Here’s Why UI/UX Designers Get Paid More than Industrial Designers
Hey friends,
A few weeks ago I was scrolling on LinkedIn and came across a post by Brad Harper, who runs the UK-based design recruitment firm Design Truth and hosts an industrial design podcast of the same name. He posed a simple question:
“Why do industrial designers earn less than their digital counterparts?”
The fact that we get paid less than UI/UX designers is something that most industrial designers assume to be true. We hear the whispered numbers from our friends who made the switch into UI/UX, and think, “Wow. I don’t get paid nearly that much.”
But is it actually true across the board?
If it is, how true is it as a difference of dollars?
I wanted to put some real numbers to it, and look at the factors behind why.
In the lively discussion that followed in the comments section, two common themes came out:
Higher margins - software doesn’t have to contend with pesky tooling costs, raw material costs, inventory storage, or any of the other stuff that pulls down the profit margins of hardware companies.
Supply and demand - there’s just a much bigger need for digital design these days and a lot more jobs out there.
Let’s dive in.
What’s value?
First, let’s start with the basics.
Why do you get paid at all?
Why does your employer or client give you those sweet sweet dollarydoos in exchange for your beautiful design work?
Well, generally because you’ve created something of value to them, which they can then produce to sell to someone else and generate more value and a return for themselves.
My brother, who was an economics major, once explained it to me in simple terms:
Let’s say you go to the store and buy $10 worth of ingredients. You take the groceries home, and bake the ingredients into a batch of delicious cookies. You then sell your batch of cookies to your neighbor, who pays you $20 for them. You have, through your labor, created $10 of value ($20 revenue - $10 cost = $10 value created).
Now, let’s say you are an incredibly talented baker and after countless rounds of experimentation, you come up with a cookie recipe that consistently produces amazing, crispy-on-the-outside, chewy-on-the-inside, delicious cookies. A national bakery chain catches wind of your baking exploits and approaches you to buy the recipe. They offer you $10,000 to buy it from you, and you happily accept.
Even with all your experimentation, you’ve only spent about $1000 on ingredients and equipment, so you’ve essentially generated $9000 of value through your labor. The bakery expects to sell $100,000 worth of cookies in their first year, which would mean $90,000 of value created for their company.
The bakery is happy to pay you a portion of the value they expect to generate for your part. You are happy to receive a sizable sum for what is essentially a piece of paper and a few weekends of tinkering. You don’t have to worry about scaling up production, health codes, packaging, storage, or finding customers.
You get to keep experimenting with baking, and they get a recipe that will sell cookies. It’s a win-win.
Now replace that recipe with your design work and you essentially understand why you get paid to do design.
The lesson here:
You get paid a portion of the value you generate for others.
OK. But do digital designers get paid more or what?
In short: yes. Quite a bit more.
According to salary.com, one of the most widely recognized sources for reliable salary data, the median pay for UI/UX designers nationally (in the US) is almost 30% more at the junior end and almost 20% more at the senior end. (Note: I only went up to level III because after that the titles get kind of muddy and less comparable). At every level I looked at, the difference is almost $20,000, which is substantial.
There isn’t much more to say about that, other than that the facts confirm what industrial designers have heard from their UI/UX friends.
Now, it’s important to remember these are median numbers, and there are always exceptions to the rule. Just because you are an industrial designer doesn’t mean you will always make less than a comparable digital designer, it just means you’re likely to be offered less to start.
So now let’s look at the two major forces that contribute to this.
Higher margins. Much higher.
A company’s gross margin is revenue from sales minus its costs associated producing the goods or services. The costs do not include payroll, research and development, sales and marketing, and other indirect costs. It’s usually expressed as a percentage of revenue.
gross margin = revenue from sales - costs of goods sold
gross margin / revenue from sales = gross margin %
The higher the cost of goods sold relative to its price, the lower the gross margin.
Generally, the higher a company’s gross margins, the more money they have to put into new product development, infrastructure, nice offices, employee perks, and of course, paying their staff.
So with a hardware company (that might hire industrial designers), some costs might be:
Raw materials
Manufacturing
Shipping
Inventory storage
Labor
Operations
Customer support
All that adds up, especially because a lot of those things involve physical material and logistics, and a lot also involve setup costs (one time fees to get things going) or minimum order quantities.
Now with a software company (that would hire UI/UX designers), the costs might be:
Hosting and storage
Licensing for other software embedded in the product
Server maintenance
Data communication costs
Customer support
Those costs tend to be a less because they are mostly service-based, and can be dialed up or down without moving large amounts of physical material around. They also benefit from scaling a lot more cost effectively. There are economies of scale in physical manufacturing, but it’s a lot easier and cost effective to double your Amazon Web Services capacity for your app versus buying double the amount of a physical product which you now have to store and eventually sell.
So let’s take a look at how these differences play out in the real gross margins of companies that we’ve probably all heard of. The SEC requires all publicly traded companies to disclose their financial metrics on a quarterly basis, so this data is freely accessible to anyone who’s interested (like me).
I picked ten well known companies (five hardware, five software), somewhat at random, and charted their gross margin % for 2021. (Note: yes, I know some of the hardware companies also sell software, but their primary business is in hardware.)
The numbers speak for themselves.
The margins of the five hardware companies were all at the bottom half of the range. Even market darlings like Apple and Tesla only come in at 42% and 25% respectively.
Now look at Adobe.
88%!!
That’s over 2x Apple’s gross margin!
That means when you pay that $54.99 for your Adobe Creative Cloud subscription every month, only $6.60 goes to making those apps available to you.
The other $48.39 goes right into Adobe’s coffers for them to do with as they please. And part of what they do with that money is hire and retain talent.
Let’s think back to the lesson from the cookie story:
You get paid a portion of the value you generate for others.
When you are a UI/UX designer for a software company with high margins, the large amount of value generated can in some way be directly attributed to your work. After all, you designed part of the app that got so many users to sign up and pay a monthly subscription, which is what led to that big fat gross margin.
This isn’t to say that hardware companies aren’t profitable, or you can’t get paid equally well at a hardware company. Apple is the most profitable company on the chart above, and has been the most profitable US company for seven out of the last eight years.
It just means that on average, software companies that hire UI/UX designers tend to have a lot more margin to play with, and thus more money to reward the designers that help generate the value they are perceived as having contributed to.
Supply and demand
You’ve probably heard of the law of supply and demand. In the labor market (which, if you are an employee or looking to be one, you are part of), it works like this:
When the supply of a certain skill or job outpaces the demand, there will be downward pressure on wages.
When the demand for a certain skill or job outpaces the supply, there will be upward pressure on wages.
For example, if you have a clogged sink and there are a hundred plumbers in your neighborhood, you would expect the price for their services to be low. If there was only a single plumber and a hundred people with clogged sinks, you would expect their plumbing services to be priced much higher.
Since the year I started college (2007), the digital economy has almost doubled in size. Everyone can see that the internet economy and apps seem to be growing faster every year. Compared this to the durable goods economy (most industrial design work probably results in stuff in this category - consumer electronics, home goods, etc.), which has grown by about 30% in that time.
This illustrates the widening gap between the demand for digital and physical design. The more companies making digital products and services, the higher the demand for UI/UX designers. This is reflected in the size of the job market and the job outlook for both industries.
In 2020 the US Bureau of Labor Statistics puts the Web Developers and Digital Interface Designers job category (I know, they lump in developers and designers. They separated out digital designers this year, but it hasn’t been reflected in the stats yet) at roughly six times the size of the Commercial and Industrial Designers category.
Now look at the projected growth over the next ten years. ID is projected to grow about 6%. Digital design? 13%. That’s over twice the growth rate in a field that’s already six times bigger today.
While industrial design has roots back in the industrial revolution, digital design (or UI/UX design), is a relatively new profession. When I was in college (2007-2011), UI/UX design was just starting to make it’s way into our design education. There was no separate UI/UX design degree. I took one class on the topic, and it was kind of clear that nobody (including the professors) really knew what it was or what it was going to be.
Because it was such a new field, there wasn’t enough existing talent to meet the exploding demand for digital designers created by the rapidly growing digital economy. Since you generally need a four year degree to be employed in a design job (not always, there are a lot of valid challenges to that now, especially in digital), there was some barrier to entry and this also caused a lag in the supply of talent.
Even now, I suspect that design education is not producing enough quality UI/UX talent to meet the needs of companies producing physical products or services because again, there’s just so much of it. Every category has a thousand apps competing for users. Users are heavily swayed by design and user experience. Everybody needs UI/UX design to compete.
So there you have the demand outpacing the supply for the employment of digital designers. For industrial design, given that the number of jobs is already low, and colleges nationwide produce thousands of ID graduates a year, it’s likely that supply is outpacing the demand.
Et voilà.
Upward pressure on wages for digital designers, and downward pressure on wages for industrial designers.
Them’s the breaks
I think it’s important for industrial designers to understand the macroeconomic forces and societal changes that are affecting our profession and our compensation. I hope the analysis above helps make it a bit more tangible. Like it or not, this is the reality we live in.
But it’s not all gloom and doom.
None of this means you as an industrial designer will always get shafted on compensation. There are a lot of other factors, such as the size and stage of your company, how you negotiate, what your skills are, how you market yourself, where you are. These are just the major economic forces at play that you should be aware of when entering any kind of compensation discussion.
There are many industrial designers, myself included, who have made a fulfilling and rewarding career out of our passion, both in a financial sense and a job satisfaction sense. It’s not that you can’t make a good amount of money with industrial design or even make more money than your digital counterparts, it’s just that on average your starting point is likely to be lower.
Of course, it’s not all about the money. If it was, I’d be an investment banker or a lawyer. So if industrial design is really what you love, you can make a rewarding career out of it, do what you enjoy every day, and be quite comfortable financially.
Now, if you’re in a situation where the financial picture really does matter (say, you have student loans from that spency industrial design degree), then you may want to look at the trendlines above, and make an educated, informed decision about where you want to take your career.
There is absolutely no shame in choosing a career path for higher compensation if you have real financial obligations to take care of or goals you’re trying to attain. If you already have an industrial design degree, pivoting into UI/UX is within reach. With the number of online courses and free resources these days, it’s eminently doable.
Anson
P.S. I may be a bit of an oddball industrial designer. I love data, charts, and graphs. This piece was a bit of an experiment in using that to explore a topic in design. Let me know if you enjoyed this, or if it bored you to tears.
P.P.S. I’m moderating a discussion panel at IDSA’s International Design Conference in Seattle in September. The title is, “Should You Pivot to UX!?” and the panelists will speak on a diverse range of perspectives regarding this question. I think a lot of industrial designers are thinking about this right now, and I’m sure the money question explored in this piece will come up. There are a ton of other amazing speakers and events, so if you’re a designer definitely check it out and I hope to see you there!
P.P.P.S. I recently hit over 100 subscribers! It was hard to imagine that this many people would want to read what I have to say when I first started. I recently met a few people in person who knew me from this newsletter, which is crazy! Thank you all for reading. If you aren’t subscribed yet, put your email in the sign up form below!