen.

    The industry is stratifying; the bottom tier will be text/still image sites. It's going to be increasingly harder to make money building those sites, I fear. In much the same way and for much the same reason that small newsletters aren't printed in print shops any more, and paperback books are heading for the POD methods.

    The upper tier will be the "experience" focused sites, yes with some text and stills, but more and more with animations/videos, sounds (a la podcasts) and other interactivity built into it.

    Just as hosting plans have dropped drastically over the past few years, the web design field is about to change, and we need to start creating "landing zones" for us in the new terrain.

    Ah, well. If it were easy, anyone could do it, right?

  16. #16
    SitePoint Evangelist adesignrsa's Avatar
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    Sorry for the lapse in time to reply to this. I must have missed clicking on a link in a notification email and I've only logged in and read these replies now.

    As you'll see, I've updated my site, as the cutline theme was just temporary.

    About other's advice, thanks I will heed it all. I have been focussing on photography lately though and bringing in some nice contracts. Similar industry, but I'm finding the business side more manageable and easier to explain value, usage rights etc.

    I'm still going to do some web design work, but I'm exploring my options now.
    Ross Allchorn
    Web Consultant
    www.allchorn.com
    Twitter - @allchornr

  17. #17
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    You should really get the Sitepoint Web Business Kit as it tells you within its contents how to solve exactly this kind of problem. You must explain and educate the clients who have rejected you WHY your price is higher and WHY they should opt for the best quality rather than low price. You need to make it absolutely clear to them that you mean Professional Business, and nothing else, and how your price has an incredible value of money.
    eFlair Design | Premium Design Services and Web Consultation

  18. #18
    SitePoint Addict Jonny's Avatar
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    Personally, I moved away from design as a career and into online marketing a number of years ago, largely for this very reason. It's very difficult for small business at the lower end of the market to compete against these one man band type set-ups who are happy to knock out cheap, quickly put-together web sites for next to nothing. It's important to remember though, that despite all this, there are design agencies who make obscene amounts of money, charging upwards of seven figure sums for a complete design and development packages.

    How do they do this? I can only speculate, but I suspect it's because they made the conscious decision to move out of the now saturated 'budget' market space long before it became the amateurish farce it now seems to be. I also suspect that there's plenty of room up there, if you're cunning enough to make the move.

    At the moment, you seem to be coming up against the type of client who focuses only upon up front costs rather than potential results. It's a well known fact that one must speculate to accumulate, however in my experience these types of business often lack the resources or foresight to speculate, then simply failing to accumulate as a result. This is a very basic marketing error, but also a very common one.

    Dealing with much larger organisations, day in, day out for the last few years it has become very apparent that such business deal only with the tangible. Facts, figures - NUMBERS! Every proposal, every strategy must be backed up with solid, realistic and ultimately accurate ROI projections. 'ROI' rules the roost. Quite simply - large organisations pay substantial fees to larger, more reputable marketing / design agencies for one very simple reason. Because they get more $ back.

    Here's an example:

    - Agency 'A' wish to charge $1,000 for a web site / marketing campaign / whatever. For every $1 you spend, you'll get $1.20 back. This will make you a total of $200 profit.

    - Agency 'B' wish to charge $50,000. However, for every $1 you spend, you'll get $5.00 back. In this case, you make a profit of $200,000.

    Assuming you are a large organisation with a large budget, which option would you choose? The 'cheap' one, or the 'expensive' one? The figures here are only an example, but you catch my drift. If you are to catch the bigger clients, this is a great way to secure the business you need to make your company a success.

    Design, on the surface is a very subjective matter and hard to put directly into monetary figures. But it can be done. When pitching, get as much information as possible from your prospect - in particular, traffic volumes, average sale values (or 'lead' value if it's not an e-commerce site) and conversion rate. If you cannot get this information, make a realistic estimation based on any industry information you can find through research.

    As an example, a prospect comes to you with the following information:

    - 10,000 monthly visitors
    - Conversion rate is 2.5%
    - Average sale value is $200

    From this we can understand that they make the following:

    10,000 visitors converting @ 2.5% = 250 sales / month
    250 sales x $200 (average sale value) = $50,000

    Then you come along and make a comprehensive review of the site. Highlight all of the issues that your review shows up and explain for instance, that in your experience (backed up with case studies once possible) with all of these issues that a conversion rate of 5% can be expected. In this case, with just a marginal increase in conversion rate, 250 sales / month become 500, and $50,000 in sales becomes $100,000.

    Then expain that at your rate for a redesign of $50,000 they will have made their money back within the first month. Again, these figures are just examples but they should give you an idea of how to educate against the 'cheap is best' mindset whilst also helping you acquire the BIG clients that will get you that villa in the Bahamas, or the Yacht, or whatever else you want to buy with your new found wealth.

    Apologies for the essay - I hope this helped and best of luck with your business.

  19. #19
    SitePoint Wizard
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    I agree with this notion. Website design is very competitive, and it is nearly impossible for an employer with little experience in the industry to know what good design is.

    Therefore, I only create sites for myself and, if I am to create one on contract, I ask for a lot.

    Other than that, try to get some corp to hire you as an in-house webmanager designer programmer. Money to be made there.

    Ryan
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  20. #20
    In memoriam gold trophysilver trophybronze trophy Dan Schulz's Avatar
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    Quote Originally Posted by Jonny View Post
    Personally, I moved away from design as a career and into online marketing a number of years ago, largely for this very reason. It's very difficult for small business at the lower end of the market to compete against these one man band type set-ups who are happy to knock out cheap, quickly put-together web sites for next to nothing. It's important to remember though, that despite all this, there are design agencies who make obscene amounts of money, charging upwards of seven figure sums for a complete design and development packages.

    How do they do this? I can only speculate, but I suspect it's because they made the conscious decision to move out of the now saturated 'budget' market space long before it became the amateurish farce it now seems to be. I also suspect that there's plenty of room up there, if you're cunning enough to make the move.

    At the moment, you seem to be coming up against the type of client who focuses only upon up front costs rather than potential results. It's a well known fact that one must speculate to accumulate, however in my experience these types of business often lack the resources or foresight to speculate, then simply failing to accumulate as a result. This is a very basic marketing error, but also a very common one.

    Dealing with much larger organisations, day in, day out for the last few years it has become very apparent that such business deal only with the tangible. Facts, figures - NUMBERS! Every proposal, every strategy must be backed up with solid, realistic and ultimately accurate ROI projections. 'ROI' rules the roost. Quite simply - large organisations pay substantial fees to larger, more reputable marketing / design agencies for one very simple reason. Because they get more $ back.

    Here's an example:

    - Agency 'A' wish to charge $1,000 for a web site / marketing campaign / whatever. For every $1 you spend, you'll get $1.20 back. This will make you a total of $200 profit.

    - Agency 'B' wish to charge $50,000. However, for every $1 you spend, you'll get $5.00 back. In this case, you make a profit of $200,000.

    Assuming you are a large organisation with a large budget, which option would you choose? The 'cheap' one, or the 'expensive' one? The figures here are only an example, but you catch my drift. If you are to catch the bigger clients, this is a great way to secure the business you need to make your company a success.

    Design, on the surface is a very subjective matter and hard to put directly into monetary figures. But it can be done. When pitching, get as much information as possible from your prospect - in particular, traffic volumes, average sale values (or 'lead' value if it's not an e-commerce site) and conversion rate. If you cannot get this information, make a realistic estimation based on any industry information you can find through research.

    As an example, a prospect comes to you with the following information:

    - 10,000 monthly visitors
    - Conversion rate is 2.5%
    - Average sale value is $200

    From this we can understand that they make the following:

    10,000 visitors converting @ 2.5% = 250 sales / month
    250 sales x $200 (average sale value) = $50,000

    Then you come along and make a comprehensive review of the site. Highlight all of the issues that your review shows up and explain for instance, that in your experience (backed up with case studies once possible) with all of these issues that a conversion rate of 5% can be expected. In this case, with just a marginal increase in conversion rate, 250 sales / month become 500, and $50,000 in sales becomes $100,000.

    Then expain that at your rate for a redesign of $50,000 they will have made their money back within the first month. Again, these figures are just examples but they should give you an idea of how to educate against the 'cheap is best' mindset whilst also helping you acquire the BIG clients that will get you that villa in the Bahamas, or the Yacht, or whatever else you want to buy with your new found wealth.

    Apologies for the essay - I hope this helped and best of luck with your business.
    No need to apologize - you just hit the nail right on the head!

  21. #21
    SitePoint Wizard bronze trophy bluedreamer's Avatar
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    The industry is moving forwards at an amazing rate so as we know it today will be vastly to say 10 years time - who know how we'll be doing it then?

    Of course different economies around the world will certainly mean "better" sounding prices for some customers in some countries but it's not as simple as that. Sure you can get cheap deals if the exchange rate works in your favour, but as an example even the top Indian developers seem to be increasing their prices closer to a western equivilent.

    Some customers will always go by price, that's the nature of an open market place, however once they get their fingers burnt or start having problems they usually come back.

    I've got several current customers who cane from "cheaper" designers in the far east, in general they didn't necessarily have a bad experience but they found a few things kept on bugging them:

    Language problems
    Expensive to telephone
    Different office hours
    Lack of design skills to match what they really wanted
    Poor quality coding
    Face to face meetings all but impossible

    ...and for those reasons they came back to a UK developer who could pay them an on site visit!

    The international market place is rarely an easy one to compete in, and for that reason it's always worth going the other way and targetting your local area selling yourself as local and offering quality over price.

  22. #22
    padawan silver trophybronze trophy markbrown4's Avatar
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    You just to be able to make the client money, or provide them with something valuable. It's up to you how to explain why your product is more valuable than the cheaper alternatives. Then they will buy.

  23. #23
    SitePoint Enthusiast chanchito's Avatar
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    some really great responses here.

    For me, I always feel that as long as I know that the price I am quoting to them is honest and justified, and they still don't go for it because they want something "cheaper", then let them have it. They are showing you their true character, and as a client they would probably try and nickle and dime you at every turn....thanks but no thanks. I would rather work for a client that sees the quality/value in my work, and is willing to pay me appropriately for it. You should never need to sell yourself short, because if you do it to yourself then everyone else is going to do it to you as well.

    adesignrsa: I also checked out your site...good luck with your new path, hope it works out for you.

    cheers,
    jonesy

  24. #24
    SitePoint Evangelist adesignrsa's Avatar
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    Thanks for the well wishes chanchito, and all the others for their input.

    Jonny, I agree with Dan. Well put!

    It's all really a pity in a way. Perhaps I will delve into active business as a website designer/developer for clients again in the future, but as like casbboy, I'll concentrate on my own sites for a bit and see how things go.

    The enquiries are still trickling in, and none of them are worth pursuing at this time. Budgets are <$x,xxx and the scope of the jobs are in line with Facebook, Youtube or "only" a CMS solution that rivals the NY times. People looking for eCommerce solutions integrated with their accounting packages in the $xxx price range.

    I'm considering creating a blog to educate creatives and clients on the dangers of lowballing, spec work and free pitching. Is anybody willing to assist me in this? It's not going to be for profit, but rather to educate. Well, PM me if you're keen.
    Ross Allchorn
    Web Consultant
    www.allchorn.com
    Twitter - @allchornr

  25. #25
    is craving 'the potato' slayerment's Avatar
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    It all comes down to marketing. Every business no matter what industry they're in needs to market itself and bring in new sales. This can be done a number of ways: value, word of mouth, networking, search engines, time, cold calls, door to door and any creative way you can come up with to reach out to people. The more people you have wanting sites the more you can charge. If you're not able to charge what you want to charge then you need to increase your value or marketing somehow.

    You're no different than the thousands of other web designers out there. Nobody cares about you until you give them a reason to care about you. Differentiate yourself from everyone else who just goes around on freelance sites lowballing. Physically walk into companies, email people samples of a design on their site, prove to people that you are the right fit for them. Find ways to gain their trust and increase their revenue.

    However...

    I agree with casbboy about building your own sites. I have been a fan of that for years and it has proven itself as extremely successful for me. I guess it somewhat depends on your strengths, but if you have a bit of business sense and can assemble what you need to create your own properties you can totally step on to the other side and dominate by using the positive aspects of the web, such as automation, 24/7 store/service, technology as your employee, etc.

    I started out as a designer myself and did pretty well with that, but through building lots of sites and exploring business was led down the path of development and ultimately marketing. It just hurt every time I would build a site for a client only to watch them make way more money than they paid me.

    It started out with me building sites for conventional businesses that wanted a brochure site to talk about their company. Then you start working with the people looking for affiliate and ecommerce sites. You see what they're doing, realize that you were a huge piece to their success and you finally break free and do it on your own.

    It is my view that the Internet is just too badass to only be a designer. It's not that being a designer is bad, and if that is your passion you should stick with it and you WILL do well. It's just that money and service jobs are generally not directly related and sometimes you have to step outside your comfort zone if you want to enter a higher level of earnings.

    I hope that is somewhat on topic.


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