Survey reveals widening gap

The gap between design consultancies offering strategic input and those selling the art and craft of design is widening, according to the Design Business Association’s latest quarterly survey.

“Consultancies which solve client problems through design are showing better profit margins, while design providers – which often tend to have high creative standards but not much strategic expertise – are increasingly struggling,” says management consultant David Jebb, who compiled the survey. The survey of performance trends and ratios measured the activities of 43 groups from January to March 1996.

Jebb adds that clients are aware of the differences: “Those clients that go to design groups expect to get strategic input and are prepared to pay for it.

“In contrast, design providers are up against digital artwork and reproduction companies who are costing their work on lower charge-out rates,” he says.

The outlook is optimistic, say the findings, with around 60 per cent of the participants reporting a profit increase. Average operating profit in the quarter has improved to 17.5 per cent, well up on figures of below 10 per cent for the last six months of 1995.