Ten chefs craft a sandwich each. The patron chooses one and pays that chef. The rest throw their sandwiches out and go home. This is crowdsourcing.
Today we’re talking about the downfalls of services like Fiverr and 99Designs. More specifically, we are going to talk about the hidden costs of these services. Their main draw is their low price tag. I think these days most of us have pretty good radar for things that are too good to be true.
It’s not very fair of us to pick on just the downsides though. That would be downright biased (full disclosure though, I may have a slight bias). Let’s see what both of these services are and if they might actually be right for your business. Nothing is ever black and white after all.
Logo design is our thing, so we are going to focus on those services. We know it best and it makes it easier for us to analyze. These sites, and many like it, do offer other design services, however. The same principles will apply.
How it works
- A new business or Joe Schmo who needs a logo for some stickers arrives on the 99designs website.
- They write up a bit of a creative brief and follow some of the prompts and questions the website provides. They are information gathering. The more Joe can provide to designers the better.
- They pick which package they’d like: Bronze (C$399), Silver (C$699), Gold (C$1099), or Platinum (C$1799).
- From there they launch their contest and 30 to 90 designs are created by designers from around the World. The bigger the package, the more designs they can expect.
- Joe then selects the design he likes and the prize money is paid to the winning designer
This is the model of crowdsourcing, whether it be 99Designs or 99Poems. They will pay the one person that can solve their client’s problem to their best liking.
I’ve actually missed the final step in how it works though. There is a money back guarantee if Joe Schmo doesn’t find anything he likes. This means no one gets paid.
I’m going to be honest. I struggle looking for the upshot for any new business to use a crowdsourcing platform, but it is risk free and they offer a ton of options to choose from.
On their landing page their stats say they have 364,571 happy customers and 1.3 million talented designers. That makes for just shy of 940,000 unhappy designers who did not win a contest.
This is where the hidden costs start to show up regardless of the package chosen.
In our sandwich analogy, 10 chefs made sandwiches. Giving the benefit of the doubt, let’s assume they are all experienced well trained chefs. They are all well aware that only one sandwich will be chosen and paid for.
Just next door there are five other sandwich contests happening simultaneously.
The chefs have a 10% chance of winning one contest. It stands to reason they would hedge their bets by taking on five more contests to increase their odds of winning. Do they make the same sandwich for every contest? They simply won’t have time to properly tailor every sandwich even if they tried.
Let’s not forget there is a money back guarantee. So actually their odds of winning could be substantially less than 10% depending on the customer running the contest. How does that affect their motivation to do their best?
The model simply isn’t built for the best work to rise to the top because there is so much wastage and uncertainty. At 99Designs, 940,000 designers have not been paid and I can’t imagine anyone giving it their all if only 28% of designers are being paid (assuming one person is paid, and there are no duplicate winners).
For your business, this is where the hidden cost comes in. What comes out of a contest will be closer to a piece of art that fits a design brief only to the degree the designer is willing to put the effort in. That can be the case for all designers, but there is a greater incentive for contest designers to enter as many contests as possible. Their focus is split and they may not be motivated to provide the best solution if they think they won’t get paid.
Can we assume that designers will put in the amount of effort equal to their odds of being paid? Project to project, 99Designs states they expect 60 designs (sometimes 90), which means the odds of a designer winning is only 1.7%. 60 designers will create logos that are basically $30 in value based on the Premium Package costing $1799.
Designers putting in the enough effort to win (which we calculated earlier, accounting for only designers that have won in total) will create a logo of approximately 28% of the total value. This means the designer that wins will aim to create a logo worth just $504.
No matter what way 99Designs slices it, the customer is never getting the full value of what they’ve paid for. At best it is about one third.
What a business is left with is something they might like the look of, but does not function as well as it could as logo. They only ever receive a design that is the value of just a fraction of the cost. It will affect brand image one way or another and foreseeably in a negative way in regards to sales—the hidden cost.
How it works
- Joe Schmo ends up on Fiverr looking for a logo for his business
- He surfs through all the designers that are offering logo design services. Many of the services have a starting price of $5 ($C6.60). The highest rate I saw was about $C260.
- Typically there are three different package levels to pick from: Basic, Standard, and Premium. Just below is a screenshot of the typical price range grid.
- From there Joe chooses the package that bests fits him and there may be a small creative brief to fill out.
- Every gig has different time frames and is dependant on the package. Typical turn around looks to be between one and two days.
So far, this is already looking better than the crowdsourcing route. Designers have the opportunity to set their own price and if hired, in all likelihood they will be paid. If all Joe needed was a basic logo for his running club, this would certainly do the trick.
Things you need to watch out for is package 1. In virtually every gig I checked, package 1 does not include the most important thing you need once you have a logo designed: the vector file.
Every logo designer should provide you with the vector format version of your logo. This is essentially the format that will allow you to use your logo everywhere. I will go as far to say that there is no point in having a logo designed if you can’t get this one file. For Fiverr that means you will most certainly need at least package 2.
High resolution, logo transparency, 3D mock up, and even source file can all be done without if you have the vector file.
What I like about Fiverr is that the designer definitely gets paid. That means if they are worth their salt, they will be bound to provide at least something equal to the value a client pays. A $5 logo should be worth at least $5.
If a customer needs someone to simply drive the mouse, Fiverr could be an option. I pulled this review from a happy client.
Problems do not get solved from very vague descriptions. What it sounds like happened is the user provided an image or sketch of what they wanted and the designer created it.
And there’s the rub. The cost is so low that the designer didn’t even care to ask more questions. They took the order and executed, removing the whole reason someone would hire a designer in the first place: their expertise.
Looking back at their package information, does it not seem at all interesting that the Premium package has a shorter turnaround time? They are offering more concepts and more revisions but in less time. That means they are going to spend less time on every concept when a client spends more money.
I think that underscores what it takes to succeed at Fiverr. Designers have to have the fastest turnaround times at the cost of providing the best solutions. They are in a marketplace where users will compare their service the same way they do microwave dinners. Whatever is fastest and cheapest wins.
Consider the minimum wage in British Columbia to be $10.85 as of writing this. The recommended package suggests a designer will spend 6 hours based on this rate. Would you hinge the success or failure of your business on the time equivalent to a part-time shift at McDonalds?
Like 99Designs, this is where the hidden cost lies. You can’t see it and it may not be realized for years. Brand image should be protected and cultivated. Cheap logos look good on paper (or maybe they don’t). What you get from these services are not complete solutions and sometimes are not solutions at all.
The budget may be tight. That’s understandable. My recommendation would be to find a student designer that will give you their full attention and pay them what you would have on 99Designs. They will at least be bound to give you their full value. If it’s a really tight budget, Fiverr is still a temporary option. Give your business a 6 month run to prove itself and then invest in a designer that can help you build something for the long term success.