When consultants talk about their income streams, they usually put those streams into one of two categories: active income and passive income. But what if I told you there is a third category that provides the best of both worlds?
It’s true. That third category is called “productized services.” In this article, we’re going to look at how you can combine active and passive income strategies to develop productized services for your business.
The Two Primary Types of Income
Before we dig in, let’s take a look at the two primary categories of income streams for your consulting business.
The first category is active income, which means money that you make from providing services. Primarily this means charging clients for completing projects, or sometimes hourly rates or monthly retainers.
The second category is passive income, which means taking your knowledge and packaging it into products you can sell, like e-books, webinars, and online classes. With passive income, you do the work once and then sell the resulting product over and over again.
A Third Way to Build Your Income
As mentioned above, there’s also a third way to build your income… a strategy that combines the higher fees that you can earn from active income with the “work once, sell over and over again” benefits of passive income. That third strategy is to create productized services.
A productized service is a service that you perform in a standard fashion over and over again for your clients. Every consultant has certain services they provide day in and day out. Most of the time, these services are performed almost the same way for every client, with only minor customizations for each customer.
Productizing those services means putting a procedure in place to offer packages to your clients where you offer the same service over and over with only small customizations for each customer.
Examples of Productized Services
Let’s take a look at some examples of productized services:
A fundraising consultant may write dozens of fundraising plans each year… and find out that the plans he writes for each category of non-profit (small, medium, and large) all tend to be relatively similar. For each category, the consultant creates a plan template, and simply needs to fill-in the customized areas based on the needs of the individual client. He then sells “fundraising plan packages” where the plan is 90% template, 10% customization.
Similarly, a social media marketing consultant may successfully implement the same marketing strategy for dozens of clients, including revamped profiles, various categories of social media posts, new photos and logos, etc. The consultant then creates templates for this project and sells it as a productized service called “Social Media Supercharge” for a standard price. Again, the package that is sold is 90% template, 10% customization.
If you want even more examples of productized services, you can check out this article over at Productize & Scale. Note that while the examples at this link are mostly tech-oriented rather than consulting-oriented, they still give you an example of breadth of services that can be profitably productized.
What Types of Services Can Be Productized?
The best types of services to productize are those where there is a similar intervention or project for each client. These are projects where you’re doing essentially the same work for each client, each time requiring only minimal customization.
Selling productized services is a win-win for both you and your clients. You’re getting the benefit of doing the work of creating the templates and the processes once, and then selling them over and over again. Your clients are getting the benefit of a successful project at a lower price than if you re-created the wheel for each and every client.
Packaging and Pricing Your Services
Productized services can be easy to market because you can package and advertise them to your list the way you would an info product. You should create a name for your productized service, as well as lists of features and benefits. You should also be sure to create a defined scope of work – you want to make it clear exactly what is included in your productized service and what is not.
Many consultants have also found great success with creating different tiers of similar productized services at differing price points. For example, you may have a low-level marketing package that includes the creation of two social media ads targeting two different audiences, a mid-level package that includes five ads and five audiences, and a high-level package that includes ten ads and ten audiences. This allows you to target prospective customers at different levels.
Using the Value Ladder
Another great feature of productized services is the ability to fit them in to the overall value ladder for your business. Remember, the value ladder is the concept where you have different products and services at different price points, and your business goal is to serve your customers so well that you are constantly moving them up to higher and higher levels. (To learn more about this concept, read How to Build a Passive Income Value Ladder).
On the value ladder, productized services are often a great segue from passive income products to in-depth consulting services. For example, if you’re a fitness consultant, you may have customers who start off by buying your e-books and health webinars. Then, after they use those info products, they buy a productized services such as your “personalized meal plan and fitness schedule,” which you create based on a template after a 30-minute phone consultation. After they have some success with that, they move to full fitness coaching, which is your highest level of health consultation.
As you can see, a productized service can fit in nicely, and allow your prospective customers to try out your services at a lower price point before moving into higher level consulting. Of course, some customers will want to just keep purchasing additional productized services, and that can be quite profitable for you as well.
Creating Systems and Materials for Your Productized Services
If you want to start selling productized services, the easy part is figuring out which services to sell: choose those projects that you work on often, and for which the project is similar each time you work with a client.
After you figure out which services to productize, see if you can create service tiers at different price points. Ideally, you will be able to figure out two or three tiers so that your customers have options as to how much help they need and how much they want to spend.
Once you figure out which services to productize and what your tiers are, the next step is to create systems and materials for those service packages so that you can easily and quickly complete the project each time it is purchased. I find that creating worksheets, templates, and a standard project workflow is essential to making this process profitable.
After you’ve created your materials and systems, the next step is to start selling your productized service. Depending on the price point, you may be able to sell the service directly on your website (in much the same way as you would sell a webinar or course), or you may need to continue selling via personalized contact (such as through phone calls, meetings, or one-on-one e-mails). Either way, keep testing and iterating to perfect your offerings, and be sure to keep looking for new opportunities to productize additional services as your expertise grows.