Growth June 2, 2020

Service vs Product Based Business Model?

Tejas Rane| Growth Marketer @tejas3732

Let's have a productive discussion.

What do you think which one is better?

  1. 6

    Good insights in the existing comments.

    Having done both, I'll add this:
    I prefer product-based models because the daily job of building something for many, incrementally improving it every day is almost like art. Service-based feels a lot more like being an employee and just executing what the client wants, which I've found much less fulfilling.

    Starting service-based and moving to product-based seems to make the most sense.

    1. 2

      I never thought about product-based models the way you just described it (i.e., never thought about my product to be like creating art). That's awesome and really refreshing to hear as sometimes I feel completely overwhelmed when trying to continuously improve what I'm building for my audience. Thank you!

    2. 2

      Your reply is very resonating. True that we should move over where it makes the process more fulfilling & that which makes sense

    3. 1

      thank you for this - this is incredibly motivational

  2. 3

    Simple answer is that product-based is scalable and service-based is heavily restricted by labor.

    Right now, Prentus is service-based but I am building the MVP so that the process can be automated. Only then will I be able to scale to 1000s of customers. Until then, I can only really handle up to 20 customers/apprenticeships MAX.

    1. 1

      Completely Agree with the Scalable part. Good luck :)

  3. 2

    Based on my limited experience. I think to start off a Services-based business is a tad bit easier to start off mainly because of the lower investment due to the lack of inventory you would be purchasing.

    Both product- and service-based businesses sell a product. The main difference is that the product business actually sells a physical, while the service business sells his/her skills as the main product.

    In the service-based business, clients invest in the salesperson or owner, which makes the client relationship even more valuable.

    Product-based businesses can be assured that their product is going to be the same from customer to customer, making the customer experience fairly predictable.

    Both have their pros and cons. I have been involved in setting up 2 Service based startups in India and I was lucky to have a ready team with me at all times.

    I am just in the phase of starting a product-based business, and already I see my investment and risk more than that of my earlier Service based startup.

    It all boils down to your ability, skillset, the team you have with you.

  4. 2

    A service can be started, adapted, and start earning faster than a product. A product is much better at marginal revenue. There's also the cases of productised service making products on the side, THEN becomes a SAAS company. For a lot of IHers I think getting paid now would be brilliant!

    This post is one amazingly detailed one on Productised Service: $15k/mo running a productized service and step-by-step guide to start yours

    1. 1

      Awesome. I will check this out