If you’re an aspiring entrepreneur, or a business owner looking to start a new enterprise, you may be wondering about the pros and cons of selling services vs. selling products online. If you are, wonder no longer — this article is about to break it down for you.
Selling services can be a great way to get started with online business. Whether it’s design, instruction, programming, or some other service, the advantages of starting a service business are numerous:
- Low investment. In many cases, all you need to get started with a service business is a website and a sales pitch. It may take time to build a portfolio, but you don’t have to create or purchase a physical product and get it to market the way you do with other businesses.
- Low inventory. If you’re a marketer, copywriter, or other business owner that sells a service, you’re unlikely to need much overhead. In many cases, all you need is a website, a computer, a wi-fi connection, and a smartphone to run your entire business from anywhere in the world. Some lines of work, such as graphic design, will require a bit more in terms of inventory, but it’s still trivial compared to a product-oriented business. This means more profitability for you early on.
- Good growth potential. Repeat clients are the lifeblood of any business, but even more so when it comes to selling services. A satisfied client is not only likely to come back for more, but may spread the word to more clients, leading to exponential growth.
Selling Physical Goods
Whether you’re starting up a manufacturing business or selling goods out of your storage unit on eBay, a business selling physical products offers different perks and challenges.
- When you sell services, you often end up selling to a lot of different clients, which can mean meeting different needs and changing up your approach with almost every job. If you know your market and do your research, selling a physical product is a much less complicated affair.
- More inventory and overhead. Unlike a service business, selling things means buying and keeping inventory, and that means overhead. It also means shipping goods to your customers, which requires either handling packing and shipping yourself, or turning to a professional fulfillment company to handle it for you.
- When it comes to selling goods, you’re often up against stiff competition — which means you’d better have the marketing skills to compete. You’ll need to master advertising, social media, SEO, and a wide array of marketing talents to make your presence known and keep your goods moving.
When comparing business models, you should also consider pricing. When selling services, you will usually end up charging for the time spent to complete the project. This tends to be more flexible, but you must be careful not to undervalue your services. Products can be a bit more complex to price, since they may include manufacturing, storage, distribution and fulfillment costs. A business owner will have to find a price point that’s competitive and profitable.
So which model is better? The answer depends entirely on your preferences. Many modern entrepreneurs choose both, selling products and offering their services as marketers, SEO experts, or otherwise profiting from the skills they’ve learned from selling. As with any business venture, it all comes down to ambition, hard work, and vision. So what are you waiting for?