Undercutting the Market

[Jeff Mottle]

I recently heard of somebody who was giving renderings away for free to get clients hooked then only charging a few hundred dollars for a rendering once they are hooked. It just really pisses me off to hear that people are undercutting the market and diminishing it to something that essentially pays less than a McDonalds cashier!

 

Not that I evenr intend to cut my rates to compete, but I just hope that clients are smart enough to figure out that you get what you pay for.

 

Just curious what others have to say about this practice.

[Ernest Burden III]

What can you do?

 

And who do you blame more--the renderer or the 'client' who is willing to go along with the charade? I would blame the client. Are they 'passing on the savings' to their client? Some buyers of renderings ARE the final client, but few are, most are architects working for an owner, developer or public entity. I really doubt that most _final_ clients would be swayed by such tactics, because they see the financial value of visualization. If they didn't, they wouldn't be buying them in the first place.

 

That renderer has an odd business model. Once they get to the point of actually charging, they could also go with a 'no money down, no interest and no payments until 2004' scheme. Do they really value clients who only hired them because they were free/cheap?

 

I remember when I was first starting out in rendering, and knew that I could not justify charging what experienced renderers got, so I asked less (though not THAT much less). I still lost projects to other renderers. Clients wanted the skills and demonstrated performance of established renderers. But they gave me smaller projects to see what I could do and how responsible I was. When I had proven myself they paid me pretty much what everybody was charging for renderings.

 

This was covered in a recent thread under another heading 'Pricing' I think it was.

 

But, in the end, what'a'ya'gonna'do'bout'it? Make your own work worth what you charge.

 

Ernest Burden III

[STRAT]

well, we dont do specific 3d work for clients, or bid for jobs this way. being a big firm we give 3d into most contract as an added bonus to the client, but all costed within the budget.

 

i must say tho, in the first 3d architectural firm i worked for there was only 3 of us there bidding for work. and we did undercut, give free renderings and do dirt cheap jobs just to get in a client and his hopeful future work.

 

it does sound a bastard thing to do to your competitors, but in the market place, and especially with the economy as tight as it was at the time, and considering we had mortgages/rents/rates and wages to pay on a day to day bases, we found it the most viable option.

 

as i say, our firm doesn't do business like this anymore because we're big enough not to worry, but for the smaller firms who survive week to week (like we did) it's a dog eat dog world me thinks. unfortunate, but thats business.

[quizzy]

Hey jeff,

 

Did you also get an e-mail from a dutch architect yesterday?? Because this is where I stumbled on yesterday:

 

A dutch architect e-mailed a lot of architect agencies in the netherlands that he could make 3d images for a very low price. How he did it? Well due to family connections he knows some people in Indonesia that make those 3d images.. Here is thier URL: http://www.kasanmoentalib-architecten.com/new/buro/3D%20presentaties

 

Its all in dutch but hey... you'll get the picture. They are offering standard prices for two type's of projects. Its between EUR 400 and EUR 800, wich is about the same in US-DOLLARS

 

Well, this is something i find very disturbing, 800US dollar is allmost a year's salary in Indonesia. But seeing those pictures on their site, I think I could do that kind of rendering in much less time/money.

 

But what to do about this?? I think we should make everybody (the clients) aware of the quality we can offer and I also think that clients don't want to be ascosiated with small companies that use illegal software, cause in most small companies this is the case.

[Ernest Burden III]

Originally posted by quizzy:

A dutch architect...knows some people in Indonesia that make those 3d images..

I also think that clients don't want to be ascosiated with small companies that use illegal software, cause in most small companies this is the case.

Also there is an issue with labor laws (or lack there-of) in countries that are able to offer labor virually free. What a surprise.

 

I doubt it's worth the time to file a complaint, but importing underpriced goods to hurt a market is an issue in many countries. You COULD complain about unfair trade practices to whatever government agency monitors that.

 

The easier thing is to ignore it and just earn a living.

 

Ernest Burden III

[Jeff Mottle]

Hey Quizzy,

 

Nope didn't get this email, but interesting none the less. No the individual I was referring to in my own backyard.

 

I love your comment about the no payments until 2004 Ernest. It wouldn't surprise me if this wingnut uses that as his next marketing scheme.

[nisus]

Hi all,

 

Undercharging is a strange issue: from one point of view one could be afraid of clients rushing to competitors, but imho this is not a real issue

because these cheap guys will eventually start charging more -they too have bills to pay-

which will piss off clients who used to have a good deal... so no prob! Add an additional imago-problem (a bad name) to these lads/firms and we're save

 

On the other hand there will of course always be a new & younger firm charging less, but on big projects clients need trust so they'll turn to an established firm and won't take the risk of losing their deal because of possible savings.

These clients can save on less important projects and from a visualisers view this is a wonderful opportunity to learn (cfr. to Ernests post)

 

Best way is to do your thing, and make sure you deliver value for your price. A good tip: know your market (3times!)

- price / product

- your target audience

- your competitors

 

Another thought on Quizzy's post: These things have been going on for a while know. Few years ago my boss used to let make his renderings in poland, because it was much cheaper. Right now, he comes to us because - although at a higher price - he can make adjustments, sit next to the artist etc. Clients need personal contact and trust. (Check a former post from Ernest on this topic too)

 

To extend your surprise: We even had an offer from a guy in Thailand (I think) to do cheap renderings for us. We would receive a fee for every rendering done by them... Of course we neglected this offer, because who wants 10% of a very very cheap render that is not like you want it to be...

 

So these things do exist... and you could try to go after them, but I think it's better to profile yourself and put all your energy in your own vision.

 

rgds

 

nisus

[mbr]

I've gotten offers from people in India, Thailand, and somewhere else... Some of there work was of decent quality, but I would never send off work without knowing the person at all, etc., etc. Obviously the fees were really low.

A recent client typically used a client in Mexico to save costs. I did lower my estimate (although it wasn't a huge reduction) in an attempt to be somewhat competitive. He has much work and requires renderings for all of it. The rendering was done in 2 days, with very little to go off of. It won him the project (to develop the entire site). I'll letcha all know if he calls back. It's always a gamble.

[John Dollus]

Getting in really late on this one

 

Jeff: I wouldn't worry too much about the new competition. Places like that do not last long. We have a big problem with software pirates around here giving stuff away, but they end up going away shortly thereafter.

Clients will appreciate your work ethic and product even more after using someone like that just once.

 

John D

[Brian Cassil]

This is really not all that unlike what has happened in the buisness of Architecture itself. For quite a while now there have been LOTS of Architects willing to charge a lesser fee in order to get a certain project. It has not only hurt the proffession, but because of lowered fees, Architects have to hurry through schematic design in order to compensate, which has resulted in a lot of crappy architecture.

 

Nowadays you have to establish your firm as a "design firm" in order to justify fees that used to be ordinary for everyone. Of course, in those days, most architects were capable of better design.

 

The whole thing has gone to hell in a handbasket as far as I'm concerned and its a big reason why I'm an illustrator now instead of an architect. In my opinion the AIA should have revoked architects membership for doing such things, but since when has the AIA cared about its members. We of course do not have an organization to refer to (btw, is that topic still alive with anyone else?) but we have to stick to our guns or we will all suffer the same fate as architects.

[Jeff Mottle]

Very interesting observations there Brian. So maybe sheeding some light on the industry by cross sectioning our market by means of the survey I have propsed would be a good start. Would also be interesting to have an orginaization that could overlook and control pricing and quality etc of members, but that sure sounds a lot like a union to me. Even if it started out with good intentions, I have a funny feeling that it would wind up in corruption with time. Have you ever heard of an organization of ths nature that has not gone south? I am curious.

[nisus]

Hi all,

 

The same story that Brian describes happened in Belgium. The OA (Order of Architects) has still not succeeded to set fixed rates for architect yet! It gives some guidelines for pricings that people should follow. To be honest, I don't know any architect who could charge this much. Most architects that I know only charge 1/5th of what the OA describes! Architectural draftsman working at home earn about twice the amount an architect does...

We got a kind of ratio on a work which is about 7-10% of building costs, unfortunately court has dediced that architects charging 0.5% can continue to ask that less. The result of this is horrible: most architects now can not even earn the 1/5th the OA fevers...

 

rgds

 

nisus

 

[ September 11, 2002, 08:51 AM: Message edited by: nisus ]

[Brian Cassil]

I'm not a big fan of unions either because any that I have known don't really serve thier members, they usually just charge expensive fees and then fight amungst themselves over who gets to be in charge.

 

This is really getting off on another topic but in my experience, the best way to keep corruption out of an organization is to keep the money out. Let those who serve in any capacity be volunteers only! Fees and dues would be very small and the funds would go to cover just the expenses. I realize there are corrupt organizations like this as well but I think that can be avoided if the members care enough to not let it happen.

 

I'm not saying this is necessarily the answer, but I don't really see how an organization of some kind would hurt. At the very least it would be fun to have more interaction with the kind of people I met at siggraph!

 

[ September 11, 2002, 09:04 AM: Message edited by: Brian Cassil ]

[kid]

I think I may have just undercut the market.

I quoted 10 pounds an hour for photoreal illustrations.

 

Mind you, it is for a non-profit aid organisation and I've estimated 1200-1500 hours are required

[Christopher Nichols]

There is a bit of "You get what you pay for..." no? I mean quizzy... those renders look like crap... Sure they are cheap, but still. Quick hand sketch looks better than that lego images. BTW, do they not teach architects to sketch anymore? Then, there is the question of reliability. Are you willing to take the risk?

 

I while back, I was looking into getting lasik surgery for my eyes. I found that the price for having the surgery varied by a lot... From 1500 an eye to 6000 an eye. This was a while ago, so the prices may be different. What was the difference in price? Experience of the doctor. I also found that experience had a lot to do with something going wrong... By a lot.

[alexg]

Nelson

 

$300 is way too cheap, I say push it up to a four-digit number.

[thinice]

The only way to deal with this is to educate the client.

 

For any serious project,the rendering cost is a minuscule percentage of the big picture. No renderer can give a consistently quality service if the rate is too low. Unlike architects, renderers cannot hope to land the "big one" , so there is really no point in working below cost.

 

You must communicate to the clients that to go to an unproven below cost renderer is like:

 

1. Getting to an unknown guy without proper equipment or reputation to repaint your ferrari.

2. Imagine the cost to them if the rendering is not accurate or not delivered on time.

3. Imagine the cost of managing somebody who is not professional or cluelesss in their work practice. Anybody can show nice renders. How many can actually do them to specification and on time.

 

If the client cannot be swayed by these arguments (I know many that fits this bill), then just walk away. You are better off spending your time on the other clients.

 

The other trick by clients is using these people to force you to lower your price." we like you to do it but look at these prices".

 

I just smile and say something to the effect, "maybe you should try them on that critical project of yours"

[rpc212]

Clearly people/companies that undercut don't value their own services enough to charge a proper price. When companies/people undercut they are damaging themselves and the industry as a whole as now clients will expect a certain rate for a certain product. Of course these companies/people can't provide the level of detailed renderings that we can as true professionals. If the client wants to risk their project, go ahead. We can't stop them, but rather inform them, like others have said, that their projects will suffer and eventually they will come back to a professional for a level of service and quality of product that only a real-world economically feesable price is going to pay for. Our companies cost money to run, we have to eat and need to save for retirerment. If a client can't understand that then as far as I am concerned they can bugger off!

 

I like to follow the Graphics Artists Guild rules of pricing and ethical guidelines. I think the whole industry would be better for it if all followed them; and yes they are a union and I have no problem with that because they provide a professional group of like minded artist's that are working to keep our industry at a profitable level through their guidelines that reflect a profesional business attitude rather than a "fly-by-night" one.

 

Just my 2 cents.

 

rpc212

[Justin Hunt]

A while ago we decided to use an off-shore rendering firm. Their protfolio was good. They are well known. Unfortunatly at the time we did not understand how they operated. We would give the information to a local contact, who would then send it onto the visualizers in China. They would do the work and two days later we would have some images to comment on. Those comments would go back to the local contact and then off to China, and so on.

 

The problem was the communication. Our comments were not interperated or implemented propely. China would do thier own thing, complain that there were too many changes and threatend to charge for more changes. What started out as a 1 week project turned into a 2 month fiasco and us firing the China company and paying our usual guy to redo the work. We have never used them or an off-shore company again. Once burnt, twice shy.

 

The reason for using them in the first place was our client like their price and our usual guy wasn't available. In the end the client paid twice as much. That Visualisation company inturn has lost alot potential of work from us. As far as they are concerned, there are alot of other architects out there who will put up with their crap. They are right, they have the work load to proove it.

 

When I give a quote it is fair and comparitive to the competition. I am willing to negotiate to a degree, but then I adjust what I am producing accordingly. I let the client known this, if he still isn't happy then I turn down the job. I will only go down a little in price before I reduce what I am going to produce. The way I see it, if I undercut then the only person I am directly hurting is myself, because next time the client will want it for even cheaper.

 

I have a few clients that I will give a cheaper rate to, only because they have been loyal, given me lots of work and paid ,me before or on time. Loyalty brings rewards.

 

JHV

Justin Hunt Visualisation

[alexg]

The biggest problem we have is similar with those of web design a couple years ago. We are dealing with global projects, with fees in regional currencies.

One region can slash off the others fees without much problem. China can charge 1/10 of their European competitor and can still live nicely with that sum.

 

A union / guild is a good answer, but how to get a union that can work worldwide?

[leoJones2002]

Quality will always speak for itself. If the client wants what these undercutting fleebies offers, then you probably dont want the job.

 

But, I do have to say, the world market is catching up and before long, it is very possible that high quality photoreal visualizations will be easily accessible. Software is becoming more user friendly. You no longer need to be a rocket scientist to do 3D graphics. so brace yourself. We may see more of this type.

[Sawyer]

Ultimatly you are responsible for yourself and your company. If you fail or mak it is based on what you do and how you price your work is a big part of that. Don't price your work on what other people are doing. Use it as a reference but price your work on what you need to do to survive. If you price a piece too low you may not be solvent to the end of the year. If you price too high you will be undercut regardless of the GAG recommendations. If it seems too confusing coming up with a price it may just be that you have not been doing this for very long because once you have been at it for a few years you know what your company needs to survive and what your work is worth to you. Your first priority is not to me or your competition it is to your company to make sure you can upgrade hardware/software, pay rent, utilities, get food, and your salary etc... Once you know that your company is working then you can push the envelope by raising price or cutting deals. My hunch is that many of the companies you see charging a fraction of what most people charge wont be doing business in Dec.

[Joel Gray]

It's interesting that no one has mentioned the impact of part-timers working in the evenings for supplemental income, or the college kid trying to earn some beer money. I've been in competition with people like that and as it was stated earlier, it's best to walk away. The client will learn their lesson soon enough.

This type of thing happens in many other markets and disciplines - ours is not unique, although it's still upsetting to see it happen.

[Sawyer]

It's interesting that no one has mentioned the impact of part-timers working in the evenings for supplemental income, or the college kid trying to earn some beer money.

 

 

I think thats a huge factor. Thats how I started. The thing with this is its not a permanent factor. People move on, drink better beer, and get really burned out working nights. But it is a factor.

[William Alexander]

A union / guild is a good answer, but how to get a union that can work worldwide?

 

www.pixelcorps.com

 

 

However it's much much more than ArchViz

 

WDA