Learn to Productize Your Services

To sell services in a scalable manner, you need to productize them.

Businesses struggle with scope creep because they tend to give away services for free. And the services they give away are usually the ones that should be controlling scope creep.

Project planning, project design, anything that determines what resources to prioritize and how things will get done — all of this has a cost tied to it. But you’ve been giving it away for free.

On top of that, because you haven’t defined the services you’re giving away, it’s impossible to go back and capture them OR to justify changes in project costs based on scope creep. Why? Because the scope isn’t apparent.

All of this creates a self-fulfilling scope-creep prophecy: The client doesn’t pay for design and planning, so they don’t value design and planning or how these services inform their budget or ensure the result they want.

It becomes expensive to serve clients because there’s no defined process. You end up managing changes and surprises that you might not otherwise have to deal with — and not all of them are created by the client. Some come from your own team.

Clients want to know they’re getting the best value , and teams want to earn that value. Without a productized approach, though, team members feel like they have unlimited time and resources to do a better job, so they end up doing more than you’re actually getting paid for.

It’s crucial to sell your services in a way that allows you to apply fee and scope. That means defining and productizing them.

What Does Productizing Accomplish?

Clarity. Productizing services provides clarity for you and for the client about the scope of a project. It lets you both know where the lines are, so you know when you step over them.

We all love to talk about transparency and communication. But the fundamental key to these is having a baseline of truth about what’s agreed upon for the project — or in other words, scope of work.

A conversation will go much better when everyone is clear the project is going in a new direction.

Profitability. When scope does change, you shouldn’t have to sacrifice profitability. If the scope wasn’t clear to begin with, then businesses end up absorbing some of the costs for diplomatic reasons — they don’t want to look reactive or like they’re gouging the customer.

Far too often, I’ll see a client agree to a project at one fee, but every new change reduces the business’s margin. Why? Because the truth wasn’t well-defined enough at the start, and the business is afraid to bring that murky truth up to the client.

Predictability. Another great aspect of productizing services is the predictability that comes with being able to plan ahead. If you have a clear scope of work, then you know what resources to allocate and how to manage calendars.

If a service will take 100 hours, you know that’s at LEAST two weeks of somebody’s time. All the details become apparent, and you don’t over-commit your team or stress your overhead.

3 Components of the Productized Service

Every productized service shares three major qualities. I’ll walk through each below, giving examples of where you can recover value in the components that are most often given away for free.

1. Create a Fixed Program for a Fixed Fee

This is the starting point, because it’s what a productized service is.

To create a fixed program for a fixed fee, you need to identify and price the things you usually do for free.

These are the roles you often skip over in value capture, bundling them into that thing we call pre-production. But most of what we call pre-production is actually three distinct jobs performed (typically) by three different people. To productize your service, you need to list them all out separately.

Yes, you could choose to make it all happen with one person, and you might feel that you can charge less as a result. But that’s incorrect, and you’re leaving money on the table. Why? Because if you end up having to outsource, you’ll have to hire three different people to do each of the three distinct jobs. So you need to price as if you were doing that.

List these three “pre-production” roles out separately:

• Creative direction is everything design. It’s creating concepts and trying to figure out solutions. It’s making drawings and doing revisions so you can determine budget. Creative direction has to happen before budgeting because you’re budgeting what the creative determined.
• This often gets done for free because you haven’t told the client what the job is worth yet. But, in fact, the process of determining what the job is worth is budgetable if you productize it.
• Technical direction takes the creative design and turns it into a technical design. Now you can create a technical budget.
• If the client has done their own creative direction, you take it and create a technical response. You solve the technical problems and design a system based on your internal resources and/or knowledge of the trade. That’s valuable knowledge the client could take and use at another supplier. So you sell technical direction separately.
• Technical direction gives clients specifications that they can now take to different production shops to price out. Of course, you don’t want the client to go to other production shops to price it out; you want to price it out yourself. This brings us to production management.
• Production management takes the technical design and puts a plan and budget together so you can generate costs. This allows sales to generate a proposal by applying appropriate margins and translating the underlying technical design into customer terms.

All these factors have value for the client, but only if you break them out so they can see what the deliverable is on each of the services. Customers will see the value of your services if you show it to them.

A quick aside on project management: I’ve found that 90% of the time, project management is just a person who walks a job through whatever processes a particular supplier uses. In other words, it’s an internal function required by your processes, which is why I’m not including it above. Because who wants to pay for that?

2. Limit Material and/or Service Options

Once you define those three major production roles, you can outline inclusions and exclusions that make the scope of work extremely clear. (Plus, spelling out inclusions and exclusions is far more professional than what most of us are doing now.)

Creative direction might include up to three revisions, or any number of other “up to” statements. It might exclude, for example, the customer owning the project design and renderings.

Technical direction includes a technical design that can be executed, but it excludes multiple variations or value engineering. Those come under production management, and they may cause the job to go back to the beginning of the process (creative direction) as a change order.

3. Specify Timeline

Time is money to the client. The faster they want to get something done, the more it’s worth. Consequently, timeline is very much about value.

Less efficient timelines cost more, and nobody wants to pay for inefficiency. So, always propose to clients the most efficient way of doing a job if they stay within the agreed upon scope and criteria. That way, they get the most efficient solution, the best value, and the best use of time.

How Productizing Affects Change Requests

It’s ridiculously helpful to be able to talk about all these services with the client so they can see how the different roles interact and interchange. It helps the client better understand what they’re buying and how it affects their ask.

A lot of people complain about clients making changes all the time — but they don’t have any built-in consequence to change. So on the client’s side, it doesn’t cost a thing. This actually encourages them to come up with changes because it impacts nothing. They pay the same amount of money either way.

But when a client sees that a process has to be redone every time they make a change — how it affects the technical or creative direction and results in more work — you can have an honest conversation.

“Hey, that’s a great idea,” you say. “But it’s going to put us back into creative direction, and we’re out of change orders. We’re going to have to approve some more money for this, and I’ll need to schedule some time with the creative director to find a great solution.”

Pause.

Maybe the client is happy paying more to accommodate their idea. Or maybe they say, “You know what, it’s not that important. The plan we have is great.”

Either way, productizing services gave you the basis to have a value-based conversation with the client. Everyone understands what’s going on, and you don’t lose margin on every change.