If you’re making a living as a freelancer or consultant, and you’re trading your hours for dollars, there often comes a point when you begin to wonder, “Is this it?… Can my consulting ever scale without me having to do all the work myself?” The concept of productizing your service starts to float around your mind.
Or, perhaps you’re running an agency with a team, still dependent on project-to-project revenue to keep the lights on. If only your business model allowed for more predictable, more scalable growth…
Productized services have become the go-to business model for those of us who have these nagging questions about the more traditional billable hours model for client services.
I’ve been there. It wasn’t until I transitioned to the productized service model that I was finally able to escape the project-to-project hustle of selling my time. It turned out that productized services were a lot easier to get off the ground and build into real businesses, rather than starting from scratch each time like with other types of products.
Are you a freelancer who has been self-employed for a little while, a consultant whose time is in high demand, or an agency owner who deals with the stresses of running that agency? Then a productized service may be the path of least resistance to begin to scale up and grow your business into a more valuable asset.
Likewise, if you’ve developed a software product (or know one really well) and want to pair a service with that software to help customers use that product—otherwise known as Software With a Service (SWaS)—then a productized service could be your next business step too.
As you begin to put together a productization plan for your service business, I hope that this guide can serve as your starter productization framework. We’ll cover all the key concepts to chew over as you get started on this journey into productized services.
This guide has a lot for you to dig into, but it’s only the tip of the iceberg.
In this guide, we’ll cover:
- Definition of a productized service
- Who should start a productized service?
- Unique benefits of owning a productized service business
- Myths and misconceptions of running a productized service business
- Resources for learning more about the productized service model
Now before we dive in, let me share my answer to reader’s question about how to turn a service into a product (a productized service). I think this frames up this guide nicely:
What is a productized service?
Before we get going, let’s make sure we’re on the same page about the definition of what a productized service is.
|From your customer’s perspective, a productized service offers a specialized “done for you” solution with a compelling value proposition, packaged at a set price and scope.||From the founder’s perspective, (that’s you), a productized service is one that runs systematically and continues to produce and grow with or without your direct involvement.|
When it comes to examples of productized services, there are plenty of variations on the business model to consider, and I cover those in-depth in a separate guide.
For this guide, just keep in mind that a productized service is all about predictability: Selling to a common customer, solving a common problem with a standard solution, packaged at an easy-to-buy / easy-to-sell price, without the typical song and dance of a custom proposal process.
How is a productized service different?
Productized services differ from freelancing and other types of services because when you come up with your productization plan, you will target a specific type of client and your service will solve a very specific business need. Your clients have a business pain point that your productized service is designed to solve.
You will use predictable, repeatable processes for delivery of your service, making your clients’ experience smooth and enjoyable—your team will know what to expect every time.
Productized services also offer simple pricing options, presented as ready-made packages, so that means no more proposals for clients. All of your clients’ expectations are spelled out for them from the start.
When it comes to revenue models, productized services come in a few different flavors, from recurring subscriptions (or retainers) to one-time engagements. The difference is the price is often fixed, sometimes with a few packages to choose from, with a predictable, pre-packaged scope of work.
Who should start a productized service?
One of the reasons I love productized services is that I’ve seen all sorts of entrepreneurs use the productized service model as the way to scale up and transition their business to a new level. However, there are a few types of people who are particularly well-positioned to start a productized service:
Freelancers & Consultants
If you’ve been working on your own, doing a certain type of work, like designing websites, copywriting, marketing, engineering, or design, then productization could be a great next step.
This is especially true if you’ve been at the billing-by-the-hour game for a while, and have become burnt out trading your time for money. I get it. I’ve been there.
The agency model on its own can grow into a good business, but often comes with unique challenges when it comes to scaling. That makes the productized services model particularly attractive for digital (and non-digital) agencies alike to drive more predictable revenue growth.
This is especially true when agencies embrace recurring revenue streams to help stabilize and grow their business.
Creating a productized service is a logical next step for many agencies as it can help to reduce the “chaos” that often happens when many projects are happening for a wide variety of clients and needs. Productization helps you hone in on your best services, for your best types of clients, and run your business in a more systematic and predictable way.
When you’ve developed software, you’ve got half of the problem solved—you have the tool. However, you haven’t yet solved the other half of the customer’s problem—the use of that tool.
Often, what your customers really need is to be able to implement the tool you’ve created or that they’ve purchased.
Software companies can create a productized service of concierge onboarding (a.k.a done-for-you or done-with-you implementations) for the software. Your productization plan is built on top of your software or can be done for popular software in the market. Yes, you can build your productization framework around software that’s not your own!
When you’re just launching, especially if you’re a bootstrapped startup, productized services are key. They are one of the fastest ways to validate a new business idea, grow revenue, and self-fund your new startup.
A productized service can often be an excellent way to launch a minimum viable product quickly and leverage a no-code solution to a problem that can be built out more fully over time. In many cases, the productized service remains the “secret sauce” that powers many startups well beyond their initial launch.
Those leaving a job or recently laid off
A common question I hear is “do I need to be a freelancer before I can switch to a productized service?” I say, no, not necessarily! In fact, sometimes having in-house experience at a company can put you at an advantage.
From your work experience, you have insider knowledge about the types of needs that companies typically pay to have solved—whether it’s things they have trouble hiring for, messy spreadsheets that don’t fully solve a problem, or jobs that require expensive salaries to fill.
These are all opportunities to present a more cost-efficient solution to these companies. You don’t need to have been a freelancer before you launch your own productized service that solves someone’s pain points.
Unique benefits of owning a productized service
Done for you
Software is “Do It Yourself,” which makes a piece of software nothing more than a tool that the customer can use to accomplish a task themselves. No matter how intuitive a software user interface is, it’s still only a tool that solves half the problem.
The complete solution still requires the customer’s (or someone’s) time if they want to truly achieve the results that the product promises.
This is where you can come in with “done for you”—you can provide a service that onboards the client with the software, manages the ongoing use, or perhaps oversees the whole process. You’re now taking a tool and turning into something functional and valuable while saving the client time.
Because a productized service is “done for you,” it’s a faster, and often more effective way to give the customer the result they ultimately want. The customer doesn’t need to invest any of their own time, nor do they need to learn any new skills, techniques, or software.
This aspect alone adds significant value to the equation.
Take my company, Audience Ops, as an example. That’s a productized done for you content marketing service. Rather than simply offering blogging software, or document editing service, we offer a more complete package that solves the problem of running an effective blog for your business.
Our standard packages include all the key components of a well-run business blog: the creation of content ideas, writing, editing, publishing, and distribution, all delivered in an easy, predictable package.
One of the biggest challenges most Software as a Service (SaaS) companies face is a high cancellation rate, a.k.a. churn rate. The customer’s experience with a SaaS typically goes something like this: The software proves valuable for a short time, usually between 1-3 months.
The customer reaches a critical point where one of several things happens:
- They realize they’re not using the software as much they thought they would when they signed up (perhaps due to lack of time), so they cancel.
- They come across a better solution (cheaper or more effective or both), so they cancel and switch.
- Or (hopefully) they’ll become increasingly engaged in the software and remain subscribed for a long time to come.
It’s extremely difficult for most SaaS products to achieve that 3rd outcome the majority of the time. Solving the churn problem becomes their biggest hurdle.
A productized service, on the other hand, has a much easier time combatting cancellations.
Because the most common reasons for cancellation are removed from the picture.
|Common cancellation reason||How productization removes that challenge|
|Customer doesn’t have the time to do it themselves||A productized service does the work for them, saving them time|
|The results don’t live up to the promise||A productized service takes a hands-on approach, delivered by experts who ensure this doesn’t happen|
|The UI or workflow is too confusing||A productized service isn’t reliant on a UI to be effective|
Before I sold and exited my first productized service business, Restaurant Engine, it had a near-zero cancellation rate. That’s mainly because we personally designed and set up every new customer’s website, ensuring it looked amazing and met every one of their needs perfectly.
As a productized, streamlined service, we ran this process for multiple new customers every week.
I don’t believe that the market for a product is truly “validated” until it has multiple paying customers. Even then, it’s a continuous evolution of meeting your market’s specific needs.
Sure, during the planning stages of a new product launch, you can do some “soft validation” stuff like collecting emails on a landing page, or pre-selling a product before it’s built, but even pre-selling can’t guarantee customers will realize the value over the long term (and not cancel down the road).
A productized service is often created out of a service that you’ve delivered before as a freelancer or at a previous job.
That means you’ve already seen first hand that clients/companies have been willing to pay for such a solution. This gives you a strong sense of validation right from the start, as you begin the work of productizing that service. I call this a pre-validated idea, and it’s a great place to begin productizing your service.
When I started Restaurant Engine, it wasn’t a question whether or not restaurants needed website design and if they were willing to pay for it. I previously had a few restaurants as clients when I was a freelance web designer, so I knew this idea was pre-validated (and there plenty of restaurant websites in the world, many of which are badly in need of this type of service!).
But even if I hadn’t worked specifically with this type of client, it’s safe to assume that small businesses like restaurants need a relatively low-cost way to get a professionally designed website. Since I started with a pre-validated idea, I could move forward with the work of figuring out how to streamline, sell, and scale up such a service.
Remember though, even if you haven’t offered a service before, if you’ve seen the need in companies you’ve worked for or experiences you’ve had, then you can proceed with a higher level of confidence that there is market demand for this.
Revenue comes easier and faster
When you’re bootstrapping your transition out of client work or a nine-to-five, you’re perpetually racing against the clock. How long can you go until you run out of savings to keep your bills paid during your transition? This is a scary place to be—I know.
A productized service helps you sustain your runway longer by getting your first customer revenue in the door faster and easier.
As a value-added, “Done For You” service—often targeted at businesses—you can charge a higher price. You can often require first payment up-front, rather than rely on free trials to convert leads to customers.
You also don’t need thousands of customers for the business to be profitable. A typical productized service only requires a handful of paying customers on a monthly retainer to be sustainable.
Compared to starting a software business, or writing a book or digital course, all of which require many months to create and “ship,” a productized service can—quite literally—be launched to paying customers within a matter of days. Then it’s just a matter of iterating and improving as you go.
With your early revenue from those first paying customers, your runway is extended. Now you can continue to push forward, scaling up your operation and increasing bandwidth.
Compared to bootstrapping a software product on the side, which often requires some periods where you must pause to take a client project just to keep the lights on, a productized service feels like a no-brainer.
Most entrepreneurs are overlooking productized services
Finally, here’s the reason why building a productized service is the perfect opportunity if you’re bootstrapping: Most others in your situation are overlooking it.
While others are chasing after the shiny SaaS ideas, throwing iOS apps at the wall to see what sticks, or trying the long, slow path to building an audience and selling a course or a book, you can be signing up paying customers with nothing more than a landing page.
While the rest avoid doing anything manually “because it doesn’t scale,” you can capitalize on that opportunity.
And that opportunity is in the systems.
Most of your peers aren’t interested in systems, procedures, and streamlining operations. But to you, the productized service business owner, systems are the key. They’re what will allow you to turn a manual, hands-on, value-added service into a product that can be run with or without you.
That could mean streamlining certain procedures, hiring key team members, utilizing 3rd party tools, or eventually building out your own software to make your process even faster.
Don’t get me wrong, there are plenty of other types of products to pursue. But, they require a lot more time and funding. In my journey, building profitable, sustainable productized services businesses has been the best way to self-fund my time to pursue other, slower-to-grow business ideas like software and training products.
Bonus: The best way to learn
And here’s a bonus reason why a productized service is a better opportunity than building software: It’s a fantastic way to learn.
The founders that never stop learning are the ones who go the farthest. I’ve learned so much through creating and launching each of my productized services.
On the product-level, you have a more intimate relationship with every customer, so you’ll learn and refine your value proposition faster than you would with impersonal software. And when your processes are largely delivered manually, you learn where the friction points are, making it easier to streamline and automate.
But at a high-level, building a productized service is your opportunity to learn what it means to go from being a freelancer to being a business owner. You’re learning to work on the business instead of in the business. That means focusing on processes, building a team, creating value.
Myths and common misconceptions of running a productized service business
Hopefully, you’re starting to see how your productization plan can come together.
Ever since I began publishing my lessons about this model, it has resonated quite a bit with people who came from a similar background as me—freelancers, consultancies, and agencies who are looking for a better way to scale.
But there has been a fair bit of skepticism too. People want to know:
Is it really as “easy” as folks claim it is? Spoiler alert: It’s not, and I wouldn’t ever say that it is.
Is it really any better than traditional consulting or freelancing by the hour? It is!
Do customers really buy productized services? They do!
These are all perfectly natural and legitimate questions to ask. I think it’s smart to be a little skeptical, or at least ask these hard questions before committing down any new path in your business.
I want to highlight 3 pretty common myths about the productized service model. Having a misunderstanding of these things can cause some to be more skeptical about this model as a whole.
But if I can illuminate the reality behind each of these, I believe you’ll see that in fact, what seems like pitfalls or falsehoods, can actually work in your favor.
Myth #1: People “buy now” off your website
Most of the time, the website for a productized service shows the pricing, packages, and offers a button to “buy now”—just like any other product you’d buy online.
From the outside looking in, this can leave the impression that a website gets floods of traffic, and some percentage of those people click and buy the service on the spot, without talking to a salesperson first.
Here’s the reality:
I’ve been running Audience Ops, a productized service business, since 2015. We’ve had hundreds of clients buy our service. These accounts are worth $12,000 – $24,000 per year (and most clients stay much longer than a year).
In that time, I can only remember two, maybe three cases where a person arrived at the site and bought a package without talking to someone first.
At this price point, virtually every customer needs to have a conversation with someone before committing to buy.
That means you have to do sales calls!
But that’s a good thing, and in a productized service business, your sales process is a unique differentiator.
It doesn’t have to be you, forever.
As the founder, it’s probably best for you to be that sales person at first, and maybe for a while. But once you get your sales process dialed in, you can—and often should—hand off that responsibility to someone else.
Your leads come in pre-qualified to your sales call
You might be feeling overwhelmed by the thought of doing these sales calls and you’re wondering if they will be worth your time. With this process, your sales leads have already seen your pricing. Perhaps they’ve been pre-educated with automated content, a recorded demo video, etc (all of which, I do and I recommend!). By the time they get on the call, more often than not, they just want to ask a couple of final questions and feel reassured that there are real, trustworthy, people behind this “machine”!
Your sales process is a process, just like everything else. Optimize it! Make it more efficient over time. Forget custom proposals. Forget “discovery meetings.” It is possible to automate most steps in your customer’s journey and boil down the personal touch-points to a 15-minute call and a couple of email follow-ups.
In my experience, some clients provide their billing information right there on the call. Some take a few days after the call to think about it, then return to the website to buy.
All of these paths to the sale can and should be optimized.
After all, you’re selling a product and you have a sales funnel!
Myth #2: A productized service can’t work without “you”
Your clients love you. They trust you. They want face-time with you. They want your personal touch.
I get it. While I’m sure all of that is true—I’m also sure of this:
Those clients want their problem solved, not to spend time with you (sorry).
Now, let’s assume your goal is to get to a business where you don’t need to be personally involved day-to-day to keep the lights on. Will this require some changes to how you sell and how your business operates?
Of course, it will. And it won’t be easy or happen overnight.
But here’s the reality:
It is possible to still give clients that same sense of trust in working with you, without you personally being involved.
Let’s get back to the client’s problem. They trust you, because they believe you’re able to solve that problem. So that means they’d be just as trusting of your ability to put the pieces in place—the methodologies, the processes, the people, the systems—to solve that problem at scale.
For example, clients of Audience Ops know that I’m not personally the one creating and delivering their work.
But, they know I’m the guy who created our process, who found the exact right type of people to hire, and who got these pieces working efficiently together. And, they trust (and see first-hand) the results: A better final product than hiring someone else, and even a better final product than if it was me alone delivering their work.
So yes, a productized service can work without you. In fact, I believe that (eventually) it can work better without you.
Myth #3: There’s no room for custom work in a productized service
A productized service can only deliver cookie-cutter, template-based, work. It’s a fast-food joint, not a fine dining restaurant.
What your clients receive from your productized service can be just as high-quality and just as custom-tailored and personalized as if they had hired you directly as a solo consultant.
The difference is in how that work gets done.
Yes, the work might involve creativity, expert analysis, and strategic thinking. But, none of that prevents you from building a process for how that work gets done: Your creative process. Your production process. Your analysis process. Your delivery process. Your process for managing and handling feedback.
If these processes require specific types of talent or expertise, then hire that talent! (Yes, other people have the same talents as you, and I’m sorry to say, often are more talented).
Or, hire smart, capable people who are ready to learn your methodologies.
The timeframe for delivery, the tools you and your team uses, the ways you track progress, the way you deliver to clients, the way you take their feedback and approvals…All of that can (and should!) be standardized and built into your process.
But, the work itself can be fully customized and unique for each client—within the parameters of the packages/scope that you’ve sold via your productized service.
It’s not uncommon (nor “frowned upon”) to offer configurable add-ons or options with those packages. If you do this, I recommend limiting those to the most common, but optional, requests.
It’s also not uncommon to have your productized service offering be a precursor to a larger, more customized and more traditional consulting engagement. That’s fine as well if you think you want to do that.
But you might get to a point where your fully productized offer has enough leads, customers, and work in the pipeline that it’s a better business decision to keep scaling up that machine and scale down or eliminate the higher-variability consulting work.
The key benefit here is having that optionality!
A non-myth: It’s hard
This one is true. Breaking away from the way you’ve done things for so long is always difficult, and feels risky.
I believe that if you’re feeling the itch that I felt and so many others have felt with traditional freelancing and consulting, then it’s more of a risk not to explore an alternative path.
For years, I’ve been saying the same thing (because I’ve done it myself): The productized service model is that path of least resistance to grow into something bigger than your billable hours.
Resources for learning more about the productized service model
Are you getting excited about the possibility of creating a productized service?
For me and so many others I know running client services, this model has been the thing that really clicked for my business, and led to years of growth, both for my business and for myself as an entrepreneur.
Here are some great next steps to take to learn more about the productized service model.
In this 4-part video course you’re going to learn how to apply the productized model to your business, even if in your current model, every project you do is different from the next. We can still likely apply the productized framework to your business.
You’ll learn how to sell your service at scale, without writing long custom proposals for every project—a productization plan helps streamline what you do and how you do it. We also discuss how to free yourself from day-to-day client work and share how to avoid management headaches!
We’re going to show you how to transition your business and 10X your value without 10x’ing your time—This is what a productized service will do for you.
Make sure to sign up for the the free 4-part crash course on productizing your service.
This is the podcast you want to be listening to as you start on your productization journey. We share stories from owners of productized services businesses about why productization has been the key that unlocked their ability to scale their business.
Listen to the Productize Podcast today to get inspired by those who have put their productization plan into place!
If you’re feeling a bit stuck or still aren’t sure what your productized service might be, check out our guide to finding your productized service.
If you think a productization plan isn’t going to work for you, this list of productized service examples will show you how this model works for so many types of businesses.
Get your wheels turning with this list of examples of productized services.
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