How to Do Product Development the RIGHT way in a Digital Agency

I’ve the opportunity to work as a developer, business owner, freelancer, business partner, and both a salaried and hourly employee across a handful of development companies. I’ve seen and been part of many situations where a service-based business takes a stab at developing products – sometimes with great success, while others died a long, slow, and painful death. Each was a unique learning experience that taught me many valuable lessons. To follow is a taste of what I’ve learned from those experiences, in the hopes it will help your agency achieve your product development goals.

The Freelancer

I started my career in web development nearly 20 years ago. A friend needed some help with a website he was working on, so he handed me a book on HTML and I was off and running. After the trial by fire, I started as a freelancer building websites for small businesses around Southern California. Whenever I wasn’t at my day job, I was banging away on the keyboard building sites. It was exciting, it was exhausting, and I loved it!

When Paypal started to become popular, several clients started asking to add a shopping cart to their websites. This is long before there was anything like WordPress where you could make that happen in minutes. After building a small handful of websites with shopping carts the thought occurred to me; “I’ll write this as a piece of software, make it available for sale, and sell THOUSANDS of copies! What could go wrong?”

“I’ll write this as a piece of software, make it available for sale, and sell THOUSANDS of copies! What could go wrong?”

Spoiler: I ended up doing two of those three things.

With the addition of product development for the plugin, I quickly found myself in the unenviable position of having not one, not two, but three full-time jobs. My day job was suffering because I was always tired. My freelance clients were suffering because I was always tired and started running late on projects. This new piece of software that was supposed to make my life easier, was bringing in the smallest percentage of my income and yet taking up the largest amount of my time. Something had to give. Right as I was ready to shut it all down, a client offered to buy the rights to the plugin. I sold it cheap just to get it out of my hair.

The Small Agency

In 2010, I was running web development shop. We were small, we were scrappy, and it felt like we were always strapped for cash. The WordPress ecosystem was growing like crazy. There were starting to be a number of theme and plugin developers making some serious money. We saw a hole in the market that we were pretty familiar with, but we were so busy with client work, there was no time for us to build a plugin to fill the gap. Instead, we hired a developer to handle the product development for us.

Fast forward a number of months. Sales of the plugin are tepid. The developer has taken a full-time job elsewhere, a major update to WordPress has exposed some issues in our plugin and it needs some serious development. Our plates are full with client work. I’m constantly having flashbacks to my early days.

We trudged along with the plugin for a while, but eventually, it became too much. We weren’t being fair to our development customers who saw us missing deadlines, nor our plugin customers who were getting a plugin that, by the end, wasn’t up to snuff.

“We weren’t being fair to our development customers who saw us missing deadlines, nor our plugin customers who were getting a plugin that, by the end, wasn’t up to snuff.”

Again, as we were considering shutting down the plugin, somebody made an offer to buy it from us. We quickly struck a deal and it was out of our hands.

The Allure of Product Development

There likely isn’t a plugin developer alive who hasn’t at least once thought about building a product that would eventually bring in enough income they could do away with their service-based business. The problem, however, will always come down to resources. Typically those resources are cash and time. As a freelance or small agency, you’re almost always strapped for one or the other, if not both.

… Fool Me Twice

Late last year I was working for a startup. By early December it was clear I was going to be out of work in January. I decided that I wasn’t going to hop directly into a new job, but would instead let the universe work its magic. I had some friends who own a WordPress agency and we started talking about possible positions I could fill when the conversation turned to products. They have a ton of code that could be turned into plugins, along with a number of ideas that could turn into products – but they needed somebody to head that up. It was definitely something I was interested in, but I had some reservations.

As an established agency, they have a number of big name clients. The types of clients who, when they say they need something done, you pool the resources and you get the work done. My concern with starting a product development division in this environment has to do with the time it takes to build it up to a point where it’s making a profit. During that time, any developer who’s working on a plugin that may or may not make money for the next 6 months, there is going to be a desire to pull them off of the product they’re working on in order to fulfill the needs of the immediately profitable client project.

The Product Development Division

In the first 6 months since joining the team, we’ve released 2 premium plugins, 1 free plugin, and have made countless updates to a handful of existing plugins. As part of a dedicated team with dedicated resources, for me personally, it has been exciting to have the chance to spend the time to research product ideas, build mockups, and develop roadmaps for both new and existing products. Such tasks are extremely time consuming and are usually the first items to get cut in order to get a product out the door, so that developers can get back to working on client projects.

Developing a plugin or product to act as an additional source of revenue for your business can be a smart move – but only if you do it right. No matter if you are a freelancer or an agency, if the core of your business is service based, creating a product or multiple products without having a dedicated team to build, manage and market them, you are doing yourself and your clients a giant disservice. By letting a product team focus on the building and selling your product, your service team can continue their work for your clients – giving your agency the best of both worlds.

Has your agency successfully developed a product to sell? Share your story in the comments!