About this Episode
In this episode of the Agency Profit Podcast, Marcel is joined once again by Kristen Kelly for a grounded, no-nonsense exploration of one of the most debated topics in the agency world: productized services versus custom work. Drawing from their work helping agencies price, scope, and operationalize delivery, Marcel and Kristen break down why neither model is inherently “better,” and why the right approach depends entirely on the value and risk profile of the problems you solve. They outline the real advantages of productization—like faster sales cycles, clearer packaging, and more predictable delivery—while also unpacking the hidden downsides, including rigidity, process debt, and misalignment with complex or evolving scopes. The conversation also highlights when custom work is not only appropriate but strategically advantageous, especially for higher-value, technically demanding engagements, and offers practical guidance on staffing, delivery margin, and pricing models such as abstracted time-and-materials. Whether you’re trying to increase profitability, streamline operations, or simply make sense of how to structure your services, this episode gives you a clear framework for choosing the model that actually fits your agency’s reality.
Watch this Episode
Show Notes
- 00:01 – 02:30 – Introduction: Marcel and Kristen introduce the episode’s focus on productized services versus custom work and set the expectation for a nuanced, non-dogmatic discussion for agencies.
- 02:31 – 07:25 – Defining Productized Services & Common Misconceptions: Marcel defines productization as selling a clear outcome for a fixed price, explains that backend processes do not need to be identical every time, and debunks the idea that productized services must be rigid or factory-like.
- 07:26 – 11:31 – Benefits of Productized Services for Sales and Operations: The hosts outline how productized services can shorten sales cycles, simplify proposals and contracts, standardize onboarding and delivery, and support more scalable, profitable operations when paired with strong process and pricing.
- 11:32 – 15:43 – Hidden Costs and Rigidity of Productization: Marcel explains how process investments create product and operational debt that are expensive to maintain and slow to change, highlighting the risk of misfit productized offers in complex or iterative work like web and software development.
- 15:44 – 19:00 – Pricing Model Quadrant and Scope–Contract Alignment: The conversation explores the value–risk pricing quadrant and shows how flat-fee or fixed-scope productized offers can clash with agile, fluid scopes when every backlog change forces contract renegotiation and erodes margin.
- 19:01 – 22:33 – Abstracted Time & Materials as a “Productized” Offer: Marcel introduces abstracted time and materials models such as leasing a cross-functional team per sprint, arguing that agencies can sell clear “products” without fixed deliverables while using pricing structures that better share risk with clients.
- 22:34 – 27:10 – Strategic Upsides of Custom Work for Complex Problems: The hosts outline how custom work suits complex, high-value, or enterprise-level problems, enables larger deal sizes and higher absolute profit, and lets agencies operate in less crowded, harder-to-solve problem spaces.
- 27:11 – 29:40 – Staffing Strategy for Custom Agencies: Marcel describes a staffing model built around a small core of senior experts and a flexible bench of freelancers or contractors, enabling agencies to absorb project volume swings without constant hiring and layoffs.
- 29:41 – 33:44 – Pricing, Delivery Margin, and Contractor Economics: The discussion dives into calculating delivery margin targets for internal staff versus contractors, marking up units of time appropriately, and deciding when to treat outside experts as pass-through costs while still protecting project profitability.
- 35:07 – 37:48 – Debunking the Myth That Custom Work Cannot Scale: Marcel challenges the claim that custom work is inherently unscalable or unprofitable by pointing to large professional services firms, while acknowledging the real challenges around utilization, staffing, and pricing on time and materials.
- 37:49 – 42:32 – Market Context, Price Ceilings, and Competitive Pressure: The hosts explain how custom approaches can price agencies out of mid-market segments where clients do not value extensive process, and emphasize matching the business model to what the market needs and is willing to pay for.
- 42:33 – 48:53 – Choosing the Right Model and Recommended Resources: The episode closes with a call to map services against value and risk, design pricing and delivery models accordingly, avoid chasing productization as a silver bullet, and check out suggested experts and resources on productized services and pricing.
Show Notes
Love the Podcast
Leave us a review here.
0 Comments