How can you pay $10k for $300k worth of work?

A friend of mine works at a small e-com design studio. They’ve quietly worked on some of today’s most popular DTC brands.

Recently, they were hired by a large agency tasked with redesigning the website for a well-known footwear brand.

Here’s how it broke down:

• The brand paid the agency $300k for the project.
• The agency subcontracted the studio for around $100k.
• The studio assigned him to the project. One single designer—who earns ~$100k annually and manages ~10 projects a year. That means he’s effectively getting ~$10k for this project valued at $300k.

One sub-sub-contracted designer responsible for delivering more than $300k of perceived value.

Crazy, right? This happens all the time.

The agency knew which studio to hire. The studio knew which designer to assign.

But what if the brand had the expertise and connections to source the studio—or even the designer—directly?

How much money (and control) could they retain?

Just some food for thought 🍔