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I recently acquired some freelance work doing logo design and completed my first piece this past weekend.  The requirements demanded that the image be submitted in vector format, whereas all I have worked with prior to now is PS.  I installed a 30 day trial of Illustrator this weekend  to try and figure out how to convert it, but I came away confused.

My question is: what is the best or most acceptable way to convert a PS image into vector format?

Here are the steps I took in attempting to convert the .psd to .ai format:

1)  I selected the outline of my logo and chose File > Export > Paths to Illustrator, saving it as an .ai file.

2)  I opened the PS file from within Illustrator and chose "Open Flattened" as the option.

3)  I also saved the Paths as a PS Custom Shape.

The problem with my options is that my logo is two color, and only option #2 preserved those colors in Illustrator format, but I'm not sure if it constitutes as a true vector format.

Any advice/comments will be most helpful.  Thanks in advance.

~Dub

Here is the original logo: