Productized services are the key to really scaling any freelancing or consulting business. I recommend this strategy to anyone trying to earn extra income, gain financial freedom, and make retirement a reality.
What exactly are productized services?
They’re services that you offer, such as real estate consulting or tax preparation, that you repackage into a product, instead of billing for hourly work. Do it the right way, and you can earn way more than you ever dreamed of from hourly billing.
The Pros and Cons of Productized Services
There are a lot of benefits to offering your skills as a product instead of at an hourly rate. Here are some pros:
- Avoid sticker shock
How much is your time worth? You and your prospective clients might disagree on the answer. Say you offer social media management services at $50/hour. A client hires you to run their social media accounts. This takes you 8 hours a month, so you earn $500. But if you wanted to, you could charge $697 to handle their social media accounts every month. It’s not too much more money. But translate that into your hourly rate and it’s nearly $90/hour. Could your client find another social media manager with a cheaper rate? Absolutely!
Listing your prices as an hourly rate makes them come off as expensive. But if you create a fixed-price product including various business tasks, it starts to look valuable and worth the investment.
- It saves you time
Every time you land a new client, you need to take the time to figure out exactly what they need, and then create a proposal for them. You have to do that with every client, for every project, forever. It takes time.
But if you create productized services based on what most of your clients tend to need, then they can simply pick: Package A, B, or C. No more wasting time creating proposals that clients might not even accept.
- Avoid scope creep
Most clients are well-intentioned when they accept your project proposal and you get to work. But later on they remember other components you need to add as a “quick favor.” These quick favors add up, and we call them scope creep.
But if you create productized services that explicitly state what tasks are and aren’t included, you can avoid scope creep altogether. If a client asks for extra after purchasing, you can offer an upgrade to a premium package or charge for an add-on service.
Bench Accounting’s productized bookkeeping services are a great example of this in action. They offer different packages based on monthly expenses of each business and how many accounts they will manage:
So when a client starts adding more accounts or incurs more expenses (e.g. making more work for their bookkeepers), it’s easy to navigate them to the next product bracket.
- It’s scalable
Charging by the hour comes with an inherent limitation: Time! There’s only 24 hours in a day, and only so many of them you can spend actively working and earning money. Unless you raise your hourly rate, you can never earn more.
With productized services, the focus is on tasks completed, instead of time. You can create processes to optimize your productivity, and instead of it leading to savings for your clients, it will lead to more earning potential for you.
There aren’t too many downsides to offering productized services, if you do it right:
- Pricing issues
Hopefully you have a good idea of how long it takes you to do various business tasks. Otherwise you could end up underpricing a productized service and earn less than you would if you did it hourly!
- Less flexibility
One benefit to creating proposals for each client is flexibility. You can cater your service specifically to their needs, whereas productized services forces them into one box or another.
One way to get around this problem is by offering custom proposals in addition to your productized services, but at a premium price.
- Business investment
This might not even be a con for you, but scalability means more business investment. Eventually you can end up getting more business than you’re prepared to handle, in which case you’ll need to enlist the help of others to keep things going and allow your business to continue to grow.
Think productized services are the right choice for your business? Good! Here’s how to do it:
How to Create Productized Services for Your Business
Here are four points to focus on if you want to create profitable productized services for your business:
- Figure out what your clients need most
When potential clients visit your website for the first time and see your packages, you want them to think:
This is exactly what I need.
It won’t happen with every single person, but if you can capture most of them with your packages, they’ll be much easier to sell.
If you’ve already been working as a freelancer or consultant for a while, you should be able to think back about the various tasks that clients ask you to do the most. Say you’re a real estate consultant. Maybe most of your clients want a few hours of one-on-one discussion with you and a property valuation. Instead of charging for these separately, turn them into a basic package (that you offer at a premium price).
If you aren’t sure what most of your clients need, you can ask them. Make a list of services you could potentially offer and send out a quick survey to your current clients asking which ones they would be interested in. Offer a small discount as an incentive to answer. This is easy to do with a tool like SurveyMonkey or Google Forms.
- Offer value instead of time
If you’re a consultant, a certain amount of your productized service will always be hours on the phone. But if you add on additional components to the package, it appears to clients as a deal instead of a fixed price task.
Online business consultants are good at this strategy. They can offer their advice (time), an accompanying video course, an introductory guide, and a database of online business ideas, for example. They only needed to create that database one time, but can capitalize on its value with each and every client.
Anton Kraly of Dropship Lifestyle is a master of offering value instead of time. He helps people create and grow their own dropshipping business, and offers 4 different packages:
The Basic and Premium packages don’t even require any time investment by him or his team. They’re full of pre-made courses, training courses, access to their online community and supplier directory. The Mentorship and Done For You Packages are where the time investment starts (one-on-one coaching and helping set up people’s sites).
The more expensive courses also include the same materials as the Basic and Premium packages, but don’t charge double the price. This shows prospects that they’re getting a good deal by buying big.
- Test out different package models
Once you’ve created packages and started promoting them to your prospects, you’ll probably soon find that certain productized services are more popular than others. That’s because your most popular option is the best suited to your audience’s needs, and offers the most value for them.
You’ll want to improve your chances of landing even more clients by testing out different package models. Take down that productized service that never gets any hits, go back to the drawing board, and repackage it as something more appealing. Do this continuously throughout your business growth to ensure you always offer the most relevant products.
- Don’t neglect new business opportunities
As I mentioned before, there’s no way your productized services will meet the exact needs of every potential customer. So don’t be rigid in what you have to offer! Always leave custom proposals open as an option. In fact, you should give prospects the option to reach out to you directly on your product page. You can charge more for custom projects and avoid losing new business in the process. Their unique needs might even give you a new idea for a productized service in the future.
Offering productized services is a simple way to earn more money for your time invested, and offer your clients the value they really need. Take the time to scale your business with this sales strategy, and you can grow a business that brings in full-time earnings with a quarter (or less) effort from you.
I can’t think of a better way to transition into retirement while maintaining an extra stream of income.
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Ian Bond is a private banking senior executive with over three decades of experience in wealth and asset management with Goldman Sachs, Credit Suisse, and Citigroup. He has built major businesses on four continents.
Despite his professional responsibility for assets over $100B and revenues over $1B, after the 2008 crash Ian was personally going broke. Within five years he destroyed his debt, became an expat in 2014, and built multiple streams of income to fund his imminent retirement. Ian is also the founder of MyRetirementRehab.me created to help other executives and professionals rehabilitate their finances and make a prosperous, enduring retirement a reality.