Why you should build a productized service on top of your SaaS
Background
We have a couple different projects/bets over at Niche Mates.
The three most relevant products share a common theme.
We've taken an existing process and automated it.
For example Swiftbrief, an SEO tool automates a quite expensive service usually an agency will offer.
Creating SEO roadmaps and writing content briefs.
Why you should add a productized service offering
Now to get to the point, we've been around for a bit, MRR growth is there, but it's slow(er) than we want to.
So what we're doing now is to subsidize MRR with one-off revenue that comes from a productized service offering that's build on the tool.
This solves a lot of things at the same time:
- We get exposure to our product by talking about the offer
- We get new users for the product
- We get money to reinvest into the product
- We get more user feedback
- We train the user in how to use the product by showing it.
- We test things that can go back in the product (e.g. paid trials)
It's a great alternative to freelancing on the side and working on something completely unrelated to what your product is.
Ofc with the caveat that it should make sense for your product.
How does the process look like?
We sell custom SEO roadmaps, a service that will usually cost ~$1000 or more, depending on the agency (our Product Co-Founder takes $2900, but that includes a bit more stuff so not directly comparable).
Here's the process in more detail.
- The user buys the service on a landing page
- They get a form to book a call where they have to submit info about their own domain (like URL, Target customer etc.)
- We have one 45-minute interactive call, where we build the roadmap together, the user gets to ask SEO related questions
- We deliver the roadmap as a link to copy into your own Swiftbrief account (users sign up)
- You get 25k credits to extend the roadmap and use the tool for next steps
Results
We started with a tiered pricing that got more expensive the more orders came in the door.
On the first day, we sold 7, then 3 and also just sold out the $99 tier, yesterday.
Price went up every 3 orders until we hit $499 which will (probably) be the long-term pricing.
Learnings
- I think it helped a lot to include scarcity/urgency into the offer, and it made sense because we have limited capacity to fulfill these.
- The first price $19, was probably way too low, next time we'll start higher
- Extending the first price for the full day was a mistake too, as we ended up with a bit of a queue.
- We offered this for free for a while and people didn't really care about it, only once we put a price tag on it they did.
Recap
Adding a productize service to your SaaS can be a great way to:
- learn more about your customers
- subsidize product revenue
- Stay within the context of your product to make a salary
Especially if your product has a bit of a learning curve or needs knowledge to get started this removes friction.
Connect
I tweet daily and make videos from time to time on stuff like this.
If you want to see how we build one of these roadmaps, check out this video of a workshop we did.
This shows how offering services alongside your product creates multiple benefits. Customers get guidance using your tool, you learn their needs to improve the product, and it brings in revenue to grow the business. A smart way to add value and support.
Automating processes but also offering human support through services is a balanced approach. The product does the repetitive tasks while services address custom needs. Working with customers directly no doubt offers perspectives that lead to product refinements, strengthening the overall solution.
Starting services at a low price to gain traction is reasonable, but too low risks undervaluing the work. A slightly higher initial point respecting both the provider's time and the customer's needs may gain quality clients. Testing price adjustments for demand provides learning to set the right long-term value.
Thanks!
We had increasing pricing built in so it was ok.
I think it's a balance between, setting the price so low that people are more likely to share it and high enough so that it makes economic sense to fulfill.
Def something that needs to be experimented with.
This is a great idea. I've always thought of it the other way around. "I'll sell services until I can productize." Which is a really great way to identify valuable products, based on the repeatable work you're doing.
Productizing a service on top of a digital product is a great way to boost revenue and drive adoption of your product. People who may not have become customers via demos, cold outreach, etc. might just simply by seeing you interact with the product during an engagement.
I'm building a SaaS product in the edge infrastructure space and often have clients who could use the product for their app platforms. I'll keep this in mind!! Great read.
Oh yeah, I think it works both ways.
The thing is we never wanted to do service biz and started with product.
Just more fun, but also sooooo much slower to build revenue.
So maybe it's just a question of where your starting point is.
However, I think once people have cashflow via product, they stop any kind of service or productized service offering.
But it can still be a great other rev stream and way to learn more about your customer (while getting paid too)
Side note, all the projects we have, we have a partner that has done this as a service business, so they kinda validated what you mean by starting with service.
For the three projects we focus on most it looks like this:
Nice! That's a great strategy. So how does that work, do you subcontract the partner agencies and offer that as a service, or do you just work on a referral basis and capture some amount of revenue that way?
Love the insights here!
We are venture partners so they have rev share & equity.
For the stuff that is agency fulfillment, there are two ways:
For the offer I mentioned above, we keep the rev, as the main point here is to funnel new users into the app.
We will add something where you can turn an outline into a full article, where we just get a cut for acting as lead gen for the agency basically. Reason being that here there is a lot more work on the agency vs on our product.
They act as our "agency of record" that fulfills anything beyond the scope of the product so to speak.
this sentence is gold "Stay within the context of your product to make a salary". Makes me see productized service under a different light. Makes it seem not that bad vs pure self-service product.
I mean, it's work people often don't want to do.
Product is supposed to remove your shackles from "service" work, and it's not as scalable ofc.
But compared to the next best alternative, it's pretty good.
Very cool idea! Thanks for sharing this. :)
🙏
Looks good, thank you for sharing this.
Np mate.
I like your determination, thanks for share useful tips
🤝
That’s a perfect mental model for working on SaaS, read as Service as a Service.
It forces you to focus on customer problems and not on features.
Service as a Service it is haha.
Thank you for sharing your thoughts.
Np mate 🤝
Thank you for sharing your thoughts on this.
💪
Insightful breakdown
Cheers Prem
Good work!
🙏🙏🙏
"The first price $19, was probably way too low, next time we'll start higher"
One of the points where I'm more afraid as a Indie Hacker.
Of course I want that 1st user very fast when I launch a product.. but I hear a lot of stories when the launch is too cheap and then people realize there was room for higher prices.
I wouldn’t overthink it.
Here we did it on purpose because it was in tiers anyway (price went up every three purchases).
If you’re pricing your product it’s probably better to start too high than too low because correcting down is easier than up.
Different strategies.
In the end pricing is something you should always experiment with but you need a lot of data first.
Thx for the advice!
Welcome 💪
Good work. this is what we are trying to do too now.
Lmk how it goes.
What’s the offer?
Great post Stefan.
Thanks for sharing.
What would you recommend as the first price as a starting point?
How did you take payment? Did you have a landing page that explains stuff, with a Stripe pay button on it?
The idea was to set the first price low enough to get a lot of attention on Twitter, but high enough so that it doesn’t look like it’s worthless.
As I said we tried these for free and nobody cared so I was thinking 19 or 49 to start out.
Went with 19 it was purely a gut decision but it went well awareness-wise.
Probably actually had too many ppl reaching out so maybe I’ll try 49 next time haha.
Payment link is on the page and the receipt email includes instructions + call booking link with questionnaire.
Thanks Stefan. I don't think I'd have the confidence to go straight to $49 but I might try $29 or $39, if I ever offer a productised service :)
Yeah, I mean this is not a blanket statement answer, it will depend on a lot of factors.
All you can do is try, learn and adjust.
Great post thanks so much for sharing.
Quick confirmation questions if you don’t mind?
So from below you’re saying services based is slower to revenue than product or is that vice versa? (I ask because I’m doing it the other way around where I am trying to build a platform product around my service business and feel that’s a longer route to revenue over my service offering)
How did you find the partners for your 3 projects ?
Thanks again super helpful and once my site/offer is ready I’ll sure be checking you guys out for SEO services.
It’s also a lot of upfront investment do build a product that is captured in the asset (in form of time / opportunity cost)
Now the good things about product is that it’s more scalable and has better margins.
But that only kicks in after a while.
Don’t quote me on this but I think the average to get to $1k MRR is a year?
After that it starts to compound.
But contrast that with how fast you can find a client and write an invoice.
And how often that invoice will be >1k too haha
Ah no you was clear just wanted to sanity check, as yes ive found it more straight forward for early conversations related to services which makes sense. I suppose the average to get to $1k MRR a year depends on many variables from target clients, market, offering etc. But yes from what I can see and from my experience in sales there is always a tipping point where the snowball effect takes place, once a new client is happy with your service or product it gets super sticky! Lovely!
Its the same for stuff like social media where some get 10x followers after slogging away for years to get their first 1000!
Best of luck to you.
Barry
It always depends, but product revenue is almost always slower.
The downside is that service is less scalable, product more.
Based! I’m doing the same, that’s an awesome strategy
Ihar the based bloke.
Cool stuff Stefan!
Cheers Orlie.
Next scampi on me lel.
HaahahahahahAha omg stoppp 😂😂😂
🦀 wheres the scampi emoji at
oh 🦐
My man.
This is a great idea if you're bootstrapped
Yes. Feel like most people on here are, so I didn't mention it explicitly, haha.
Basically for anyone that is broke, which includes most bootstrappers 😅
This is a fantastic breakdown of how integrating a productized service with your SaaS can significantly boost growth and revenue.
It's a smart move to leverage existing processes and automate them, while also capitalizing on one-off revenue streams.
I appreciate the transparency in sharing your pricing strategy and the lessons learned along the way.
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'Niche Mates' is a 404 for me.
My bad we just migrated this and the URL doesn't exist on the new site haha.
Here is the new one: https://www.nichemat.es/
Thanks! Sorry to bother you again: Linkedin links (team page) aren't working. We should connect.
😢
Thanks, I fixed them just now.
I'm here -> https://www.linkedin.com/in/nafetswirth/