$200

Design Discussions general design discussion
21

as a student in school, that offer at first made me look twice, then realized what was going on. I think that in school they teach us to be hungry and warn us about how hard it is to have a career in design. They tell us to enter contests,do internships, do freelance and on all the walls around the school there are posters for contests and prizes. so this seems like a great thing, and especially with money attached to it.

I think that there is a lot that isnt taught about in school about these traps or just “reading the fine print”. I am sure that this contest does exactly what we are not and that is have people enter. i am sure that thousands of students will enter and work really hard on it, thinking of all the benefits and how good it would look on a resume/.

how do we stop this from happening? I am not sure that we can, other than speak out and inform others.

22

is it possible the competition is only open to designers of czech or slovakian nationality?

check the rules out

http://www.transfurniture.it/eng/regolamento.php

23

ah, thats it! $200 is about the average monthly sallary of a Slovak

24

is this a test? :wink:

(wrong comp, NBS)

25

Those watches look a lot like the items being sold at the kiosks in the mall for around $10CDN. In fact, some of them look exactly like that. Not only are these watches cheap, they look cheap.

They will get their “design” for the specified rate, but it will also be a “cheap” quick design. Why should anyone with a great design sell it to these mfg for so little, especially if no royalties or other remuneration is forthcoming.

But that is the difference between Oris and Guvana. A premium watch does not just tell time, it tells about it’s owner. I have one or two of these watches for when I’m cycling (mountain, recumbent etc.). One crash and it’s gone. I’m not crying, except for the injury.

It is just price points, folks. $1000 gets you a cheap design for a cheap product. More gets you a better design for a higher tax bracket.

Are we cheapening the business? The products being sold at the kiosk say otherwise.

:)ensen.

26

i think it does cheapen the ID profession. issue isn’t Price Point imo. that argument translates into designer styling a Ferrari is worth more than designer developing an obviously lower-quality low-cost world car for the masses. so it sets up a designer class system (which we kind of have already). even though low-cost world car would require greater design skill, that designer would be low-class. his design is only worth a couple hundred. pay the Ferrari stylist more bc the product has higher price tag. made w better materials. aso.

argument ignores Volume. if the world car sells a ton, it’ll make more money. WM taught everyone: Volume Rules.

Guvana is a Volume player. they make plenty of money i bet. and nothing makes their rich shareholders happier than arguments saying what the rest of us do is “unimportant”. fine. call it unimportant. just give us our fair share of the profit.

27

Hmmm… as I understand your reasoning, the cost of the design doesn’t figure into the final cost of the product?

But before I go further, let me first say that I’m not condoning the proposed payment. In fact, I wouldn’t do the work for that. That’s like saying I could do the job in half a day at a billable rate of $50. Granted, I’m a staff designer that makes less than $50/hour (I won’t elaborate beyond that) but as a consultant my fees would certainly be more.

But the cost of the design must figure into the overall cost of the product, as does shipping, materials, employee benefits, local bribes and just about everything else that a “company” must deal with.

Selling it for $10CDN means that is landed for $5 or less, wholesaled for $2.50 and sold by the mfg for $1.25CDN (or about 99 cents US!).

If we figure that Guvana sells 12 million watches annually and has about 100 designs in their product line, that’s about 120,000 units annually for the one design. If we figure a healthy margin of 30% for the watch, that works out to base mfg cost of around 70 cents US. Generally materials and labour are around 3/4 of the cost leaving us with 23 cents. Overhead is typically 15% so we are left with 12.5 cents. If the owners skim off 5%, we have 9 cents. For 120,000 units, that is $10,800 USD. From that we subtract tooling and startup costs of around $10,000 (which is cheap!) and we are left with $800.

That’s what they should be giving away for the design. And even then, I wouldn’t do it, unless it only took me a day to design.

My reason that this doesn’t cheapen the field is that no matter how well or beautiful the design, it would not be possible to make it for a dollar without taking shortcuts in the mfg or materials. The resulting product doesn’t look like a designer worked on it. It just looks cheaply made… which it is.

:)ensen.

PS: Can you tell that I spend more time doing paperwork than design!

28

i see some problems w your figures. and problems with logic at conclusion. rather than detail now, just contacted marketing bud at big watch company. said he’d call back this evening. i’ll pass on some details then.

29

blown off. maybe i’ll still hear. the Landed Cost ratio surprised me. in low-margin goods i’ve worked on (eg small appliances), ratio of factory cost to retail is usually 5-to-1. Landed does not double. that seems odd to me. would like more info.

but wrt the numbers, try using this equation for Margin:

Margin = (Sale Price - Manufacturing Cost)/Manufacturing Cost)

a $0.70 manufacturing cost and $0.99 sale price means 41% margin. redo numbers and you dont get $10,800 USD. you get $4560 [edit - number still wrong. left out an unknown expense.]

(btw, that leftover at end isnt scraps for ID. company doesnt go bankrupt. its math leftover. it should be $0.00 if everything properly deducted.)

logic issue: if your $800 goes to ID consultanting fee, how do Advertising Firms and Legal Consultants get paid? they all share from the $800? and w revised numbers maybe they all pay for privelege to help out!

those fees are built in to product cost (to answer original question). usually called Fixed Costs. part of the overhead (your 15%). the lawyers get their money. so why not ID?

30

You are right about fixed costs, overhead and “remainder” being shared by all the consultants and professions involved in getting the object to the factory floor. That could be why the prize money is so much less than my guess.

As to the numbers, we’re all just guessing about costs. Retail/mfg ratio as shown is 8:1, but I’m trying to take into account that there may be more than 3 levels before the consumer and people skimming their “percentage” at each FOB point.

Who knows, maybe that watch is made for even less than 50 cents, which puts the premium on a Breitling into serious question. I’ve even read somewhere than most under-25’s don’t even have a watch, preferring to use their cell phone for time-keeping. At school, I remember one guy who said that everyone else had a watch, so it was cheaper and more social to just ask for the time.

I don’t think competitions like this cheapen design. I think fashion cheapens design, in that the only incentive to buy a “designer” product is to be fashionable. Fashion often creates demand without offering better design. Blame Pierre Cardin and Ralph Lauren. Even ID’ers have some fault in this. For example, the Starck juicer could also be re-designed in plastic for the masses. It would work just as well and be just as beautiful if Brita molded it in a clear polycarbonate.

:)ensen.

PS: As for margin, I think we will have to disagree. I a familiar with it as the portion of the price that is profit. Margin = (Price-cost)/Price. Thus margin never tops 100% and in practice only approaches it. I understand that the reason for using it is that it is becomes possible to estimate profit directly from revenues, provided margins are fairly constant over the product line. The most outrageous margin I’ve ever seen was something like 85%, making the mark-up something like 650%!

In retail, 50% margin is typical since real estate is such a huge part of the game. At the factory, 30% is a very good margin. I’ve seen margins as low as 15% or the equivalent of distibuting our $0.70 watch at 82 cents!

31

“You are right about fixed costs, overhead and “remainder” being shared by all the consultants and professions involved…”

odd then you devalue ID before devaluing other consultants.

“As to the numbers, we’re all just guessing about costs.”

yes. we are guessing. which is why that exercise was only an exercise. what REALLY didnt make sense was leaving meaningless mathematical scraps from guesswork to pay designers. like dogs waiting for dinner scraps. how demeaning.

“Retail/mfg ratio as shown is 8:1, but I’m trying to take into account that there may be more than 3 levels before the consumer and people skimming their “percentage” at each FOB point.”

poor assumption imo. Guvana is international supplier. now handle Casio account. more likely there are fewer rather than more layers in their own products. either way thats healthy ratio. i’ve worked w 3:1. there’s enough $$$ to go around. so IDers should not be treated like sh*t.

“Who knows, maybe that watch is made for even less than 50 cents”

who cares. if companies can expense CEO’s 5-figure annual membership fee to country club, ID should get enough to make a living. doesnt seem unreasonable.

“I don’t think competitions like this cheapen design.”

semantics. we’re discussing design profession and proper renumeration. and would disagree “fashion cheapens design”. blanket statement.

“PS: As for margin, I think we will have to disagree. I a familiar with it as the portion of the price that is profit. Margin = (Price-cost)/Price. Thus margin never tops 100% and in practice only approaches it.”

not disagreeing on definition. i actually suggested you use Mark-up equation for your “Margin”. bc we ARE disagreeing on how Guvana probly operates. neither calculation is worth a damn. bc ID just doesnt get paid this way.

32

I don’t think the idea, necessarily, is that $200 isn’t worth entering a contest for. I think the idea is that any design that you submit becomes their property, and if they decide to use it (1 million pieces per month, remember), you only get $200. Kind of a shallow payment for something like that.

33

something marketer told me thought i’d share:

Points

example: Retailer says “we want 50 points”. according to source this would be -

Cost * 1.5 = Retail Price (eg $5 Cost * 1.5 = $7.50)

but if Manufacturer says “we want 50 points” it would be -

Cost/.5 = Wholesale Price (eg $5 Cost/0.5 = $10.00)

and definition can vary from company to company.

34

@Arclight - could be double. his and hers versions.

35

This is a great thread. Back to the basics.

The issue is very timely: what is the role of design in commodity goods?

This reminds me of something disturbing I read in the latest Wired. Something to the effect of DELL (The Great Commoditizer) laughing at the “wasted R&D” expenditures of competitors like Sony. Logic being that DELL doesn’t innovate, but it’s the market leader regardless.

36

[Boston Legal withdrawal tonight]

@CG - article from last Fall i thought was interesting: Seed of Apple. is Dell headed by a salesman?

37

still trying to get more numbers info (sometimes good to think more about the Business end). but noticed something. ratio i learned is Retail Price to Factory Cost. not Factory Price. just an fyi.

38

Yes… very good discussion. I would be curious to see what real numbers you dig up ykh.

No not devaluing ID, just pointing out that ID is already devalued by the current models. My own personal response is to refuse any work that I believe devalues me… except my day job. That’s just survival, unfortunately.

So the questions remain… how to prevent the devaluation of our currency? And how to change the business model to make design from merely desirable to integral.

Anyway, going on holiday so may not post for up to two weeks. But, since Core is addicting, never say never. I guess the day job is not so bad if they let me go away for a few days here and there.

:)ensen.

39

“I would be curious to see what real numbers you dig up ykh.”

still getting blown off. hate to bother. looks like i’m hunting work.

“No not devaluing ID, just pointing out that ID is already devalued by the current models.”

i missed how that example points this out.

“So the questions remain… how to prevent the devaluation of our currency? And how to change the business model to make design from merely desirable to integral.”

million dollar question.