Last week, when I launched my new online shop of whiteboard-animated cards, I mentioned that it was the first step in a larger plan.

I’m conducting an experiment. And in this post, I’ll tell you which ideas I’m testing out, share some of what led me here, and explain how my little shop fits into the equation.

If you’re thinking of adding products to your service offerings, I’m hoping to give you a business idea or two to consider.

My future company. Maybe.

Let me start by sharing a few changes I’m considering making to my small business.

For context, my company produces made-to-order whiteboard-animated videos to help our customers turn their complex information into compelling visual stories

In the future, I’m considering complementing my service with a product line: Off-the-shelf whiteboard videos that communicate messages that businesses often need to share with their customers or users. 

For example, we might sell a video to welcome new customers, one to reengage inactive ones, another to ask for a referral or testimonial, etc.

Essentially, customers would buy a ready-made video off our website, choose from a few available customizations, and receive the adapted video by email.

Why the change?

I consider it a privilege to do what I do, and I hope to keep doing it for years to come. But I also think I’m leaving some other opportunities on the table—opportunities that I could address with a complementary product line.

I’ll drill down on the why. But if you need no convincing, go ahead and skip to where I talk about the how.

What I like best about having a service business

There are many things to love about running a one-to-one service business. My personal favourite is the incredible learning opportunity it presents.

Because if you’re lucky, each client needs help to solve a different problem. Each project offers new challenges and the opportunity to grow. 

And that can be incredibly stimulating.

But compared to selling products, there are also drawbacks to running a service business.

The drive to productize

Selling products offers several well-known benefits compared to selling a service. Here are a few: 

  • Get paid even when you aren’t working. (If you’ve ever fretted about taking time off to go on holiday or to deal with a family emergency, then you know what I’m talking about.)

  • Generate more predictable, repeatable revenue by standardizing and automating your sales and marketing processes. This is harder to do if you’re selling a personalized service that requires a custom business proposal every time. 

  • Build equity. When you sell a product, you have an asset outside of yourself and your team. That makes it easier to raise funding or to one day sell your company.

  • Increase profitability by finding efficiencies. When you sell products, you can make more money by making your processes more efficient. But if you sell a service based on an hourly rate, working more efficiently benefits only your customer, unless you raise your rates.

But there’s another potential advantage to productizing your service that particularly resonates with me: It can help you increase your addressable market.

Productizing can broaden your audience

When you sell a service, the customer’s price has to reflect all the work you’re putting in for just them. That means that the more customized your service, the more they’ll have to pay.

As a result, your consulting fees could become prohibitively costly for customers who are interested in what you offer but can’t afford to fund your efforts.

The cost of originality

Let’s take my own business as an example. 

Our customers pay thousands of dollars for our whiteboard videos. Why? Because the videos are entirely made-to-measure across every step of our production process—from discovery and scripting to illustration. animation and professional voiceover. (See a snapshot of our process below.)

whiteboard-animation_Discovery
whiteboard video script
whiteboard video storyboard
whiteboard-animation_Illustration-Animation
whiteboard-animation_Voiceover
whiteboard animation Music sound

And so our pricing has to cover all the time we invest in all those areas, as well as all the feedback rounds along the way.

Although I do my best to streamline and scale the parts of the process that can scale, much of what we do is intentionally original to each customer. That’s what makes our videos a cut above so many of our competitors. It’s why we’ve won awards. And why our clients rave about us.

I’m proud of the quality we offer and I stand by our pricing. But it does make me a little sad every time someone excitedly tells me they want a video… only to backtrack when I send them a quote. 

(True story: I always imagine their smiles dimming at the other end of the email, and I feel disappointed on their behalf.)

Products: build once, sell often

But a product is different.

Because you build the product once and sell it many times, you can afford to sell it less expensively: your development costs are spread across multiple buyers, rather than shouldered by a single one. And that makes your product more attractive to a broader market of customers who prioritize affordability above exclusivity.

A quick glimpse of my new holiday shop…

productized service holiday shop

If products are so great, why sell a service at all?

Fair question. Aside from the vast learning opportunity that selling a service offers, there are benefits to the business model of selling both a service and complementary products. Here are a few:

  • Enjoy the best of both worlds: the learning potential of the service and the scalability of the product.

  • Serve multiple audiences. (In my case, the people who value uniqueness and are willing to pay a premium for it, as well as those for whom price matters more.)

  • Diversify your revenue streams, for increased financial protection.

  • Create synergistic revenue opportunities, such as upsell, cross-sell, and added value opportunities.

  • Solidify and deepen client relationships by serving more of the needs of each of your clients.

  • Use your service revenue for funding your product development and mitigating risk.

And speaking of risk…

The inherent risk of selling products

The upside for products can be more significant than it is for services. But products can be more of a gamble, too. Here’s why:

  • Products can create a cash flow crunch. Unlike with services, where your work starts only after you secure the client, product development begins (and you start incurring costs) before you even know for certain you’ll have sales.

  • There’s a minimum break-even number of transactions. When you sell a service, a single sale can be sufficient. Whereas with products, you generally need to sell more than one unit to break even. And obviously, the higher your break-even number of transactions, the higher the risk.

  • The product/market fit is uncertain. With services, you start your work knowing you can solve the customer’s particular problems. (In fact, you often  work with the customer to develop the solution.) By contract, with products, you need to anticipate the needs of many, and solve for them in advance.

  • Building trust at scale is a challenge. It’s reasonably straightforward to build trust with one-on-one service clients. But trust-building is much harder to do at scale with buyers of a product.

  • You risk producing a generic product. Compared to a highly customized service, a productized service—standardized in order to appeal to everyone—risks resonating with no one.

  • Risk of price competition. If your product does become generic and commoditized, you risk having to compete with other producers on the basis of your price, which often becomes a race to the bottom.

This list of risks is enough to sober even the most enthusiastic among us. But planning is everything. And there are things you can do to mitigate these risks and increase your odds of business success. And that is where the experimentation comes in.

“One problem with turning services into products is marketing and trust-building. I find it is easier to build trust and win clients when I’m selling one-on-one services. I’m still learning how to sell one-to-many.”

Chris Brown, founder of Pixel Law

Best practices for productizing your service

If you’ve gotten this far and you’re tempted to productize your service, here are my best practices for doing that, based on my initial experience.

1

Stick to what you do best

Build your product around your core strengths and interests.

2

Do some market research

A good start is to talk to your service clients. Are the products you’re planning of value to them? If so, then you may already have your first customers.

3

Dream big but start small

Start with a pilot project to test your assumptions. (Here, at last, is the reasoning behind my online shop.)

4

Choose a pilot with a broader or more certain appeal

In my case: Many companies plan to send holiday cards to their clients. And with more of us working from home, printed cards are a riskier option. And so my holiday cards are a surer bet than some of the other canned video ideas I’ll play with next.

5

Find and target a market for your product

If your product won’t appeal to everyone—few do—figure out what your ideal customer looks like, how you can tailor your product to their specific needs, and how you’ll reach that audience.

6

Develop the skills you’re missing

You’ll need to pick up a few new skills to go from selling a service to selling a product. Speaking for myself, my e-commerce and social media advertising skills are rudimentary, at best. I’ll need to upskill in those areas or to outsource the work to a freelancer.

7

Differentiate your offer

Find ways to gain a competitive advantage over existing competitors. How can you leverage your service experience to deliver a killer product? In a separate post, I’ll outline several of the techniques I used to make our holiday cards stand out.

8

Make sure the product is scalable

(Or else, what’s the point?) That means choosing which elements to customize and thinking ahead to how you will do so cost-effectively without compromising quality. Sticking with my holiday card example, I spent time planning which of the elements (logo, colours, copy) would be customizable for each card, and how I would execute those customizations.

9

Promote. Promote. Promote.

Building your product is just the beginning. Spend at least as much time planning your go-to-market strategy. Start with the low-hanging fruit: make sure that happy buyers of your service offerings know about your new products.

Over to you

Are you thinking of trying your hand at productizing your service? I’d love to hear about your thoughts and experiences. Leave me a comment and let me know? And if you have any thoughts on my future business plans, my shop, or my experiment, I’d love to hear those too!

Finally, if you’ve enjoyed this blog post, please sign up to my email list, to receive the next one in your inbox. And be sure to check out the whiteboard animation examples in our portfolio