More and more freelancers, digital agencies, and other individuals discover the benefits of productized services. Many of them have been trading their expertise for dollars by the hour. Their biggest pain point is the struggle to scale their business.
This is where productization comes in: instead of creating manual invoices for each client, you can bundle your services into valuable packages.
The change from a “by the hour” model to the productized service model takes a bit of time and effort to pull of. The following five tips should help you get started, and succeed with your new business strategy.
1. Create a Value Based Pricing Strategy
There are multiple pricing strategies a business owner can choose from. One of the tougher ones to pull of is the value based pricing strategy. It requires thorough market research, competitor analysis, and patience.
If pulled off successfully, however, value based pricing ensures that your business can scale with low effort while maximizing your revenue. The biggest advantage of this pricing strategy is that you don’t compete on price. Globalization has made that pricing strategy hard to pull off unless you offer the by far best prices.
Here’s how you can get started with your value based pricing strategy:
- If you’ve been running a business for a while, take a look at your past invoices/quotes. Are your clients asking for certain services repeatedly? If so, you should offer them as a service package.
- If you spend hours talking to potential leads, think about reserving the chats for high-value-leads instead. Everyone else can choose from one of your pre-configured packages.
- If you’ve spent hours creating the perfect quote without making too much money, try to upsell your customers. Someone looking for website design might also be interested in a new logo!
2. Manage Client Expectations
Nothing costs a business more than angry clients. To ensure that they stay happy throughout their journey, make sure you are on the same page.
A key element of productized services is the definition of your offering. Make it clear for your clients what they can expect to receive for your service price. Even big companies have detailed comparison tables for their plans–and you shouldn’t be an exception.
Also ensure to set clear boundaries what is included in your price, and what is not. Any extra work should be charged appropriately.
A few more things to keep in mind:
- Set clear working hours so clients know when to expect answers from you.
- Regularly share project milestones with your clients to keep them up to date on the progress.
- Maintain realistic expectations of your work and never overpromise.
3. Start Automating Your Processes
Once you’ve transformed your services into packages, start offering them on your website. Make the checkout process as easy and seamless as possible. The important thing is not to ask too many questions during checkout–this creates friction and customers might abandon the process.
An abandoned checkout is still not a lost sale. Set up an email reminder in Mailchimp, and trigger automated emails to convert the abandoned checkout into a sale.
Here are a few more automation tips you can set up:
- Integrate Calendly with Mailchimp, and set up an email flow that sends out two follow-up emails to keep them engaged.
- Automate reporting with Google Data Studio instead of creating manual reports each month. Check out the Data Studio Report Gallery to get started.
- Stop manually generating leads. Use Zapier instead to convert hard-to-get leads via LinkedIn Matched.
4. Learn When to Delegate
Many businesses struggle with the idea of letting others help them with their tasks. This not only leads to higher stress levels, they also spend time on less important things.
Productized services are all about optimization and automation. The idea is to scale your business with minimum costs and effort. To achieve this, one key element is delegation. Take a look at your current team and find someone who can help with your tasks because they understand your processes. If the ideal person doesn’t exist yet, think of training them instead to take over some of your tasks.
Things to think about before delegating:
- Check the needed experience to complete the tasks.
- Verify that the chosen person has a light workload.
- Set priorities and write down clear instructions.
5. Double Down on your Niche
Part of setting up your value based pricing strategy will be to find out which services are worth keeping. You’ll notice that you’ve been offering services that are rarely requested from clients, or worse, have a low profit margin.
If you’ve been in the business for a while, you should know where you accelerate. Niche down and make it clear that you are an industry expert. If you want to offer productized services, you’ll need to set yourself apart from the competition.
If you are just getting started with your productized business, you’ll have to do a bit of market research to find your niche. This guide by Shopify should help you find your niche and evaluate it.
Here are a few things to keep in mind:
- Try to target specific businesses with your services. Someone who offers SEO services could target lawyers, for example.
- Niching down helps in an already competitive market as mentioned here. It forces the competition to either niche down, or expand.
- Focusing on a niche should not be considered a limitation. See it as an opportunity to focus–and one that can also grow with time.
Productized services have slowly captured the hearts of many business owners. While some still struggle to transition to this new business model, others are enjoying the benefits it brings. The five tips mentioned in this post will hopefully help anyone who still hasn’t managed to productize their services.
This article has been kindly provided by Deian, Head of Agency Success at SPP.