A primer on productized services

Many of us do some freelancing to keep the lights on. It's a good way to support your projects and unburden them from monetary stressors. But exchanging hours for dollars is tough and doesn't scale easily.

My wife and I have been running an agency-of-two for a while now and we're considering expanding it. As a result, I've been looking into productized services. I've spent much of my career either working for or owning agencies (and I've also frequently been a client), but I haven't messed with productized services yet. My wife has had some success with them, but she also ran into issues with pricing, hiring, and process. So right now, we're in a process of taking what worked and researching the rest.

Here's what I've found. I hope it's helpful.

Productized services: the good and the bad

Productized services are standardized services that are structured and sold like products.

So, for example, a writer might provide a done-for-you blog post. A designer might offer a logo with a specified number of iterations. A marketer might provide an actionable marketing strategy. And an engineer might provide website monitoring and maintenance. All would be at fixed price ,either one-off or recurring.

Here's why they're a step up from normal services:

• Faster growth

• Upfront payments

• Eliminates time-tracking

• Less "feast or famine" which is so common in freelancing

• You know exactly what you'll make from each project

• In the case of subscriptions, it brings consistent, predictable revenue.

• Your business becomes more scalable such that you can increase sales without increasing time/cost as much

• You can achieve passive(ish) income.

• Eliminates scope creep

• Simplifies the customer journey

• Makes niching down easier

• Processes become streamlined for efficient, effective work

• And it allows you to build revenue and learn the space so that you can eventually pivot to a full product that supports or even replaces the productized services.

Benefits for your customers:

• It often ends up being cheaper

• Results are consistent — they can trust the quality

• They know exactly what to expect

• Faster delivery and no blown timelines

• Can't go over-budget

• Processes are smooth and frictionless

Of course, there's a flip-side. Here are the cons:

• Niching down means a smaller market (not really a con IMO but still)

• It may upset existing customers

• It takes time to set it up properly

• You may lose some customers who want things beyond the scope of your productized service(s)

• Hiring/managing a team is time-consuming and often difficult

• Can lack customization. But that doesn't have to be the case — just build creativity and customization into the process, structure, and price.

Building productized services

So how do you get started? Here's what I've found:

1. First, identify the productized service. Take a good hard look at what you're currently offering clients. Or if you don't currently have clients, think about what you have to offer. If you don't have a clue, start by asking yourself, "What do people ask me for assistance with most?" And begin talking to folks in your industry to identify their pain points. Once you've thought of a service, think about the result of those services — what exactly is the customer getting? What is the "product" that they receive at the end of the day? Distill it until it is as simple as possible.

2. Once you've got a productized service in mind, figure out who needs it the most, and get hyper-specific. It's important to really niche down. Productized services should be intended for (and marketed to) a very specific subset of people.

3. Once you have the offering and the market sussed, structure the product accordingly. What exactly does the customer get? What don't they get? How quickly do they get it? Do they get multiple iterations? If you've written up an SOW for services in the past, this is pretty similar to that.

4. Optimize your processes like crazy. Document them clearly for any subcontractors you bring on board. Everything should be templatized and automated. Most important is the process of completing the work, but you should also optimize sales, marketing, invoicing, and so forth.

5. Structure your pricing. Is it a one-off or a subscription? What price can the market bear? What is the cost for you and what margin do you need? To figure out the cost, put a price on your time (or a subcontractor's time). Note: Your pricing should be continually optimized.

6. Take the structure you've set and clearly define it on your site and content. Make it absurdly clear who this productized service is for, who it isn't for, what it is, what it isn't, and so on.

7. Start selling. Hopefully, you've got a good audience and network that you can tap into. Put the word out. Frame it as the result that they receive, not a service. It's probably best to start with one or two customers so that you can iron out any wrinkles and optimize early on. Make sure to ask for feedback (and testimonials) from your customers and your team.

8. Optimize your processes more. Keep optimizing.

9. Scale. Bring on team members as needed, add new productized services, etc.

As for best practices, here are a few pointers:

• Niche down

• Make it duplicable — there should be minimal adjustments made between customers. Use templates and systems to this effect, per above.

• Be a stickler on the scope of the productized service. Scope creep shouldn't exist here.

• Optimize and scale yourself out of the job.

Productized services examples

Examples might help. Here's an unlikely one that @ryandoom mentioned in a conversation on IH. I think it demonstrates a subscription-based productized service well:

Using your example, if I'm thinking car repair as a productized service. What might that look like? A subscription fee you pay monthly. The fee is based based on type of car and how old it is. It includes free oil changes every 3000 miles and tire rotation every 5000 miles, plus 25% off new tires for $XXX/mo.

You then create relationships with your local car mechanics and tell them you're covering the bill for the maintenance on your customers. You're going to bring them business and you want a 25% discount on their services for generating the leads and business.

Your customers are paying $XXX/mo in your service area and it's time for their oil change. They "request an oil change" and you then connect them with a person in your network that does the oil change at a discount to you, charge you, they pay nothing.

And here are few real-world examples of productized-service businesses founded by fellow indie hackers:

• @J_Schiff of PodReacher saw demand for turning podcasts into blog posts. She started by freelancing on Upwork. Soon, she started contracting writers to do the work. Now, 75% of the work is productized — they convert podcast episodes into blog posts, ebooks, etc.

• @joehhoward of WP Buffs ($137K/mo) offers website maintenance and more for a monthly subscription.

• @Vinrob built ManyPixels, an on-demand graphic design service with a monthly subscription.

• @brettwill1025 of DesignJoy ($60,000/mo) offers unlimited product design on a monthly subscription basis.

• @jasonleow of Sweet Jam Sites offers a number of productized services for one-time payments, such as a multi-page responsive website and hosting for $999.

• @LukaMlakar of Flowout hit $10k/mo in only three months by offering productized webflow services.

Clearly, the companies above seem to be doing very well for themselves. But I should also note that I ran into a few that were no longer active, indicating that this doesn't work for everyone.

What indie hackers have to say

Here's some wisdom on the topic from fellow indie hackers:

@Mjgs said:

I think a lot of is down to choosing your services wisely so the deliverable is quite specific. For example the past few days I've been thinking to specialise my web development offering into api development, because it's easier to validate an API with a customer than a user interface.

@Jasonleow said:

Niche down first then expand your offerings later when your customers demand for it. Also great to start off with finding a few customers first, build ing stuff for them and at same time getting their feedback. You'll learn a lot about what kind of nocode productized service to launch that way

@jacobeus said:

It is difficult to standardize deliverables when 1) the very essence of what you do is custom, and 2) the commitment of your customer in their role has a big influence in the success of the project. Most agency "gurus" recommend value-based pricing over hourly fees, which makes total sense but I've always felt that difficult to apply to software development (and I've consulted said gurus).

Something you can do is standardize your methodology/processes and guarantee "best possible results in allocated time and cost“ (see the famous “project management triangle”). This is what agencies do when they sell workshops, design sprints, etc. : they commit on a methodology and agreed time/cost constraints…

@ryandoom said:

Productized services are easiest if they can have rigid scope and be picked from a menu.

@ryandoom again:

Yeah I imagine DesignPickle is not as bad as a gym membership but similar. They've got lots of members who don't use it much and subsidize the members who use it a ton.

I don't really love that model, I feel if people aren't using it, even if it's cheap they'll eventually churn.

There are a lot of SaaS plans you see that if someone leveraged it to the fullest it's going to be painful for the business owner. Some hosting companies market unlimited bandwidth, unlimited space, but if most of the people leveraged that much it just wouldn't work, and they always have an asterisk if it looks like the policy is being abused.

- Setting up a queue like you mentioned is good.
- Giving a certain amount of monthly credits.
- Optionally roll all or some of those credits over to the next month if it makes sense to do so.
- Maybe running a bid / board system behind the scene. When the submission comes in, based on their subscription credits used or allotment it assigns a value and your subcontractors can see what it pays or bid to do it for a certain amount. Almost a marketplace on the other end of the equation of bidding down, who can do it cheapest.

@vinrob said:

At the beginning it was very, very basic. We were only providing a design "retainer" service and everything went through email. No dashboard, no structured brief: We just asked a couple of questions via email.

So you're right at the beginning we were not a productized service.

The only way to "productize" is to create very clearly defined "service packs" where you exactly say what you'll do / what you won't do, for how much, with which steps, at which speed, etc.

A good way to do so is by breaking your service into "pieces" and thinking of an assembly line where the customer will review separate items of that whole project.

Productized services are more about customisation than creation from the scratch (which is what services are about)

Resources

Here are a few resources that might help if you choose to go down the rabbit hole.

• The Productized Services group here on IH has nearly 15k members and is full of helpful content and conversations.

• Productize Community is an active FB group put together by @Vinrob. It currently has over 5k members.

• Growing a Productized Service from $0 to $50,000/month is a free ebook by @Vinrob about growing his productized agency.

• Productize.co's free course comes highly recommended by @genfurukawa

• My article on working from home has a number of places where you can find freelancing work — this could be a helpful starting point for some.

Wrap up

Seems like a no-brainer to me, so I think I'll give it a try with new clients. I'd love to get your thoughts, though. What did I miss?