Productized Service

How Profitable Is A Productized Service? (Updated for 2024)

Pat Walls

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Updated: October 8th, 2024

How Profitable Is A Productized Service? (Updated for 2024)

So you want to start a productized service?

And the first question that came to your mind was, “well, are productized services actually profitable?”

Especially considering:

You could start a productized service with as low as $60
Based on our data, productized services generate an average of $1.45M per year
You could see gross margins as high as 94% with productized services

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a productized service.

Let’s dive in!

Is a productized service profitable?

Yes, a productized service is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $1.45M per year with an estimated gross margin of 90%, you could expect to recover your investment within 9 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your productized service.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your productized service is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a productized service worth it?

If you’re wondering if a productized service is worth it, the answer is a big YES. With productized services, you have the potential to earn $1.45M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a productized service to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful productized services case studies.

Examples Of Profitable Productized Services

Here are a few examples of profitable productized services, and a few more details about them:

2. Queue ($1.6M/year)

Mas, founder of Queue, built a ~1.6M ARR platform after solving his own pain point of syncing feedback on Overwatch videos, which quickly gained traction among esports coaches and video editors, evolving into a comprehensive productized service tool.

Is it profitable? Yes
What's the gross margin? 70%
How much money it makes: $1.6M/year
How much did it cost to start: $1K

Our SaaS is Backed by Y Combinator and Grew to $1.6M ARR

This case study article highlights the success of Queue, a platform that allows users to launch their own productized service businesses, with impressive figures including ~$1.6M/ARR and rapid growth in the past 3 months, providing valuable insights for aspiring founders looking to build or grow their own businesses.

Read this case study

Read by 3,803 founders

3. Design Joy ($1.74M/year)

Brett had started with sharing his design works on social media (even the scrappiest ones). With time, he was able to refine his skills more and more, and fast forward to today he runs this agency with 50 clients as a solo designer and has 10x'd his prices from when he started.

Is it profitable? Yes
How much money it makes: $1.74M/year

How Brett Williams Built Design Joy to $1.7M ARR

Learn how Brett Williams scaled Design Joy from a weekend project to a $1.74 million/year design agency, handling 50 clients solo, by mastering productized services and leveraging platforms like Product Hunt and Indie Hackers for growth.

Read this case study

Read by 861 founders

Learn more about starting a productized service:

Where to start?

-> How much does it cost to start a productized service?
-> Pros and cons of a productized service

Need inspiration?

-> Other productized service success stories
-> Marketing ideas for a productized service

Other resources

How much can you make with a productized service?

With a productized service, you can make an average of $1.45M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $60. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 9 months.

How much does a productized service make a week?

Based on our data, average weekly revenue for a productized service ranges around $30.5K. As such, you could see monthly revenues of $122K.

To know if your productized service achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your productized service.

How much do productized services owners make?

The income of a productized service owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established productized service is about $30.5K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a productized service owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Productized Service Profit Margins

Generally speaking, a productized service can expect profit margin of around 90%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a productized service, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, productized service owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, productized service owners can ensure long-term sustainability and profitability for their business.

Productized service owner salary

The salary of a productized service owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established productized service, in a prime position, might see an average weekly salary around the ballpark of $27.4K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a productized service may be a promising business to start - but the success of your productized service mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable productized service.

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Starting A Productized Service: Everything You Need To Know

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