Product, Service or Hybrid… Hmm…
Posted by Andy on March 14, 2007
So I’ve reasoned that makes more sense to sell a high-margin product, which probably means a combination of expensive, exclusive and/or luxurious.
In an attempt to narrow down the possibilities further, let’s explore whether or not a product, a service or a hybrid offering (selling a product with services on top) makes the most sense.
A Service?
My initial hunch is that selling services requires someone to either deliver services themselves or manage the delivery of service. Starting out, this isn’t something I can afford to do from a time or money perspective. With service based businesses, your inventory is measured in man-hours available for sale meaning that if you are selling design services, you have to hire someone to deliver the design and manage the project. That someone has an upper limit of around 1700 hours/year per full-time employee.
Maybe I can develop a web site that matches service providers with customers, which is aways a possibility. The downside is that there are plenty of sites out there already doing this quite well.
A Hybrid?
The hybrid concept is not a possibility. My business would have to sell a product then manage the delivery of services. This is done quite a bit in enterprise software. First companies will buy the software, then they’ll buy customization and a maintenance contract. This is harder to do without matching up service providers, unless of course the product was something can be used with an existing industry’s service offering.
A lame example: a new hammer that has a site listing current handy men trained on how to use this special hammer. The issue here is that if it is really that special, someone may have to train new handy men on this whiz-bang new hammer, then the public would have to be educated on why they should demand this new hammer from their handy men. Sounds like a lot of work! Generally this is fine and expected of a new venture, but my rules won’t allow me to effectively pay for and manage such things.
A Product?
Finding a product to sell seems like the most sense. The various aspects of developing and delivering the product can be outsourced. Selling a product can easily be purely transactional, as long as the product is simple and easy to use and/or appreciate (a pet rock for example!)
Summary:
I think it is safe to say I can start narrowing down my thinking to a tangible product possessing properties that would allow it to be marketed as luxurious and exclusive.
