Productized services are growing rapidly in popularity. For founders, they offer a way to make a six figure salary relatively quickly. For companies, it means paying top talent without the downsides of hiring an employee like paying for a recruiter, paying extra taxes etc.
What are productized services?
A productized service is a standardized service that someone provides to companies for a fixed fee per month or per quarter. For instance, a productized blogging company might produce 4 blog posts per month for every client.
Instead of charging per day or per project, productized service companies charge by the month. Rather than offer different product scopes to each client, you have a fixed amount of work you do for everyone.
Examples of productized service businesses
There are productized service companies for all sorts of niches like design, social media, SEO etc. There are new ones popping up all the time! Here's a few examples:
Productized design service - DesignJoy
Brett from DesignJoy is one of the leading proponents of the productized service business model. He is a designer who last year launched DesignJoy, a service which promises users unlimited design work for a fixed fee per month. Brett has so far earned over $1m from this business and it's therefore almost inevitable that he now has a lot of copycats. Incredibly, his business only costs $275 a month to run!
Productized SEO service - Embarque
Jules is the founder of Embarque, a productized SEO agency. Embarque offers a range of SEO services such as keyword research, blog article writing and backlink outreach. Julian's SEO service business makes over $500,000 in annual revenue.
Productized social media service
I offer Twitter and LinkedIn ghost writing services for companies and founders. I offer social media strategy and write posts and replies for a fixed fee per month or per quarter. This means founders and companies can focus on their core work and leave social media management down to me.
Productized web development services - Peaceterms
Lots of people have been inspired by the likes of DesignJoy and have figured out how they can apply this service business model to software development. One such person is Alex Rudall, who has launched a Ruby on Rails-based 'developer on demand' service called Peaceterms
Productized sales service - CyberLeads
Alex West makes over $500,000 from his CyberLeads business. Originally, it was a service which sent agencies leads for startups who had just raised venture capital funding. Alex has since expanded into offering a sales service on top of the leads business and he charges $3,000 a month for this. This is obviously a drop in the ocean for clients if he can secure a big sales deal for them.
Pros of the productized services business model
Part of the appeal of productized services for the founder is that you can charge a fixed monthly, quarterly or even annual price for your services. So instead of charging per the hour, you can charge by the month and have more financial security.
For instance, instead of designing a YouTube thumbnail and charging by the hour, you can charge for a month for a set number of designs. So you have more business from each client you book. If you have 10 clients paying you $1,000 per month, that's $10,000. It's a lot easier to manage 10 clients on a recurring basis rather than charging $100 per thumbnail and having to find 100 customers every month!
It's pretty easy to start a productized service business and start making revenue. It's certainly a lot quicker than SaaS because you don't have to build any software at the start before you can charge people. Assuming you have 10 clients, here's how much you can earn with a service business:
• 10 clients paying $1000 = $10,000 per month
• 10 clients paying $500 = $5,000 per month
• 10 clients paying $300 = $3,000 per month
So if you have a skill that one person would pay $1,000 a month for, you just need 10 clients to make $10,000. With SaaS, you would need 334 people paying $30 a month to make $10,000. It's probably a lot easier to get 10 clients, provided you are good at marketing and have a good network.
Cons of the productized service business model
At the end of the day, you are selling your time. A lot of SaaS founders say you shouldn't do this. A productized service business does not make money when you go on vacation or if you get sick. It is also probably harder to sell a productized service in the future if it is based on one person's skillset.
If you want to expand your service business, you'll need to hire. For example, Jules from Embarque hires writers to help him write articles and do backlink outreach. Some founders don't like hiring people or working as a manager so if you don't like that side of working, that's something to be aware of.
What is the difference between productized services and SaaS?
The two are very different. A productized service may involve software but it's still a human providing a service. For instance, a Rails developer like Alex will write software for you every month for a fixed price. Or a social media expert like myself will write a set number of Twitter or LinkedIn posts per month.
In contrast, SaaS (Software as a Service) is when someone makes software that you can log in and use. For instance, Netflix is a SaaS. For a fixed amount, you can watch as many movies or TV shows as you like. One advantage of SaaS is you can sell for a lot more.
Productized service ideas
Here are some ideas for service company businesses:
TikTok videos for brands
If you are good at using TikTok you could make 4 videos a month for companies for $500. If you can get 10 clients, that means $5,000 per month in revenue!
Most people hate getting in front of a camera. Making TikToks requires skills like video and audio editing that a lot of people, especially older founders, don't possess. Young people who spend a lot of time on TikTok will also be able to use sounds that are popular with TikTok audiences.
Podcast editing service
Podcasts are a lot of fun to record but they take a long time to edit and promote. Why not offer a service where podcasters can send you the audio and you can remove the 'ums' and 'ahs' with a product like Descript? If you have a good ear for audio, you can find a good piece of music to start and end the show with. I know a lot of people who would pay for someone to take the laborious work of podcast editing off their hands.
If you $800 per month for editing 4 podcasts, you only need 10 clients to make $8,000 a month. That's just shy of $100,000 annually!
No-code website builder
People are increasingly building websites without knowing how to actually write lines and lines of code. They use 'no-code' tools like Bubble, Webflow and Framer to create websites by dragging and dropping elements on a page.
If you have any of these skills you could easily start up a service business where you offer your no-code skills to build and maintain apps for founders, which enables them to focus on sales and marketing.
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