Budgeting for Design

How much should design cost? Many small businesses reject design as a core business strategy because they think they can’t afford it. In particular, because it is an intangible, they have a hard time seeing value in the intangible.

Yet, it is the intangible that adds value to the tangible. In most cases, the tangible assets are fungible and commodities. There is nothing to distinguish them from others.

• Identity: .05-1% annual $
• Brand: .05-1% annual $
• Communications: .05-2% annual $
• Products/Services: 1-7% product $
• Experience: 1-2% annual $
• Interactive: .05-2% annual $
• Architecture: 5-15% of cost

This list shows the approximate investment for design. As is clear, it typically represents less than 1% of a year’s revenue, and in most cases, these are one time costs. Match that against any form of price reduction, and it’s amazing that a small business would choose lowering price to increase value, over increasing the perceived value of their business or offering.