Service Business Revenue Model and Profits

Two women discuss business over a service counter.

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One of the biggest problems of small service businesses based on one person’s talents or expertise is just that — the business depends on the talents and expertise of just one person.

For product-based businesses, growing profits is comparatively easy; such businesses can expand by exporting and/ or opening more branches, just to give two examples.

But if you have a service business, there are only so many hours per week you can work. And you can only raise your hourly or project rate so much before you price yourself right out of the market. This means your service business has a profit ceiling — a ceiling that may not allow you to make the income you need.

How can you break through and grow your service business’s profits? The answer is simple. Change your revenue model so that your service business’s profits (and your income) are no longer dependent on you.

Key Takeaways

  • There are ways to expand your service-based business, even if you feel like you do not have the capacity to do more work.
  • Sharing your knowledge of the service, expanding your offerings, and changing your market could help improve sales without adding extra work time to your day.
  • You don’t have to feel constrained by the number of billable hours in the week and can expand your income from your service-based business.

Here are seven ways to change your revenue model and make your “solo” service business’s profits soar.

1) Add Products

There is absolutely no written rule anywhere that says a small business has to be a product-based business or a service business. And for many small businesses, selling products that relate to the services they provide is natural.

The carpet cleaners that sell stain remover products. Veterinarians that sell pet food. Look at the businesses around your community and you’ll see examples all over the place. Add the right products and your profits could increase exponentially.

But, be sure to choose products that relate to or complement the services you provide. Selling unrelated products doesn’t work.

2) Hire and Train

This is another obvious way to change the revenue model that many service businesses have used successfully. If one person can only make so much money, then x number of people doing the same thing can make significantly more money.

If the service your business provides can be taught to others or is a talent that can be hired, hiring and/or training can work very well for you.


Never hire without training. Even creative types need to be trained in terms of house rules and your business’s culture and standards.

For instance, if you are a designer, you could hire other designers, enabling you to expand your client list. Or think about the carpet cleaner again for a moment. It would be easy for him or her to train employees to provide the same service.

3) Productize Your Service

By taking the service you provide and turning it into a product package, you unchain yourself from charging by the hour and relieve clients of their fear of hourly rates stacking up endlessly as a project drags on. 


Be sure to develop products with your target market in mind — and be sure to thoroughly test them before marketing them.

An aspiring entrepreneur might want to have a business consultant create a business plan for them, for example, but be apprehensive about the expense of paying the consultant by the hour. But paying a flat fee for the consultant’s business plan package makes having the consultant create a plan more attractive and affordable — and gets the consultant a sale she otherwise wouldn’t have had.

4) Change Your Market

Right now there’s a fuss being made about differential pricing. But differential pricing has existed since the first homo sapiens made a sale; different people have always been willing to pay different prices for the same thing, so there have always been striated markets from low-end to high-end. Walmart and Holt Renfrew both sell clothes but at very different price points.

Take a close look at your market; you might be able to change your revenue model by “moving up” to a higher price point. And don’t limit yourself to thinking only in terms of a business-to-consumer business model; consider changing to a business-to-business or even a business-to-government model. Governments, in particular, can provide a steady stream of income as they pay for products and services.

5) Repackage Yourself

Just as markets have striations that have different price points for services, so do professions. And those striations can mean the difference between being paid as a lowly grunt and being paid like a star. Who would you rather be; the poorly paid public defender or the glamorous defense attorney for whom people are willing to pay huge sums?

Here’s a secret; there are many professions where you can move from one to another. The barber can become a hairstylist; the masseuse can become a massage therapist; the writer can become a content developer. Titles matter when it comes to fees.


Repackaging, like rebranding, has to be complete. It may involve sweeping changes such as relocating or rebuilding a client list, so be sure you know what repackaging will involve before you do it.

Repackaging yourself is not just a matter of changing what you call yourself, of course; it may also involve improving your credentials or increasing your celebrity.

6) Sell the Maintenance as Well as the Service

Think how much more income you would have if instead of paying you to do one thing, your clients or customers just kept paying you. That’s what this revenue model is all about. For example, if you are a web designer, you could offer the service of maintaining the website with monthly or annual fees, instead of just designing a website for someone.
Focus on creating a maintenance program that solves a customer’s current or potential problem; that’s the kind of maintenance program that will be easy to sell.

Or if your business is installing irrigation systems, you could also offer a maintenance service to your customers that would involve turning off the system for the winter and turning it on in the spring — a truly brilliant idea because it would also give you the opportunity to check the system over twice a year and spot any repairs that needed to be made.

7) Become a Franchise

If you are operating a successful business that can be duplicated to allow others the same potential success, franchising your business can bring in big bucks.

Learn about franchising your business to see if it is a viable option for you. Franchising isn’t just a matter of opening up branch locations; what you’re actually selling is your business system, and not all businesses are suitable candidates.

You can start slow by opening another branch office of your business before franchising; it will give you the chance to test your business model and work out the kinks in your system.

The Bottom Line

You don’t have to settle for what you feel is a low income from your business just because you charge by the hour for your services and don’t have time to add any more billable hours to your week. Service businesses can make just as much money as the most successful product businesses. All you have to do is figure out how you’re going to change your revenue model to break through the profit ceiling — and do it.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Department of Labor. "Workforce Development Solutions."

  2. General Services Administration. "How to Sell to the Government."

  3. Harvard Business Review. "Reinventing Your Personal Brand."

  4. International Franchise Association. "How Do I Franchise My Business?"

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