Selling Productized Services, with Chris Badgett – Episode 32
The Agency Profit Podcast
What Was the Data and Reporting Like?
i'm more of an intuitive person than a number driven person, so i don't search in my non numbers, data driven way of thinking for the the deal. But i would say that it was kind of flipped or r agency work, even though we're doing really high en projects,. It was so much custom developin that high touch, client relationship stuff. Somewhere around 20% profit margin. Product, hi service, 80 % profit margin. It just flips. And ye, i mean, that's the best i could give you without lie diginan an mala.
By way of background; LifterLMS encompasses the needs of modern membership course creators, allowing you to create an integrated membership site.
Chances are, you have a productized service option lurking within your current agency resources; this could be launched quickly, thus opening up a new, easier revenue source.
About Chris:
A natural and authentic teacher, Chris uses his innate ability to hone every business he’s started or mentored.
Creating a Learning Management System for WordPress, he helps online course creators launch, and scale. The LifterLMS community includes agencies who build learning management systems, membership sites, and courses for clients.
When he’s not working in his cabin, or homeschooling his kids, you can find Chris on his organic farm spending time in nature, and wowing his family with magic tricks.
Points of Interest...
- Maintaining cash-flow to fund products 3:35
- Sustaining your product over time 6:34
- Deciding when to start productizing services 10:04
- Measuring the impact 11:38
- Tips for agencies transitioning to productized services 12:07
Maintaining Cash-flow to Fund Products
Once you’ve built out your SaaS product, complete with making the often necessary concessions on profit, there are other ways to maintain cash flow.
For example, Chris has a knack at talent scouting; investing in someone who may be less experienced, but has the potential to become a leader if given the opportunity to grow while making mistakes. This is the foundation of an economical team engine.
Additional ways to maintain cash-flow as discussed by Chris include…
- Move up-market, ensuring good payment terms
- Get used to pre-selling and receiving cash upfront
- Live below your means where possible, ensuring you survive any dips
Sustaining Your Product
It’s one thing transitioning from an agency to a software company, but – once there – how can you (frankly) survive that transition and ease some of the cash-flow constraints?
In short, it’s worth reminding yourself (often) that moving to productizing services is a “process not an event”. As it happens, this is a mantra Chris uses frequently…
“I say that about a lot of different things, but transitioning from an agency to a software company was definitely a multi-year process, not an event – like, it happened on Tuesday on this date…”
Therefore, it’s necessary to get good at scoping projects and forecasting cash-flow.
Based on his experience in delivering high-end, custom web dev solutions for membership sites, Chris also challenged himself to create and productize, while “using mostly our tool, plus some templated sites, with limited customization”, that still delivered ALL the value and a medium price point.
Deciding When to Start Productizing Services
Given price points vary across the board, your productized service is likely going to be the customer. Bear in mind, the ideal customer or client is going to have different attributes than your custom high-end work.
Five years ago, Chris’s process included some of the below…
- Firstly, he considered how to improve upon scope control, plus drive-up margins
- Then, he experimented for a year
- He learned that clients for productized services are going to be very different to high-end clients, with “productized services, sort of a halfway point between agency and product”
- He also referenced the work of Brian Castle (generally considered a leader in terms of creating productized services out of an agency) and Mandi Ellefson, the mind behind the Hands-Off CEO programme
Measuring The Impact
Realizing he was a product person and packaging services that way made sense, it aided a shift in thinking from services to the product – on the way to SaaS.
“When you really get clear on productized service offerings, you don’t have to put your best people on it.”
Indeed, productized services don’t tend to require a number of high-talent staff. You may need their help to develop the templates, processes and to brainstorm, but in a standard operating procedures way of implementation, resulting in value for the client that feels customized and bespoke.
Additionally, Chris was able to price on value and create great margins, plus he realised productized services brought far less stress.
Regarding the resulting data and reporting, plus profitability, gross margin, and PR from the product; there was a lot of iteration to get to Product/Market fit. Oh, and margins flipped from 20% to 80%… Result.
Tips for Transitioning to Productized Services
So, if you’re reading this at home – with a few ideas ruminating and therefore “product curious” – here are some points to consider if you’re pondering a similar move.
- Do a deep dive into your soul
- Get better at running a profitable agency so you can afford to invest in the product
- Figure out how you’re going to bridge that gap
- Be open to challenging your assumptions about what the product is, versus what it needs to be
That’s the key to unlocking value in a really good offer; don’t get too attached to your assumptions, instead help your clients and your customers uncover their own cause.
Want to see more of Chris? Follow him online @
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