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Podcast discussion: TropicalMBA.com/services

Andy Black

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What are examples of a "Productized Service"?
 

Andy Black

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What are examples of a "Productized Service"?
Here's one that Dan Norris created and then sold:

Here's a well known graphic design one:

Both of these are monthly recurring services. I don't suppose it has to be monthly recurring.



Here's a good short video of a guy explaining the difference between a consultancy and a productized service:
View: https://youtu.be/y2MJE65afyY



TL;DR
  • Consultancy = Customised services that matches the needs of your client.
  • Productized Service = Packaged services with a fixed fee / deliverables.
(I'm sure there's grey areas!)



I'm a lot like the guy in the video in that I'm still figuring this out. For instance, because I don't want to grow a consultancy that depends on me, I'm charging productized services prices for what are effectively consultancy services. This would be dumb long-term, but I'm happy doing it as my goal is to build something that runs without me and I think it needs my consulting brain to build it.

I'm also not trying to grow my revenue at the moment, but change how that revenue is earned.


My own sliding scale that I've been using since I listened to this podcast years ago has been:
  • Employee
  • > Contractor
  • > Freelance Consultant
  • > Consultancy Owner (have a team but doing bespoke work)
  • > Agency Owner (have a team and doing more productised services)
  • > Productised Services
  • > Platform (directory, marketplace, plugin, SaaS, etc)
An aha moment a few months ago is that I might not need to move along the scale and no longer occupy previous positions. Maybe I have offerings at different levels:
  • I could be a highly paid consultant for some clients.
  • I could hire out my team to do bespoke work for a high fee.
  • All while creating repeatable processes and systems that "productise" some parts of the service, which either increases margins or allows us to charge less and scale faster.
  • While finding common needs amongst the consulting clients that could end up being a plugin we roll out to them all, and potentially to new *customers* who will never become consulting clients.
 
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astr0

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I'm also not trying to grow my revenue at the moment, but change how that revenue is earned.
That would definitely pay out long term. Something that's detached from time usually takes time to get going, and short-term income is definitely lower than with offering skilled consultancy but at some point, it would get to the point where "hourly-rate" is much better than with consultancy. Supporting productized business usually takes a lot less time and fewer employees.

I've had a similar plan (except Consultancy owner and Productized services) and going in products direction too. The main reason for that was realizing that I've been working in a service business for 12 years as an employee and I know client needs in some industries, recent success with the client's project where I was involved more than just developer, and some talks with service and product business owners in the software industry.
Main takeaway: services get harder with scale, products are not as hard and risky as I assumed if you build something useful (still some luck and randomness involved).

Having processes and systems that productize parts of the service is great. Do you also have some in-house tools to save time managing all the campaigns or optimize them? That probably could allow you to provide service more efficiently and maybe even convert them to SaaS for other agencies. After so many years in business, you should already have some generalizations in mind for that plugin that your type of clients may need. In your videos, you mentioned that you have "consultancy" and "DIY" clients, later may really use and pay for the tools and you can continue consultancy for the first group. That would keep short-term in place income and open good long-term perspectives.

We're "just starting" so can't really go that route. Marketing and looking for prospects for a new service business would take too much focus. We don't really have enough money to keep us afloat for a long time, but we have some service work left on a current project and possibly some "freelance consultancy" from our networks in the future. Another good option for products would be to take adequate investments. That would be another step in idea validation too, as "selling" the idea or MVP to an investor makes him put his money on the line which means something.

I haven't thought deeply about productized services, cause in our industry it's like... selling workbenches to woodworkers. Yes, if they in a hurry or the product is really exceptional they would buy, but normally they would DIY what fits them best.

TL;DR
Being on many steps at once is fine as that would ease all the bumps and get you better feedback on a product part, but it's pretty easy to lose focus and vision while you're "busy".
 

Andy Black

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it's pretty easy to lose focus and vision while you're "busy"
^^^ My biggest problem currently!



Thanks for your detailed reply.

For me (us) the route of "Consulting > Productised Service > Product" means we're learning intimately what's needed by the market. We slide along that scale naturally by creating processes, tools, and systems to help us serve the same market better.

Another potential distraction for me is serving other agencies. They're a different market from our current market.

Myself and @eliquid discuss some of this stuff in our chat here:
 

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I tried productized services and I believe they're too much glorified these days. The reason why I launched one and why most people do the same is that they come from a selfish perspective: "I want something scalable" "I want to have more freedom" "I hate discovery calls." The thing is, I believe a discovery call it's necessary for high-ticket services 'cause converting cold on a sales page it's very tough unless you've done some huge heavy lifting building trust with the content or other means before. The solution, I believe it's often (not always of course) not to productize but to go from freelancing to running an agency which takes more care of itself.

Btw, a great book on productizing: Built to Sell.
 
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babyballer

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If you love this podcast, you will also love sweaty startup (The Sweaty Startup - A Resource for Entrepreneurs).

His podcast links:
‎The Sweaty Startup on Apple Podcasts

His reddit page:
 

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