Every day I go on some online marketplace where I bid on projects. This is one my marketing activities that complements my reaching out to prospects directly. It is a crazy place - this marketplace, let me tell you. People bid there $500 for a $5,000 dollar project. It makes me think how can I ever get any project with my prices. With hours I will spend, $500 or even $1,000 won't even pay my rent and expenses. So I started to check other design companies and agencies for what they are charging, and to my surprise, they were charging 2 times more than me on average. At this point I started to think about value and what does a $500 provider lack in his offering and that I provide to a client.
First, these $500 offers are made by either freelancers whose livelihood doesn't depend on this income and who's commitment to project is generally very low or they are made by companies that are not in US or anywhere in developed world for that matter. The freelancer is thinking "I'll make some money today, it's better than nothing but tomorrow when I get a real job, the client can find somebody else". I hear experts say how we are moving to freelancer economy where companies will be hiring 90% freelancers and only pay for clear deliverables in a worldwide competitive market. How about guarantees of timelines, delivery, and budget? I don't think so. The other $500 group are offshore companies where they can hire at rates where I can't even go. My government won't allow me even though it allows companies from foreign countries. On top, they don't have to pay any tax i US. Great job protecting US worker! Anyhow, back to value. A foreign company may have trouble understanding your work standards. Monday means Monday and that is not Friday. It costs money to check same things over and over and report that it is still not being fixed. Finally, why do we even think that professional education quality in "i won't name anyone" is same as in the US.
Second, this search for bottom price creates another problem. Unhappy with providers and dealing with uncommitted freelancers, companies cycle through many developers working on same software. Each usually messes it up a bit more while taking shortcuts in order to make some profit and not worrying about the long term. A clear series of hit and run cases. It takes only 2 or 3 and software can be already rendered completely unmaintainable. I had a project once with software like this and after a while I had to recommend to client that it would be better if we bite the bullet and rewrite the software because the time to add or fix anything, due to the state the software is in, is 10x longer than it would be if software was in a normal maintainable shape. She didn't want to hear it, I recommended somebody else, and I don't know how it ended for her and her business but probably not very well.
Saving today can cost you a lot more in the future. In addition there is the whole legal aspect to the digital creations. A US company serving US client is governed by US laws. Most foreign companies bidding on the Internet are not. Copyrights are clean and belong to client when you deal with local providers. There are guarantees in place! Savvy business people know that. They don't want to risk their business for a few dollars of saving when the stakes are usually 100 or 1000 times bigger.
Perhaps the best argument why the rates are as they are is that US companies are in competition with each other. This keeps rates in check. If you're still asking why does someone charge $5000 when another will do it for $500 then you probably still don't understand value of our service. Read it again and God bless you and your business.
