A productised service (productized service, in the US spelling) is a piece of skilled work that a firm has turned into a defined offer: the scope is fixed, the price is fixed and published, and the way it is delivered is written down and repeated. The buyer can say yes to it the way they would say yes to a product, without a proposal, a scoping meeting or an argument about hours. Productisation is the work of getting there. It is a packaging and pricing decision, not a business model, and it is often confused with recurring revenue, which it is not.
What makes a service productised
Three tests, and a service needs to pass all of them:
- Fixed scope. The offer says what is included and what is not, in words a buyer can read on a page. “A cloud readiness assessment of up to three applications, delivered as a written report in ten working days” is a scope. “Cloud consultancy” is not.
- Fixed price. One number, or a short table of numbers by tier, published or at least quotable without a meeting. If the price depends on a conversation, the service has not been productised yet.
- Repeatable delivery. There is a documented method, a template for the output, and a defined grade of person who does the work. The tenth delivery should cost the firm less than the first.
The consequence of passing all three is that the firm, not the client, now carries the risk of the job taking longer than planned. That is the whole trade: you give up the protection of billing by the hour in return for a shorter sale and a fee that no longer needs defending line by line.
Examples for consultancies, agencies and MSPs
| Type of firm | Custom version | Productised version |
|---|---|---|
| Consultancy | “Cloud strategy engagement”, quoted per proposal | Cloud readiness assessment: three applications, written report, fixed fee, ten working days |
| Consultancy | Discovery phase scoped on the phone | Paid diagnosis: a set number of interviews, a findings deck and a costed plan for the next phase, at one price |
| Agency | Retainer with hours negotiated monthly | Content package: a fixed number of articles a month, a set revision allowance, one price per tier |
| Agency | “Website project”, estimated per client | Site audit with a written report and a prioritised fix list, fixed price, one week |
| MSP | Support priced as a percentage of the client’s cloud bill | Per-application managed service: each application placed in a tier, one fee per tier per month |
| MSP | Migration quoted per environment | Fixed-fee migration of one standard workload, with a published list of what counts as standard |
None of these needs a named client to make sense, and none needs the firm to be large. The paid diagnosis on the second row is often the first thing a two-person consultancy can productise, because it is the piece of work every client needs first and it can be sold before the bigger, still custom, job behind it.
Productised is not the same as recurring
This confusion costs founders real money in planning, so it is worth stating plainly. Productised describes how the work is packaged: fixed scope, fixed price, repeatable. Recurring describes whether the client pays again next period under a contract that continues until someone ends it. They are independent:
- A fixed-price audit is productised and not recurring. The client buys it once.
- A bespoke retainer with hours agreed monthly is recurring and not productised.
- A per-application managed service on a monthly tier is both.
- A quoted-per-job consulting engagement is neither.
A firm can productise everything it sells and still have no recurring revenue, and a buyer of the business will count only the second column. If the goal is a firm that is valued on contracts rather than on the founder’s pipeline, productising is a useful step towards it, not a substitute for it.
How to price a productised service
The mistake is to price the package as a discounted bundle of hours. That gives away the only reason to fix the price in the first place. The method I would use, in order:
- Cost it honestly. Write down the hours by grade a typical delivery takes, including the handover, the report and the follow-up call nobody counts. Price those hours off your rate card. That is the floor, and you should know how far above it you are selling.
- Add the risk you now carry. With a fixed scope, overruns are yours. Add a margin for that, and write down the conditions under which the scope is not standard and the price changes.
- Price to the outcome, not the hours. Ask what the buyer gets and what they would otherwise pay to get it: a delayed decision, a bad migration, a month of an engineer’s time. The price sits between the floor and that value.
- Decide what happens when you get faster. The tenth delivery takes fewer hours than the first. You can keep the saving as margin, pass it to the buyer as a lower price to win more volume, or split it. Decide on purpose; do not let it drift.
An invented example, for method only: a consultancy costs a readiness assessment at forty hours across two grades, which prices at £8,000 off its rate card. It adds a fifth for fixed-scope risk, giving £9,600 as the floor it must clear. The buyer’s alternative is a month of an internal architect’s time and a delayed migration, so the firm sets the fee at £12,000 and holds it. After six deliveries the work takes twenty-eight hours; the firm keeps the margin and uses it to fund the template that gets the next one to twenty. These numbers are invented to show the arithmetic, not a benchmark.
Greg Isenberg’s argument, and where a services founder should be careful
Greg Isenberg has argued that productised services are among the best businesses a founder can start now: a fixed offer with a fixed price can be marketed like software, bought without a sales call, and run on a small team. That is his argument, and it holds as far as it goes. The caution I would add from the services side is that a productised offer inherits every constraint of a services business: revenue is still people multiplied by rate multiplied by utilisation, the fixed price now makes the firm carry the overrun, and a productised offer sold once is not the recurring base a buyer of the business will pay for.
What we did
In the first weeks of the business that became DevOpsGroup, a services company helping other businesses build and run software, in 2013, I proposed building a software platform instead. We chose the services company. It took years for the productised offers to arrive, and when they did they came out of delivery rather than a plan: the first end-to-end datacentre exit we ran produced a flat rate card for the next one and a recurring line for keeping the systems running afterwards. Later we priced the managed service per application, against tiers the client could count, with a fee designed to fall as the estate got simpler. That is the version of productisation I would build first if I were starting again: the repeatable offer that leads to a contract, not the one-off that leads to another proposal.
The course How to build recurring revenue, in development, covers the move from productised one-offs to a recurring base. The MSP pricing model playbook, also in development, covers the per-unit fee in detail.