How Higher Volume Leads to Higher Prices

This seems counterintuitive at first, but if you're running a productized service, you can actually charge more per unit of work the higher your output capacity.

Let me explain:

When I first started Draft.dev, we offered packages as small as 2 blog posts per month.

Clients who only needed 2 posts per month were either budget-constrained or not really sure about content marketing yet. They were highly price-sensitive and didn't know how to get results from the content we created.

Plus, with a package this small, you're directly competing with freelancers who don't have the overhead real businesses do.

You can probably cobble together enough clients to make a service like this work, but your overhead managing these small accounts is the same per client as it is for big ones (or at least similar), so it's really tough to eek out a margin.

On the other hand, when we bumped our smallest package up to $4800/mo, we entered completely different territory. Clients ready to spend this much on content are likely well-funded and already know how it will drive value for their business.

The "killer feature" we're offering is a vetted team that's ready to generate content consistently. This saves months of management time and costs for our clients.

Additionally, we're no longer competing with individual freelancers. They can't work 200 hours per week, so our rate doesn't need to align with theirs. We're offering a completely different service.

Having larger packages, therefore, means you can justify a much larger per unit rate, even if the work is the same.

Now, I say all this, but there is another pitfall that service businesses face when they go this route:

Being overly reliant on a single anchor client.

You might start with an anchor client, but if they're not replicable, you're putting your business at huge risk. If you have three clients of similar size that dominate your revenue, that's okay. But five to ten is better.

If you can design your service offering so that you don't rely on too few clients AND you are not competing with freelancers, that's the sweet spot for a productized service. 👌