“I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”
Why It Matters
Productized services help you move from selling time to outcomes.
You can build systems instead of billing hours.
Purchasing services is more complex than purchasing products.
Productized services offer services at a fixed price with a clear scope and timeline.
Freelancers are like personal chefs who cook everything for everyone.
Productized services are like restaurants with a menu.
- Software will eat services.
- SaaS companies will court productized services to build on their platforms. This deepens their moat without reducing leverage.
- Productized services will move upmarket. See Fiverr Pro. Testimonial Hero has an average order value of $9,000 and LTV of $50,000. Very Bad Wizards does design sprints from $16,500 to $27,500.
- Index into an existing market. Avoid unnecessary market risk. There are 20+ content marketing productized services. It’s easier to capture demand than to create it.
- Whitelabel services. WPBuffs acts as your backend to help you focus on sales. Agencies help clients without hiring with white-labeled solutions. Own relationships to take a spread between what you quote clients and pay providers.
- Build a branded framework or methodology to gain pricing power. Scribe Media creates white space with the “The Scribe Method.” Goodpatch does this with The Designathon®.
- Offer software with a service. See ConvertKit’s concierge migrations. They weaken competitors’ embedding effects by making it easier to switch.
- Build on an existing platform. Compete in walled gardens. Platforms have pre-built communities, certifications to signal trust and directories for discovery. See Shopify, Webflow, WordPress, Quickbooks, Coda and Carrd. HubSnacks builds on HubSpot.
🔑 Key Lessons
- Productized services are more scalable and have shorter sales cycles than agencies.
- SaaS has lower marginal costs than productized services. Scaling servers is easier than scaling culture.
- Minimize market risk by indexing into markets. See Competitor Risk.
“Productized services don’t scale like SaaS.”
It’s not the final step. Stop here or stair step like Brain Casel (Audience Ops => ProcessKit) and Craig Hewitt (Podcast Motor => Castos).
“Productized services have lower AOVs than agencies.”
Play a value game or a volume game. There are also high-ticket productized services.
“Indexing into markets is a race to the bottom.”
Positioning matters. We discussed how to gain pricing power.
“Freelancers aren’t going anywhere.”
Agreed. Personal chefs, drivers and pilots exist despite Uber, Uber Eats and airlines.
“Building on platforms brings platform risk.”
Software companies aren’t eager to enter services.
“Taking market risk can work.”
Sure. Winner-take-most markets may be worth it. Productized services exist in fragmented markets. First-mover advantage is overrated.
“Freelancers can sell outcomes too.”
How many types of outcomes? To how many types of customers? Variability is inversely correlated to your ability to scale a service.
“Systems kill creativity.”
“Discipline breeds freedom.” | Perhaps productized services aren’t your game if you disagree.
📁 Related Reports
- XaaS • A look at subscription-based productized services.
- Competitor Risk • On the importance of indexing into markets
- Digital Products • Find ways to combine productized services with digital products.
- No-Code • On building systems. Productized services have fixed outputs and flexible inputs.
- Micro-SaaS • Find ways to combine services with SaaS.
- Marketing Funnels • On customer acquisition.
- Lead Generation • More on customer acquisition.
- Remote Work • Labor cost spreads are fading but available.
- AI-Generated Content • Logos, voiceovers and more are being automated.
- Managed Marketplaces • See marketplaces built around productized services.
- The Pros and Cons of Productized Services • Rob Walling chats with Meryl Johnston of Bean Ninjas.
- Clockwork • Build systems. Move from doing to deciding to delegating to designing.
- Built to Sell • A business novel on transitioning from an agency to a productized service.
Thanks to Tyler Gillespie (Productized.Services), Brian Casel (ProcessKit, ZipMessage, Audience Ops), Yolanda Stephens (Sprint as a Service), Stewart Townsend (Channel as a Service), Sam Shepler (Testimonial Hero), Quinn Zeda (Conversion Crimes), Héctor Reyes Flores (Indie), Jaclyn Schiff (PodReacher), Onyx Adegbola (Contentago), David Horne (Calm Capital), Jim Zarkadas (The Human-Centered Maker), Chris Bakke (Laskie.co), Craig Watson (Product Buffs), Yarty Kim (Kick Ass Letters), Vishal Srivastava (Trainedge), Tyler King (Less Annoying CRM), Rick Lindquist (LegUpHealth) and Kimsia Sim (DjangoGreen.com). We had a great time jamming on this report.
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