The increasing commoditization of downmarket web development
To commoditize is the act of making a process, good or service easy to obtain by making it as uniform, plentiful and affordable as possible.
Wix, Squarespace, Weebly, Shopify, Wordpress, ect.
In the past few years the process of creating a simple website has become nearly completely commoditized. It is now trivially simple to get a very professional looking website deployed in an astonishingly small amount of time using various online website builders. In fact, more than ever when prospective clients contact me about creating a (small) website I end up simply recommending they sign up for Squarespace and do it themselves.
There is, of course, a very large subset of potential clients that wants things done for next to nothing - e.g. $200 is their budget and for that sum they want $5,000 worth of work done. Would you ever want to work with these clients? The answer is an unequivocal NO! However, being able to simply direct a low quality client to wix.com is very nice and ultimately gains you trust in the eyes of such a client.
When observed from this perspective the commoditization of web development is a wonderful thing in that it filters out clients that have no business (read: budget) in seeking out professional help. The question though, is does this also diminish the pool of high quality clients (read: clients with lots of money), and how will it affect freelancers? Additionally we should consider that on top of these highly sophisticated website-builder platforms, globalization is playing a larger and larger part in the low-end of the market.
The fact is, most people expect to pay very little for professional development services these days and it is hard to blame them with sites like Fiverr, and Upwork (formerly Odesk and Elance) where you can get professional services done for as little $5.00 a job or you can hire a dedicated professional in, say, Pakistan for $4.00 per hour. According to a recent Tribune article the average Pakistani makes about $1500 per year. A freelancer working 2000 hours per year (that is about 40 hours / week) would gross $8,000 at that rate, a huge premium above what the average worker brings in. Even at $10 per hour, that would be exceedingly cheap compared to a web developer in a western economy and many pay more than that for offshore talent. So you can see the draw to this kind of work and the kind of intense competition it can bring even at such low rates. If I was a native of Pakistan I would absolutely be doing offshore web development work, with that kind of pay premium!
Should anyone in a western economy do low-end freelance web development?
I believe, more than ever, the answer is NO! Even in great numbers it is impossible to compete with workers in a globalized service economy and highly sophisticated and polished website builders that have been funded by the recent bubble in venture capital.
So where is the money now?
You may think that there is great money in this for the platform owners, however even Shopify, arguably the best online shop builder at the time of writing this, and one that charges a substantial monthly subscription fee for the site owners must be wildly profitable. However, Shopify has not turned a profit since going public! Check it out:
So if even Shopify is not making money how are the even cheaper web platform owners doing? Let’s look at Wix.com - their plans are quite cheap at only $10-$15 a month for a reasonable amount of functionality.
Yes, Wix.com is losing money too, and they are losing it hand over fist in fact. In 2015 they lost $51 million dollars on $204 million dollars in revenue. They had only $149 million in assets and $153 million in liabilities at year end (2015). So even these online property builders are competing so aggressively with each other they are incurring huge losses. I can’t comment on Squarespace, as they are still private, but they seem to still be in the process of raising additional venture funding. I’m sure the picture is similar.
What should western economy freelancers do?
I believe that there will always be plenty of software work, but I don’t believe there will always be an abundance of freelance web development work, especially in the less expensive markets. Perhaps the best bet for a freelancer is to find a handful of large companies that need consistent work done and get into rotation with them. Large companies usually have systems that are so complex, or sensitive that they cannot use commoditized services. However, to me that does not sound all that different from steady full time work from a single employer. And if you observe the trends in companies such as IBM, where more technical employees work offshore than onshore, this could be somewhat hit or miss.
Maybe a better solution is to be an expert in platform customization. Recently the most successful work I have done has involved customizing Shopify sites for small E-Commerce outfits. There are a myriad of things that store owners would like to do that are not easily done with a base Shopify install, but can be accomplished through clever configurations, webhooks, and customized apps (which are Shopify store plugins essentially).
If as a freelancer you are just acting as a technical resource to manage the admin panel of a Wix.com or Shopify site, you are still going to add value for your client. Especially the type of client that has an aversion to complicated interfaces, computers, or technology in general. But is this a highly skilled occupation anymore? Certainly the level of training required in order to navigate and admin panel, wire up navigation links and copy and paste a Google Analytics code is much lower than what it takes design, build, and deploy a 100% custom site for a client. It seems only natural that less skilled workers will move into this market and charge a commensurately lower rate. And if you cannot provide any value for your pricing premium, then how can highly skilled developer begin to compete in that kind of market?