Episode 63:How Do You Move from 90% Client Work to 100% Products?
Summary
The episode takes a listener question about moving from 90% client work to 100% products and mostly deflates the premise. Nick and Kai argue that product businesses still demand emotional labor, customer support, and high-touch work. The practical portion covers how client work feeds product content, how to carve out 10 hours a week for writing, and how to calculate a revenue target that lets you drop clients.
Highlights
- Nick’s A/B Testing Manual came directly from client engagements. Without running actual client tests, he says, he’d be testing headlines on his own website ‘in a vacuum.’ Kai’s Outreach Blueprint and Podcast Outreach both started as printed SOPs from consulting services he was already running.
- Course completion rates top out around 20%, Kai says. People buy educational products aspirationally, the same way physical books sit unread on shelves. A chunk of your paying customers will never open the thing, and that’s true for consulting deliverables too: clients put reports in the bottom desk drawer.
- Products spread revenue risk. Losing 20% of 100 subscribers hurts less than losing 2 of 5 clients, each worth 20% of income. Delivery cost also changes: the product ships on button click, with support on the back end rather than one-off work up front.
- Nick says you need at least 10 hours a week for writing, and if one client has filled your calendar, fire them or raise rates until that space exists. Content reuse is how you stay efficient: Nick copy-pasted a newsletter lesson into a course sales letter, cut five paragraphs, and shipped it. Kai put a coaching call MP3 through Rev, got a 20-page transcript, and mined it for newsletter and product topics.
- Kai recommends calculating a ‘retirement number’ before anything else: the exact product revenue needed to let go of consulting. Writing down a real budget often reveals the number is smaller than assumed. A concrete milestone helps, like getting product revenue up $1,000/month to justify dropping one client.
- Kai cites Brandon Sanderson: professional authors say their first five books are bad and the sixth is where they find their voice. For product creators, the same logic applies. The knowledge, SOPs, and scar tissue from a failed first attempt make the next one better.
- The ‘Be Aggressive’ post on My Year of Everything asks: what haven’t you done, where aren’t you pushing hard enough? Kai applies it as a prompt to stop waiting and start outreach to people a few levels above where you are, on the grounds that embarrassing yourself now costs nothing if you’re treating it as a one-year experiment anyway.
Read the transcript
There’s a um kind of false dichotomy, I think, in The split between client work and non-client work. And I think that People either assume they are selling a product or they’re selling client work, right? Like you’re either working for somebody or you’re not. And I guess that’s true. Like you could just not be working for somebody or you could be serving them in a different way. their book wasn’t delivered or something like that. Um but we got a question recently that was extremely long and I deleted it. And I reduced it to this sentence. And I think this sentence is good to talk about. We’re just going to talk about this sentence for the entire podcast. How do you move from 90% client work to 100% products? Now let’s talk about why I phrased it this way. It’s 90% client work because usually you have some sort of product in place, right? It might be a tripwire, it might be a little pamphlet or book or some toolkits or some icon libraries or whatever have you, right? And you’re selling that, and you’re using that as a way to get clients. So that might be 10% of your revenue. Like worst case, books are 10% of your revenue. And then you, you know, then you spend the rest of your revenue getting clients and doing consulting engagements. And it’s usually kind of more of a high touch thing. It might be like a productized consulting thing, which we talked about in a previous episode. I’ll just break down for y’all, for draft’s sake. last year draft was about sixty five percent to sixty nine percent product revenue, and then the rest of it was draft revised engagements and revised express reports. Which is cool. I feel really good about that. But it wasn’t, there was never a clean break, and I’m not at the point where I’m getting 100% of my revenue from client work from products. So. To some degree, I don’t know how to answer this question, but the 100% products bit. I like kind of the deeper question, which is how do you manage the split between client work and products effectively? Because I think everybody listening to this would like to have more product revenue than client revenue. And I would like to have slightly more, but I actually feel pretty comfortable with the position I’m in right now. I like doing client work and I like using that as grist for for the products that I do. I don’t think my products would be as good or as successful as they are without having client work.
Client work serves as a very nice input in terms of problems and issues that the people you are serving through your products are experiencing. And so there’s a really, really nice give and take where even if you want a purely product focused business, having some sort of engagement with customers and clients, be it coaching calls, one-off calls, small engagements, productized consulting engagements. It keeps you knowledgeable about the questions they’re asking. And then lets you feed those questions into future products you’re creating or new versions of existing products you’re updating.
Yeah, yeah. So in one way, I’m serving my clients and getting interesting case studies and using that as a way to level myself up as a consultant, but I’m also kind of doing research, right? Like every time I’m in a client engagement and something is happening. I’m thinking about how that can best serve my other clients and what I need to be doing for making books around this to teach other people. And I’m not like using my clients’ names in those situations, but you better believe that the A B testing manual is informed by all the A B tests I’ve run. And where did that come from? It came from client work. And so I have to be tremendously indebted to client work lest I be running A B tests on what, headlines on my own website in a vacuum? Like that’s not helpful to anybody. And it doesn’t give you a sense of really what the the climate around optimization is. And I think you can take that principle and use it You know, and whatever your own practice is.
It mirrors my experience. Both the outreach blueprint and podcast outreach as books came from doing those as consulting engagements repeatedly, running outreach campaigns for clients, getting clients booked on podcasts. And then I realized. As we’ve discussed in previous episodes, I was about to say future episodes, when you sort of downfill your product ladder, Taking your most frequent engagements that you have the standardized operating procedures for and turning those into books is a good way to start that process of creating a book. The Outreach Blueprint and Podcast Outreach both started off by me taking printouts of the standard operating procedures I used for those services and saying, okay, great. What if this makes sense to teach somebody? If I was teaching somebody how to do this, what do I need to teach them? What could they safely ignore? And that gave me version one of these products, which I’ve iterated on since then. But it all comes from That direct hands-on research, and that research just happens to have been paying client work.
Can I I’m going to step back and think about like the 30,000 foot view, because it seems to me like everybody believes that product-only businesses are the best way to go about doing their work. But for me, product only businesses tend to involve some amount of high touch work with people, right? And in a sense, you’re just getting rid of the like typical client relationship that you would have, and then you move into an educator relationship, but then you have 50 clients, right? So let’s talk about maybe there’s a retreat or something like that that you hold every year for your best customers and you charge them three grand. Well great, now you have to bring it for that, right? Now you’re an event organizer instead, and is that something you want? Let’s say you have a $2,000 course and it includes like periodic check-in calls with you or access to you on Slack or something like that. Well, great. Now you have fifty bosses and they’re all on Slack and they’re all afraid, and most of them aren’t going to learn anything. And it’s 3 a. m. and they’re messaging you. And most of them aren’t going to learn anything because the vast, like, the dirty secret about releasing a course is that most people don’t even ever look at it.
Yeah, of course. Or people brand and don’t look at it. Course completion rates, yeah, 20% at best. It’s very rare for somebody to actually fully finish a course. And I think that maps well to most people’s experience investing in education. How many books are on my bookshelf that I haven’t cracked open yet? A lot. How many e-books are on my hard drive that I haven’t cracked open yet? A lot. There’s an aspirational purchasing aspect. To a lot of educational products. And so this gets further down the line, but as a product creator, as you move to being a product creator, be it SaaS, be it education, be it something else. You have to realize, like, there’s a big contingent of people who pay you money that end up not using your thing. And it’s not that they’re dissatisfied, they just aren’t using your thing. And Well, that’s the way the game is played. Just like as a consultant, you pour your heart and soul into a report. You deliver it to the client. The client says, This is excellent. Thank you so much, and puts it in the bottom desk drawer where they’ll never look at it again. Never, ever, ever. And that’s the way the game is played sometimes.
Yeah, I think that, you know People glorify it. That’s kind of what I’m trying to get at. Like, you’re either doing client work and performing emotional labor for your clients, or you’re doing product work and performing emotional labor for touchy customers. And there’s no. You’re still doing work. There’s not.
There’s no beach. There’s no four-hour work week. There’s no. Magic, I can’t even remember what the goddamn phrase is. Passive income. There’s no true passive income. It’s doing work for an audience, for customers or clients to turn. The attention they’re paying to you, the value they’re seeing in what you’re creating and sharing publicly or privately into revenue. But you’re still serving people. You still have. Customer support, you still have customer service, you still are running events or retreats, you still are coaching people, you still are working in a different capacity. The big advantage that I do see when it comes to products over pure consulting is that instead of let’s say having Five clients at a time, and each client represents 20% of your revenue, and you lose two clients, that’s a huge hit to your revenue. You might have a hundred customers paying you money on a subscription basis. You lose 20% of them. That does suck. But well, you still have 80%, and it’s going to be hard to lose a large chunk of the remainder. So You were distributing the risk over a larger customer base rather than a smaller client base. Each customer might be worth less to you month to month or year to year, but You diversify that risk across your products. Additionally, there’s no cost of delivery, or rather, there’s a different cost of delivery. Instead of, I’m doing the work up front to create the report for the client, it’s Well, I’ve already produced the book or the course. Now I’m dealing with questions, support, coaching, making sure people are doing it right when they ask me questions about it. After the sale, but there’s no real effort involved, or rather, there’s different effort involved in making the sale. You still have to invest time in the marketing side, get attention, get people in, optimize your courses, but When it comes to the actual delivery, somebody clicks a button, puts a credit card in, and they get your product. Now you might have support on the back end, but it’s that delivery aspect that’s been eliminated. You no longer are creating one-off Educational products for clients, which is what I think of a lot of consulting eventually ends up being: hey, here’s a report on how to do that thing. Well, that’s an educational product scoped to one. Where, if you’re creating a book or a course like the A-B testing manual, it’s an educational product scoped to thousands.
Yeah. Okay, so now that we’re thinking about it in this way, and kind of Well, also now that we’ve driven away literally everybody from our podcast because we told them that this is going to be really hard, let’s talk a little bit about how you actually go about doing this. So let’s say you have followed some of our advice in the past and issued something approaching maybe a novella-length book, like a forty-page how-to guide of some sort. and you’ve gotten a couple clients in the door. One thing you should do is devote some significant amount of your time to creating new work. And if you’re full time for your client, congratulations, you fucked up. You got a whale client. You need to fire them. If you are overbooking yourself, congratulations, you’re overbooking yourself. You need to fire one of your clients or you’re not going to actually do this. You need to work up enough money so that you can actually do that. Should probably increase your rates with the clients. There are a billion resources out there for how you can go about doing that and figuring out value-based pricing engagements that allow you to get the kind of overhead necessary to actually fulfill this. And that’s not in scope for this. You need to be having at least 10 hours a week for writing. And I don’t have any easy answers for you on that, but a lot of other people do. With that in mind, we did a podcast episode, oh God, like six or seven months, a long time ago, called Grist for the Mill, that was basically about how to reuse your content. That allows you to be more efficient with the content that you’re creating because you need to be very, very deliberate and intentional about what it is you’re doing. I’ll cite one example that happened to me this morning. I just published a new course on my website. That’s a free course and you can go and take a look at it. And it’s about like improving design decisions for conversion.
What’s the URL for your website where people could sign up for this course, Nick? draft. nu.
Thank you for asking, Kai. Anyway, on this course, there’s one lesson in there that leads into a hard sell for a course that I’m bringing out called draft analysis. And Part of that letter came literally ripped off word for word from a revised weekly lesson. I copied and pasted the revised weekly lesson in, deleted five paragraphs, polished it up and shipped it. And I could have written that like 1200 words again, but I already had it sitting there, right? So The more the point the point being is that the more content that you can copy and paste, the better, right? It’s extremely valuable to be doing that. And that helps you create products faster.
One example on my side, I had a coaching call recently of somebody who decided to invest an hour in getting my advice on their business. And On every coaching call with a client, I record it and send them the audio afterwards. And I was thinking about it and I was like, it’s an hour call. They paid a good rate for it, they got a lot of value out of it, but It would be nice to send them a transcript of the call. So I put the MP3 file into Rev and sent them over a link to the transcript, and I’m like, hey, if you don’t want to bother listening to an hour-long audio recording, Here’s the text for it. And they were like, oh, thank you. That’s super convenient. But the flip side is for me, I now had a 20-page document I was able to go through, highlight And identify: oh, these are the things I talked about, these are the things and problems that came out of that call, these are the solutions I advocated. All of those went into my publishing system as topics to write about. I have a swipe file of. Oh, I talked for three paragraphs about this already. That could become a daily letter. That could become an article. That could become A lesson in an email course. So there’s a lot of ways to look at the content you’re already producing: being emails, be it podcasting, be it client reports, be it articles you’re publishing, and say, How can I get the maximum utility out of each of these pieces by effectively reusing it in courses, in products, in books, in other fashions?
Yeah. So and you can’t be deliberate and intentional about reusing that content if you’re not thinking about your content. And you can’t think about your content effectively if you’re not focusing on it. which is why you need to spend at least ten hours a week doing so, because you will not have the brain space necessary to think about your content. And your content is what will sustain you and get you out of this. That’s it. I don’t have an easy answer for you on this front. You need to raise your rates and fire your clients. And then you need to give yourself the space and overhead to start outlining and researching. And if you don’t do that, that’s it. We’re done.
I’d say you need to fire clients to make space for it. And then you need to hire yourself as if you were a client. And you need to pay attention to your business. The bugs in your business, the goals in your business, just as you pay attention to those same things in your client’s business. Outline that six-month strategic plan. Hire yourself for six months to help you get to that point. Tactically, a few things I’d recommend to make that shift from 90% client work to 100% products. Well, A, it’s not an absolute overnight switch. You start by moving 1% from the the client work column to one percent on the product column. And you repeat that time and time again and slowly shift the balance. Tactically, one thing that’s worked very well for me and worked very well for colleagues that are making this shift or have made this shift is to identify their retirement number. How much money do they actually need to be making from products to effectively retire from consulting? Not 100%, but 90%. Get to the point where they’re able to dramatically raise their rates, take on that one client a month or one client a quarter, and it provides a nice cash windfall, but it’s not necessary. Having that specific number in mind, actually taking the time to construct an effective budget for your personal life and your business life, tells you exactly how much money you need to be making to make that jump. In your mind, it might be like, oh no, I need to make $100,000. What do I do? Then you sit down on paper and realize: okay, I don’t need to do this thing. And oh, I’m spending too much money on SaaS applications. Why am I doing that? And you realize, oh, it’s a much smaller number than I thought. How do I get to that number? And then, once you get to that number, you get to work on growing that number and growing that income. But I think step one really comes down to. How much money do you actually need to be making from products to have a 100% product-focused business? And that is really the key question. Because until you are able to effectively identify that number, that retirement number, You’ll never be able to effectively work towards achieving that goal. It’s like saying, I’m trading for a marathon. How long is that marathon? I don’t know yet. I’m just going to run a lot. Well, Are you trading the right amount? Is this working? Is this an effective trading program? I don’t know, but I’m going to run a lot. It’s the same thing if we don’t know how much money we need to be making from products to be able to retire or each threshold. Like, hey. If I could get my product revenue up $1,000 a month, I could let one of my three remaining clients go. And you’re able to slowly shift the balance over to 100% product or 90% product or 75% product. But It comes down to knowing what that number needs to be. If you aren’t able to effectively identify that number, you’re SOL.
Yeah. And I mean, for me, my number is kind of shifting because I just bought a house and my life’s priorities are changing quite a bit. But like The number is effectively whatever percentage you feel comfortable with, right? Like I kind of have two clients right now, and I love it. I actually really enjoy having two clients. It’s been pretty enjoyable. And You know, if I lose one, then that’s a lot of revenue and I’ll end up replacing them. But whatever, you know? The somebody part of the five paragraph question was, How do you think from a position of abundance? And well, the answer is to make a lot of money. That’s it.
I agree with you on having cash in the bank being valuable for that mentality of abundance, but I think it gets a little I think we go a little deeper into the question and we say, well, how do you start thinking from a position of abundance? Well, first, you need to recognize the abundance that’s around you. First, you need to recognize those opportunities that are around you. You cannot start thinking from a position of abundance until you start to recognize the abundance that’s around you or The scarcity that’s limiting you that you need to adjust and eliminate from your life. If there is some sort of scarcity, I don’t have enough time because I’m doing all of these things. Well, okay, of the 10 things you’re doing, what are the three most important that bring you the most joy? Conmarie away the remaining seven. Now you have more time to focus. You might have a ton of clients and you’re making more money than you necessarily need. Good. I hope you’re putting some of that into savings because it will help with this type of transition. Get rid of the clients you don’t enjoy. Get rid of the clients that make you wince every time an email comes in. Get rid of the clients that don’t bring you happiness in your professional or personal life. Make that space, make that abundance. And part of it comes from recognizing: oh, I’m making more money than I need, and my business is in a healthy position. Just like I evolved from working a day job to being a freelancer to a consultant to maybe building an agency, whatever vector you built your business along. This is just continuing to build your business in a new direction by testing something new. You might go down the product route for a year and go, nope, not for me. I like consulting. That’s great. I’m happy for you. Do that. Try it. Test it out. But How do you recognize that position of abundance? Well, you have to get a little hippie and look around and say, things aren’t that bad. Things are kind of good. What do I need to change to really be in a position to capitalize on this? For me, at least in my experience, that’s been where that mentality of abundance has come from. I definitely had a scarcity mentality thinking back. two or three years. If I don’t get this project, there’s not another client out there who’s going to hire me. If this launch doesn’t work, it’ll never, ever, ever work. And I shifted my thinking to saying, hey, you know what? This is one launch out of a hundred launches for this product. This is one client out of a hundred potential clients I could work with. And by recognizing that there are, really, honestly, truly Limitless opportunities out there to solve problems for people, to help them improve their businesses, to help them get to the next level, to help them make more money or solve a problem in their business and get to that outcome they’re searching for. that’s when you start to recognize that abundance, that there are so many opportunities out there. And then it becomes a different, interesting challenge of picking from those abundant opportunities what to focus on next. Since you could easily come up with 10 wonderful ideas that all are validated, all seem profitable, and you’re faced with that really hard choice of: do I do all 10 at the same time, or do I pick one? How do I pick my favorite child? What do I do? And the truth is, you pick the one that you think has the best chance of succeeding and will bring you the most happiness, and realize that even if that idea spectacularly fails in a climactic fashion. You’ve got nine other ideas on the list, and your time spent working on that one idea wasn’t wasted because you developed intellectual property, you developed knowledge, standard operating procedures, lessons learned, you have a few scars and a few good stories. And all of that will make the second, and third, and fourth attempt at moving towards products and shifting this balance that much more successful. We don’t jump into a swimming pool and start swimming perfectly the first time. We jump into a swimming pool and flail around and have a lifeguard say, Do you need some help? I think it’s the same sort of transition when it comes to moving from consulting to products. You jump in, you flail around, you have a couple small successes, you have a couple small losses, you learn a lot, you do it again and again and again. There was a, I just read this wonderful interview with Brandon Sanderson. I think I’m butchering his last name. Author of The Way of Kings, great fantasy author, invited to finish the Wheel of Time series after the author that started it passed away, and he was talking about His history creating books, and he read some article somewhere when he was struggling to be an art author doing the starving artist thing. And the article said Professional authors always say their first five books suck, just completely, completely suck. And it’s with the sixth book that they start getting some success or figure out their voice and figure out what their audience is looking for. And he read that and he said, okay, awesome. My goal is now to get to six books. And he didn’t care that the first five were going to not be as good as the future ones. He said, Okay, I have to do this thing. I have to make the clackety noise. I have to get the experience of these books under my belt. And his first five books. Not really good, not well received. His future books, very good, very well received. And by approaching it with this mentality of abundance, I’m going to do these things and see what happens and put this content out there. He was able to build up a very prolific following and become very established as a modern fantasy author. And I think there’s a very, very important lesson we could pull from his experience to when it comes to creating products. Your first attempt at creating a product. Isn’t going to make you 100% of your revenue. Isn’t necessarily going to be a huge success. It is going to be an attempt and a step in the right direction, and you are going to learn very, very, very important things from doing that. But It’s not going to be perfect. And what you need to do is recognize that and recognize that you are investing in learning by making mistakes. And from that, your second, your third, and your fourth product attempts are going to be that much better.
There’s a Tumblr on the internet, and I’m so sorry that I have to mention Tumblr. And I don’t like this person very much who runs the Tumblr, and I don’t really like his work. And I don’t really approve of most of his actions, and his New Yorker profile was quite unflattering. Um but I prove of the sentiment behind the title. So I’m just going to talk about the title. It’s called the jogging. And if you’re from the art world at all, you’re probably groaning and salting the earth right now. But it’s basically an art tumbler that this guy makes and the sentiment behind it. Is that you always have to be churning out new work. And it can be fine art, it can be punk, it can be brief stuff, it can be big stuff, it can be weird stunts, but you always have to be doing something. And so the idea is that it’s not a sprint, it’s not a marathon, you’re just jogging, and you do that for forty years, and then you’re done jogging. And the jogging is still going, right? And again, I don’t really care about this Tumblr. And I but like, that strikes me quite a bit as what you’re talking about here. Where I’m thinking, like, okay, well, you just start making stuff. And you’re not going at a crazy pace. It’s 10 hours a week, you’re just making stuff. And nobody’s going to notice. Eventually, one person’s going to notice. And then they’re going to tell a couple other people. And we’ll ask those people questions, and then it’ll make the content better. You just keep rolling that snowball, right? Like that’s basically what it is. And you’re I think this is all coming around to a point I want to make, which is that the I wanted draft to start moving in a product direction probably around two and a half years ago. And I may be halfway to the end of that strategy, right? And I feel no remorse or upset about that. I’m enjoying my job and what it is right now, but that’s it’s going to take five years. It’s going to take a very, very long time for you to build up a system necessary that works. And I don’t know how to build a system that works. You know how I build a system that works? By screwing up a lot and deleting things. I deleted two-thirds of the homepage of my website this morning, you know? And I have this one thing, and it’s a tremendous risk. And if it doesn’t work out, fine. I’ll put something else up there. But you’re you the thing that I’m I’m hearing from you around all this is that you need to allow yourself the latitude to screw up. And the way that you do that is by not panicking about running out of money.
At least for me. There’s another Tumblr I’d love to cite. I emailed about this to my list a couple weeks ago. This is one of my favorite articles on the Internet. Describes a lot of my life philosophy. It’ll be in the show notes. It’s on the Tumblr, My Year of Everything, and it’s entitled Be Aggressive. And there’s one paragraph that just Always, always resonates with me. Pretend you’re giving it all up and going back to school in a year. Act like you have one year to make it work before you give up and try something else. What haven’t you done? Where aren’t you being aggressive enough? Go do it and embarrass yourself with your pushiness. After all, you’ll be doing something else in a year anyway, so who cares what people think? Push until you feel uncomfortable and then double it. The trick is, when you do that, good things start happening right away, and you get yourself to a point where you can’t imagine giving up one year from now or ever. That resonates so powerfully with me. And I think it’s very applicable here. Where if you are motivated to say, hey, I’m running a consulting business right now, I want to be running a product business instead. Well, you need to follow this advice. What haven’t you done? What haven’t you tried yet? What can you try? Where can you be a little pushy? Where can you do some outreach to somebody that’s a couple weight levels above where you are and say, hey, I want to contribute a thing? I want to work together on a thing. And help level yourself up. Where aren’t you being aggressive enough?