My grandfather owned an auto repair shop in Cleveland, Ohio in the mid-20’s, during Prohibition. I’m told some of his best customers were bootleggers who needed their cars double-springed so they wouldn’t sink beneath the weight of the cases of illegal alcohol they were hauling, thereby arousing the suspicions of local enforcement.
Dad learned the automotive business from his father, and in particular, how to rebuild engines. During the mid-50’s, he worked in downtown Los Angeles at one of the largest production engine remanufacturing companies of the time. Yet, he always dreamed of being in business for himself. He and his brother made that dream a reality in 1965 when they started their own engine rebuilding business.
To do so, several hurdles had to be overcome. They needed a building. And equipment—expensive equipment, like crankshaft grinders, a boring bar, a value resurfacing machine, and large degreasing tanks to clean the engine blocks. They also had to stock the shelves with an inventory of parts. Then there was worker’s compensation insurance, sending their wives to work to help support the families until the business got off the ground, not to mention, a second mortgage on the house to finance the whole thing.
Compare that to opening a web business today, where you need a computer, some software, and 250 business cards from Vista Print for $3.99.
Low Barrier to Entry
Sixteen years ago, when I was first learning Photoshop, I became very excited over how quickly I was catching on. I remember gleefully thinking, “This is easy; anyone could do this.” Then came the thought: “Oh no. Anyone can do this …”
The same can be said for HTML, CSS, PHP, or any other technical skill in the web designer’s toolkit.
Today, what we do for a living is even taught in high school.
The bane of web development is that the barrier to entry has always been low. A Google search for ‘los angeles web designer’ yielded 6,820,000 results. Considering the population of Los Angeles is about four million, that means everyone in L.A. and his dog designs websites.
To quote Thomas Friedman from The World is Flat:
When everything is the same and supply is plentiful … clients have too many choices and no basis on which to make the right choice. And when that happens, you’re a commodity. You are vanilla.
In an article on Freelance Switch, freelance web designer Rita Lewis says that when this happens, the relationship between you and the client becomes reversed: the client dictates the cost and you wind up doing the work for that price.
There seems to be a basic disconnect between what is needed to earn a living as a freelancer and what clients seem to want (at least on these outsourcing sites) to pay. The disconnect goes even deeper. Suddenly a client can define all aspects of a job from price to design, causing the designer’s role to change from that of a professional to that of a technician.
Large companies can manage to differentiate themselves through advertising. Think of domain names and chances are Go Daddy comes to mind. When I think of hosting, I think of Rackspace—not because I use them, but because I see their ads all over the Internet.
Product innovation is another way. Gillette managed to out-sell the competition by adding a third blade to its razor and giving it a stylish name—the Mach 3.
But both of these are beyond the means of the average freelancer or small web firm. To make things worse, the very reason you went into business in the first place is compounding the problem. It’s your left-brained, technical skills that are making you a commodity.
And even though design is a right brain, creative process, this has also been commoditized by the proliferation of design templates, do-it-yourself site builder applications, and even WordPress themes.
According to Wikipedia, commoditization is the process by which goods and services that once had economic value and distinction end up becoming simple commodities in the eyes of the market or consumers.
It’s difficult to make the case that web design and development can be placed in the same category as traditional commodities like lumber or sand. Yet, web design can be a service sold as a commodity. Sure, you can claim that there’s a distinction between the service provided by different vendors. But that distinction is only important if the market thinks it’s important. Any differentiation the consumer doesn’t care about ceases to be one.
You see, it doesn’t matter if you and I refuse to believe our services are a commodity, or that we can make a sound argument as to why it’s not. If the market perceives there to be plenty of choices and little or no difference between them, then you and I are not Chunky Monkey or Cherry Garcia. We’re vanilla.
Next week: How to break out of the commoditization trap.
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Former owner and partner of web firm Jenesis Technologies, John is currently Director of Digital Strategy at Haines Local Search, a company providing local search marketing solutions to SMBs, including print and Internet Yellow Pages, web design, and local SEO. When not working or spending time with his family, John offers great sales and marketing advice on his blog, Small Business Marketing Sucks. When not working or spending time with his family, John offers great sales and marketing advice on his blog, Small Business Marketing Sucks.