I am just about to start the design phase of my startup. The design firm gave me a proposal of roughly $25,000 for the initial design process. Which is way out of my current budget. However, I want to partner with them. Is equity a good proposal to designers? If so, what is a good number, or is it beneficial to have a step up equity system? I am looking for any ideas or comments. This project will require consistent work from a designer.
PAUSE! Unless if your project is super complex where you are building a SIlverlight UI, or Ajax AIr application then you are being RIPPED OFF. Just because a design firm quotes you 25k does not mean you cannot get the same or higher quality of work elsewhere.
Stick to your budget. Shop around. NO EQUITY IS EVER GIVEN TO DESIGNERS! that is a really terrible move to make from the get go. Think of equity as the most valuable asset you have, way more valuable than $$$. You dont want to give it away, unless if you have to, or if giving away equity will bring back more income for you even though you have a lower share.
The only time I would consider giving away equity is when you have a working product, that sells, and you need a huge amount to dominate the marketplace.
In other words, shop for better designers.
Check out. Odesk, elance, freelancer. Also check out Themeforest.com and CSSHub. If design was so expensive do you think talented designers would be willing to sell their work for a 75% cut of $20????
The firm you are talking about is doing a great job trying to SELL YOU.
I highly recommend crowd source design - check out CrowdSpring.com and 99Designs.com. Much cheaper and the results are impressive.
I used freelancer.com for my company logo, splash page for the Windows application and product logo (feel free to check out quality of the company logo on my site). Three logos, $250 bucks. The guy from Vietnam worked with me for a 10 straight days via IM and probably 40 revisions per each of the three graphics. I can recommend him on freelancer via private email if you wish.
25k for what you mentioned is not only insane, its INSANE! :)