Product Vs Service Based Businesses
In this video we will be explaining the pros and cons of product, services, and digital products. Me and my guest Imani Jones (CEO of So Pressed By Phancie) will be sharing our experiences in our businesses and share some stories from other niches and what their daily routine looks like. A lot of people want to start a business but aren’t ready to deal with the challenges that come with it. With any new skill or task you approach will have its ups and downs. It's all about how you react to it.
In this article I will give you the full rundown of how product based businesses and service based businesses work and even share some tips on digital products. To start out the obvious difference between the two is that one can physically touch and the other one is virtual and cannot be touched. I will help you figure out which method that would work best for your needs.
Product Based Business:
Products based businesses usually have products that are tangible meaning it can be touched. There is a chain line going through the process of getting ready to ship the item to the ideal customer. There are multiple steps that you have to take before launching. There is the Planning Phase: Figuring out what your niche is. Research Phase: What is treading in the market. Development Phase: Building the product. Experimental Phase: Testing out the product. Launch Phase: Sell it to market to the direct consumer.
Some pros that it has is that it can incorporate all of your senses such as seeing, touching, tasting and smelling. You can always up-charge your potential audience an additional fee to make more money to build up more supply for your inventory. They can be sold at physical retail market stores and they are clear on what their purpose could be used for.
Some cons include that you can go short on inventory and even the fact that some trends can go out of style. Yes, keep in mind that it does require a lot of time and effort to produce the item that you're trying to assemble together. For that reason the upfront and recurring cost could be really high compared to service based. Items can be returned to the merchant due to customers not being satisfied with what was delivered to them.
Examples: Cosmetology Products, Books, Cars, Real Estate
Service Based Business:
Service based businesses are businesses that trade time for money. It is the act of being fully invested with your skilled experiences along with building a relationship with your ideal customer. What makes this type of business interesting is the fact that it isn’t tangible meaning that you can't hold it but you can experience it though your other senses.
Some pros that come along with being a service business is that it usually has a low upfront cost starting. You can start this concept by teaching a skill or task that you are genuinely interested in or have an expertise in. Knowing that this helps you save money on buying inventory and having to purchase shipments that you would keep in your house or warehouse to hold your products. You can start your company all by yourself without a team starting out. Remember you are selling you expertise to make a sale to your potential client.
Some cons include that it requires more effort to make money. If you're not physically working you are not making any dollars. If people aren't signing up for your sessions or what you're trying to deliver, you're not making anything. Since people aren't able to touch the product or sometimes not able to see it it's hard to market it. It requires a good deal of marketing to get reviews and testimonies to help support why your business is needed. Testimonies help you build that ideal audience that you're trying to present to you specific age group, regional, or national audience.
Examples: Webinars, Coaching, Podcasting, Music, Uber
Digital Products:
Digital Products are a combination of a service and a product. The only thing that makes it different from a product based business is that it can’t be touched. It can be downloaded through audio, video, and pdf.
Some pros include a low upfront cost perspectively. You can usually sign up for a yearly subscription for some services for hosting and domains to have your products sold and utilized. It does require a lot of work but it comes with a great return on investment (ROI). It is a neat way to create passive income and earn money as you sleep and as your business expands..You can create zip files for people to download so you don't have to worry about running out. Customers also have lifetime access to the information and service as long as the website is renewed.
Cons may include that it cannot be touched and require more effort to market off from the ground due to not having a big audience initially. You may have to pay a good amount of money to host the product or service on your platform, not counting the time required to prepare for launch.
Examples: Courses, E-Books, How To Guides
Sources Cited:
Mark, T. (2021, January 27). Difference between product and service. Difference Between Similar Terms and Objects. Retrieved August 15, 2022, from http://www.differencebetween.net/business/difference-between-product-and-service/
Peek, S. (2019, September 9). Differences In Selling Products And Services. https://www.uschamber.com/co. Retrieved August 12, 2022, from https://www.uschamber.com/co/grow/sales/differences-in-selling-products-and-services
YouTube. (2020, April 3). Digital Products vs physical services - what should you sell? YouTube. Retrieved August 15, 2022, from https://www.youtube.com/watch?v=O6XN8G9SNcU
