The Trade-offs of Productization and Recurring Revenue

Productizing services to pursue recurring revenue involves trade-offs. This approach is built for scale, aiming to sell a service that can be bought by many clients without customization. However, clients give up a perfect fit as services are tailored to the average in a segment. To make up for a lower price, scale is necessary, requiring a separate sales structure and management system. Building an infrastructure productized service might require spinning it off to focus on efficiency seeking business. Digital marketing firms often fall into a mushy middle, attempting to productize but lacking scale and facing pricing pressures. Careful consideration of the trade-offs is essential.