Dec 28, 2019

Why You Should Start A Productized Service Business

Instead of doing freelancing and consulting

I was a graphic design freelancer since 2005, and very happy with my life then. When my kid was born, there was no way for me to be serving my clients while babysitting. That’s when I realised my business couldn’t run without me. I was the bottleneck in all areas of it.

Searching for solutions, I tried to create other tech products, thinking that services can never be scaled. Maybe developing a SAAS (Software As A Service) product is the only way for me to remove myself from my business, scale it while still earning an income from it.

Since I’m equipped with decent coding skills, I thought I could create the next Facebook or Youtube and not have to work forever. After a few failed SAAS startups that included everything under the sun: parenting, food and advertising products, I got slapped by many lessons.

I found out I was wrong about how startups and businesses work. I was wrong that coding is the only skill I needed to find freedom. I was wrong to think that SAAS is the next big thing to create. I was wrong that service businesses cannot scale.

I did some soul-searching and realised it comes down to one thing. I just wanted a business that can scale, something I can create processes and systems that anyone can take over to run it. I didn’t need to create a SAAS or a physical product to remove myself from the day-to-day tasks in the business.

In 2015, I boxed up a part of what I’ve been providing as a freelancer into a productized service business. I was on my way to building an asset that allows me to help more people and bring me the freedom I’ve always wanted.

Remove the limitations on your earning potential

I’ve been working my way not just to remove myself as the bottleneck in my business. I’m also moving towards improving my wealth, health and lifestyle in general. In the past, I tried everything to do more in less time. But so long there is only one of me (which always will be), something has got to give.

In the freelance and consulting models, doing more may help bring more profits and more of your own individual flavour to your client’s work. If you want to earn more, you can raise prices and take less client work. Freelancing and consulting can be profitable if you want them to be. Sad truth is, no one can multiply oneself, nor can anyone add more time to one’s day.

The good news is, there is a way you can remove the limitations on your earning potential with what you know. One way is to identify a set of common items that a large percentage of the market would want to buy. Then package it up, grow a team to produce the same thing and sell one thing to as many clients as you want.

No back and forth haggling with quotes

Though I’ve been doing this for ten years, in retrospect, negotiation of my rates was a classic waste of time. I can’t expect to go to an Apple store to buy a Mac for something less than anyone else by bargaining for it. Why should I allow that in my own business?

Starting a productized business changed all that. I used to be a generalist, providing everything from brand strategy advice, logo designs to full-on web designs. Within this huge space of design, all my clients will ask for one thing without fail. And they will ask for that same service many times. That is, to make changes to things like colours, fonts, spacing, images and text.

With this knowledge, I simply put together a monthly service that provides simple graphic edits at one fixed rate. I don’t have to take time to create one from scratch just for one client and another different one for a new client. Also, there’s no need for them to wait for me to update them with my quote and negotiate with me for weeks. It’s just one price, they are either in or out.

No scope creep

This is one of the worst things that can ever happen in a service-based business and I had my fair share. I used to have clients who promised they only needed easy, minor and few changes to a seemingly simple artwork. They are so easy that I could have worked on them for free.

After a few rounds of changes, the clients started asking for new requests, such as a change of text and image positions. Then they started to ask for improvements in the original design. Before you know it, a few minor changes that only needed an hour of work became a few weeks of major design overhaul that required tons of research work. The budget remained the same while time and effort were stretched way out of proportion.

With a productized service, there’s just one price for a limited scope and/or within a limited time span. Instead of you having to wait for the client to request for anything without boundaries, you set the scope from the get-go, eg. only simple graphic changes, no research included. Clients will have a clear understanding of what will be delivered to them at that given price.

No more chasing payments

In my freelancing days, I hardly get paid for all the services I am offering before the work starts. That’s because I wanted to do everything my clients ask for not just to please them but also to provide as much value as possible.

Also, it’s tough to know what’s the total price because I wouldn’t know how much changes they would be asking for, and the time that had to be taken to work on them. The most I could do was to get paid a deposit before the work started. After the work was completed I would send them a final invoice. Most of my clients never paid me on time. Half the time I would be sending them emails and messages day-after-day chasing for payment.

When selling a productized service, clients will receive a standard set of deliverables at a fixed price, and the price is the same every month. Without the variables to be quoted and invoiced, we can sell a packaged service just like any product to be taken off the shelf. If they need one, they have to pay first before bringing it home. In a real case scenario, work starts only when payment is made. Since this change, I never have to chase for payments again.

Repeatable service and recurring income

The possibilities of a productized service are as far as you can imagine. You can package one quick deliverable (for example, icon designs) at a low price, or you can put together a series of services (for example, a logo, web design of maximum five pages and five social media graphics) at a higher price on a subscription basis.

The service you come up with depends on who you wish to serve and the expertise you and your team can provide. Just like a box of pre-mix, someone can pick it off-the-shelf, all ingredients included.

You can replicate the exact same service to a different client by expanding your workforce without having to be the one putting your head down to do the work when you don’t wish to. You provide the same type of service to people who need it repeatedly and you get paid a recurring income. What’s not to love?

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