It is obvious to even the most casual observer that the service industry has seen significant growth in the last few decades. With this growth comes a wide range of innovations in various sectors, which have largely been responsible for the rapid development of the industry. One of these innovations is productized services. In this article, we’ll explore how the productized services business model works, its strengths and weaknesses, as well as the opportunities available to this form of business.
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The service sector (also called the tertiary industry) is considered the most developed stage of the current three-sector economic cycle model and involves the provision of “intangible goods”. It is also considered to be the most valuable stage (ahead of the primary and secondary sectors), with the global service industry expected to have reached nearly 12 trillion USD in 2021 and accounting for about 65.7% of the global GDP in 2020.
One of the newer developments within the tertiary industry is the creation of productized services. A productized service simply refers to services that are sold as packages with clearly defined parameters, terms, and prices. Therefore, customers who purchase these services are fully aware of what to expect beforehand. It is hard to say exactly when this model was created, but it has become prevalent among many members of the service sector, including both freelancers and larger service agencies.
During the rapid rise of the service sector, one of its greatest strengths also turned out to be a significant hindrance. The flexibility of many services offered a previously impossible degree of scalability and versatility, but it also created certain issues, such as consumers not being able to accurately estimate the costs and expected results of certain services.
Productized services were seen as a solution to this issue by offering consumers much-needed transparency and predictability, as well as offering businesses a much more reliable business model in terms of costs and revenue.
Some examples of such services include WordPress (through their WP Speed Fix service), KENJI ROI (which specializes in Amazon listing optimization), and 50 Pound Social (a social media content creation platform).
Just like any normal product within the service industry, productized services generate revenue by offering “intangible goods”, which may include actions, access to certain resources, or other types of benefits. The key difference is that these services come in pre-packaged forms which already have well-outlined prices and parameters.
Let’s examine the productized services business model canvas.
Productized Services customer segments consist of:
Here are some of the advantages offered by productized services over other forms of services.
Productized Services value propositions consist of:
Productized Services channels consist of:
Productized Services customer relationships consist of:
Productized Services revenue streams consist of:
Productized Services key resources consist of:
Productized Services key activities consist of:
Productized Services key partners consist of:
Productized Services cost structure consist of:
While productized services have solved several issues within the industry by adopting standardization, they have also sacrificed a degree of flexibility and versatility. Therefore, their biggest competitors are service companies that offer a greater degree of customer freedom.
Let’s examine the strengths, weaknesses, opportunities, and threats to the productized service business model.
Below, there is a detailed swot analysis of Productized Services:
Productized services may represent the future of the service sector, as they blend the standardization that customers have come to expect in other industries with the inherent benefits and growing popularity of the service sector. Though there are still some drawbacks to the business model, it has demonstrated a potential for strong growth and may soon grow to be the norm within the service industry.
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