The Transition From Client Work to Product Business

In the Happy Monday podcast Sarah and Josh have started a series about transitioning from client work to products with Episode 69. This is something I talk about in detail in my book and as part of my presentation about side projects. In the podcast Sarah said that some blog posts and advice about making the move make it sound as if you can just drop everything and make the leap, with advice such as “just give up what’s not making you happy”.

Our two-person company has made the switch from client work to product, and I don’t gloss over the fact that making that transition took a long time, and was hard.

We launched Perch, over the weekend, on the 31st of May 2009. The product and all of the surrounding infrastructure was developed in our weekends. The next working day we had to get straight back to client work as we were still 100% booked out on client projects. We didn’t make the decision to stop doing client work until January of 2013.

Between being 100% client work and 100% product work there was a slow transition. As Perch began to bring in more revenue we were able to dedicate more time to it. However as Sarah notes in the podcast it can be really difficult to manage the expectations of clients and their demands on your time alongside your product. As I have written in the past, I believe it is vital that your product becomes a first class citizen from day 1. You might only be able to dedicate half a day to it at first, but that half a day should have the same amount of weight in your schedule as any client work.

As your revenue builds, it is worth being more selective about the client work that you do take on. We found that the more time we were able to dedicate to Perch, the more attractive working on Perch became and client work became far less attractive. This was made worse if we were dealing with difficult, demanding clients. Problem clients take a lot of emotional energy as a one or two person business, and that can have an adverse effect on your whole business. Use your new revenue stream from your product to enable you to be that bit more picky when taking on client work.

What happens if the product doesn’t make enough money to be a first class citizen?

If you have a product that needs more of your time due to an increasing customer base, but it isn’t making enough money to be given that time then you need to take a long hard look at your business model.

One of the benefits of bootstrapped businesses, of side projects, is that their growth curve tends to be pretty slow. This gives you time to fix a business model that isn’t working. Common issues include simply pricing too low, relying on an expensive service such as storage, or attracting customers who need a lot of handholding causing support to burn up all your product time.

In our experience these can be related. Before we increased the license cost for Perch we were attracting a lot of customers who were outside of our target market of professional web designers. Those customers needed a lot of handholding, and so caused a huge increase in support. Raising our price just a little helped bring in more revenue despite the fact their was an initial drop in licenses sold. However the increase put us more firmly into the professional tools market, which as a small business is the market we have chosen to target.

More on this subject

Making Your Product a First Class Citizen, referenced already in this article is full of my practical tips for managing a product business as a side project of your consultancy.

In Making Time for Side Projects on A List Apart I explain some of my strategies for carving out the time to work on your product.

My book The Profitable Side Project Handbook goes into lots of depth on how to create a business from a side project. You can read the first chapter here.

Leave a reply