Designers are confident fees will increase over the coming years, but, asks Chris Cox, will they be working harder for their money?
According to the latest figures, the recession hasn’t stopped the design industry growing. Its overall turnover has increased by around £3.4bn since 2005, while 40% of design businesses are reporting that their fee rates have climbed over the past three years. It seems like the recession has bitten, but perhaps not as hard as many expected.
But what is most surprising is that despite commentators warning that businesses now simply have less money to spend on creative services, designers remain bullish about their future growth prospects.
Work is exciting because clients are more willing to take risks, but shorter project times mean they are paying smaller fees
In the UK, 78% of consultancies earn less than £500,000 per year, 85% of freelances earn less than £100,000 a year and one in every five in-house teams has a budget of more than £1m. Around 60% of consultancies and freelances say they expect their fee rates to rise over the next three years.
Wally Olins, Chairman of Saffron Brand Consultants, typifies this confidence. Olins says that the recession caused slumps in every market, but in the last quarter of 2009 he saw a dramatic upturn. ‘People who’d been delaying for months and months seemed to decide that they couldn’t wait any longer,’ he says. ‘The next 12 months are going to be a consolidation period, but business is slowly coming back.’
Olins is confident that design will not just recover, but thrive. ‘Some markets will pick up faster than others, but broadly speaking it looks like we’ll be back to the same levels of growth that we saw when we first started business nine years ago.’ During this period, Saffron has seen 20% growth year on year, he says.
Jim Thompson, of retail and branding group 20/20, says the consultancy’s fees have increased over the last three years, but are not as high as they were six years ago. ‘There was a huge drop in the market value of design in around 2004,’ he explains. Thompson points out that the drop in value wasn’t recession-driven. Instead it was caused partly by the diminishing life span of design projects – for example, brands once lasted a decade, but are now refreshed every few years – and partly because there is simply so much more design being offered around the globe.
For some this has been a mixed blessing. ‘The work has been exciting because clients are more willing to take risks,’ says Thompson. ‘But it also means they are paying smaller fees.’ Thompson says that 20/20 has responded to these lower rates by doing more for clients, digging deeper into their needs to get a bigger bite of their marketing budgets. This has resulted in them pushing their strategic advice as a stand alone offer, for example, or offering web design as part of communications projects.
This approach does have the benefit of deepening designers’ relationships with clients. Nick Talbot, Director at Seymour Powell, says the consultancy has responded to increasing competition and tighter budgets by expanding its offer to include a whole series of connected services. These span research, strategy and ‘pure’ innovation services.
While rates might not be rocketing, these broader approaches appear to be prompting companies to spend on design across different parts of their business, which for designers means more money coming in. With clients buying design in new ways, the trick seems to be in providing them with a ‘joined up’ approach.
According to Thompson, the biggest issue remains meeting the needs of clients who are competing for increasingly sophisticated consumers. ‘Good design has become part of consumers’ expectations, so demand is not going to disappear,’ he says. ‘The challenge is coming up with the ideas that help clients differentiate themselves.’