[This post is in response to my friend Cole's great post, addressing the ongoing issue of designers devaluing their rates in an effort to compete for more business. I suggest you read her post before this one. Here I'll try to look at it as an institutional issue, in addition to what we should do in the future to prevent this race to the bottom.]
This is a discussion that definitely needs to be had. Part of it is about self respect, and having an understanding of what it takes monetarily to actually afford to live a life. This is something most kids — and sadly most adults (cough *credit crisis* cough), can't honestly budget for or understand what "living within means" means. That seems to have either stemmed from or to the startup/new business culture which thinks taking two milllion bucks in startup capital on something that doesn't make money is okay long-term.
The other part of this is definitely a institutional problem, because I don't think education really wants to convey that you are independent and can survive independently. I mean, the trades and farming are falling away for a reason: larger corporations. As long as education is tightly tied to corporations, independent education will be a hard sell. Or at the very least, not as highly regarded.
I think our profession needs to treat itself like trade guilds. And I've always felt that my clients respond better when I treat things like a tradesman providing a service (such as a carpenter). Sadly that downplays a bit of the art to our craft, but it makes the concept of paying for a service more understandable to the client and charging what we're worth, easier. Obviously these are my general thoughts as there are a lot of nuances here.
Those nuances are part of the challenge too. Mediocre/poor designers who don't know they're mediocre/poor but still feel like "I need to charge what I'm worth!" end up souring clients who may have been initially willing to pay. Once they feel they were "screwed" by a designer, and it only takes once, they're suddenly tightfisted and nitpicky cause they're trying to "make back their money's worth" from that first bad experience for the rest of their life. It's awful to deal with and it sucks that the client had to deal with that initial designer's inability to design a successful solution.
I guess that, again like a trade guild (see Sign Painters) it's the competition within your trade and the elder tradesman willing to teach you that will help you decide how good you are and what you should fairly charge. This is going to require a lot of discussion on our industry's part and a bit more humility when it comes to teaching young designers. As well as fearless openness about how we do things, instead of keeping secrets in an effort to diminish potential competition.
I think there can be a really bright future for design as a profession if we focus on teaching each other for the sake of rising all ships. Realizing that by putting ourselves openly on the line, we will all produce better work, draw more respect to the profession and make what we charge an undisputed fact rather than a potential battle with clients.