Why It Matters
Productized services help you move from selling time to outcomes.\
You can build systems instead of billing hours.
Problem
Purchasing services is more complex than purchasing products.
Solution
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.
Players
Design
Bookkeeping
Testimonials
Sprints
Content
Coaching
Repurposing Content
Usability Testing
Predictions
- 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.
Opportunities
- 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.
Haters
"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
Links
- 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.
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Thanks, for sharing, it's of great help.
As a founder, I was researching design services and that's when I came across Penji, ManyPixels, Design Pickle, etc.
Tried doing a comparison of companies offering unlimited graphic designs:
https://www.indiehackers.com/post/affordable-design-solutions-for-indie-hackers-comparing-subscription-based-graphic-design-platforms-ac853feadc