Should you offer services or products?

The old phrase, The grass is always greener … is often heard when discussing the merits of services versus web-based products. Listed below are some of the advantages and disadvantages of both models. Which ones apply to you?

Products — Advantages

• gives you unlimited income potential, because time constraints are minimal (unlike selling services)
• enables lower prices for the consumer, as costs can be amortized over more customers
• allows you to concentrate on building one main project, rather than several small ones
• presents a choice of different revenue models, which are simpler to modify over time
• affords a better opportunity for residual income, in continual license fees
• provides an easier option to sell as an ongoing concern than a small web service does.

Products — Disadvantages

• requires more upfront investment in time and possibly money, especially the marketing aspect
• presents the possibility of competitors creating similar products and competing directly with you.
• necessitates market research to avoid ending up with little or no customer base.
• runs the risk of fielding more support queries than anticipated
• may delay long-term growth because of the lack of immediate cash flow

Services — Advantages

• generates income faster, because it’s easier to sell your services than a brand new product to the marketplace
• provides scope for a variety of projects, maintaining your interest in each new project
• offers more versatility in meeting market demands, rather than having to rebuild a mature application

Services — Disadvantages

• reduces your capacity for income, because it’s based purely on how much you can charge and how many staff you need
• limits short-term growth; for example, hiring staff is more time-consuming than bringing a new server online
• makes you more vulnerable to market buoyancy than product licenses

Also remember, as Dave mentioned, that it’s very simple to have a hybrid model of both: sell your current services while developing and offering products as well. This is similar to how businesses may sell hosting, stock images, and CMS licenses.

This post first appeared as part of Issue 424 of the SitePoint Tribune, a very popular email newsletter that I am co-editor of. Thanks to SitePoint for allowing me to reproduce the work here.

Everyone loves a freebie, right? Well, here’s a great freebie – a PDF copy of the book I wrote last year, The Principles of Successful Freelancing.

All you need to do is visit this website, and either follow @sitepointdotcom on Twitter, or put your email address in the box to get a download link.

I’d like to also suggest you follow me on Twitter, whilst you’re at it. :)

Judging by people’s reactions, this 10 day only giveaway will once again be HUGE.

The team at SitePoint did the same thing some time ago, with another book. The result of that twitaway was 13,000 new followers in under a week! That’s a great jump in followers for anyone over any period of time, let alone an increase like that in a week. You can read all about that campaign over at TwiTip.

I hope you enjoy the book (so much so that you’ll buy the real paper version too!), and remember, this only lasts for the next ten days.

Earlier this year, I organized a loan for my new house with my usual bank. All went well, they approved it quickly and before long, I had removalists at my door.

Then the trouble began … payments not deducted, double payments deducted from the wrong accounts, inept bank employees who tried to argue with me, more double deductions … the list goes on.

After a while, I was close to giving up–even considering changing banks and organizing new loans. Then, one day I got a telephone call from one of the handful of managers who handle this bank’s business in my state.

He opened with “I owe you an apology.” I was over the moon! This manager had taken the time to phone me and say that he’d heard about my plight; he wanted to assure me they didn’t believe anyone should be treated the way I was.

Not once did he even attempt an excuse, nor blame others. Here was an executive who was in charge of dozens of bank branches and yet, he took it upon himself to call and say that he and the rest of the organization he works for were sorry.

This manager was attentive and keen to hear my views. We ended the call fifteen minutes later with him providing his cell phone number, and asking me to call if other issues arose.

We’ve all been there. A web site project goes awry or one of your team makes a mistake, and before you know it, you are metaphorically huddled under your desk, frightened that the client will call.

What your client wants to hear is “sorry.” Everyone is human and when mistakes do happen, what we all want is for our suppliers to recognize when they have erred and offer a simple apology.

It costs you nothing besides a few minutes of your time, and believe me, you’ll feel better being proactive and apologizing before the client gets a chance to be angry.

So, swallow that ego and make the call–you’ll be relieved afterwards, and your client will respect you for it.

I’m still with that bank and the service has improved. I’ve even recommended them to my colleagues, based on that manager’s one call. Wouldn’t you rather your clients do the same?

This post first appeared as part of Issue 413 of the SitePoint Tribune, a very popular email newsletter that I am co-editor of. Thanks to SitePoint for allowing me to reproduce the work here.