What are the pros and cons of a fledgling SaaS startup (less than $500k revenue) offering professional services in addition to their core product?

This is one point on which I mostly disagree with Jason (it's rare). To me, the most important element of this question is stage. I don't think it's a good practice to compare the metrics/performance of a $2.5B public company to your 9-person startup. Of course a $250MM company is doing professional services. At a certain point, product growth will slow and you'll find a way to grow through services. I don't have any problem with that. But at your current state, sub $500k - 9-people who are probably already working a ton of hours trying to build the product business...offering services makes me very, very nervous. Depending, of course, on the nature of the services. I think there is a spectrum of services a software company can offer. >> On one end of the spectrum are very scalable (repeatable) offerings, like a premium onboarding/training package or some light integration work. This is something that can be designed once and delivered in a scalable way by junior folks. >> On the other end of the spectrum are full-fledged consulting engagements. Custom work, individual scopes, delivery only possible by more senior talent. It sounds like you are asking about services that are further on the consulting end of the spectrum. I really don't like this idea for a few reasons: I find these services completely distracting to the goal of building the product. They will require your senior folks and they will always spend more time delivering on this work than what you agreed to in the contract with the client. Partly b/c that's the nature of consulting and partly because you want the client to become a customer of the product - so you'll do whatever it takes to please them. Your product will absolutely suffer. With consulting work, there is pressure to deliver good work on schedule. Anyone in the path of delivery for this work will feel this pressure. Even if he/she isn't dedicating full time to the service work, they will always have this hanging over his/her head. The hope that these services will help you find product/market fit is mostly optimistic in my opinion. Most often you end up building (or being asked to build) custom features to solve the problem of a single client. You can get customer insights for product/market fit more effectively by spending free time with your customers. Once you are being paid for your service work, you lose freedom and become obligated to deliver whatever they want (vs what is good for your product/business). I agree with Paul Graham on this one - rather see startups offer 'free' services while building the product. And not for nothing, selling these types of services and selling product are very different practices. They require different sales people, different approaches, etc. You have probably hired, trained & compensated your current salespeople based on their ability to close product deals - which are more transactional in nature. Asking them to shift to selling custom consulting services is not a good idea. They will hate it and you won't have much success with it. With that said, if you are totally bootstrapping the business and the revenue will keep you alive, I can't argue. Go survive, but be careful. If you are serious about building a big product business...be careful. At the same time if you can offer some services that are (a) scalable and (b) help to ingrain your product into the customer's workflows (leading to higher LTV)...then that makes sense. I also don't think your main concern at this point (as a business) is valuation. The time & resources it will require to generate generate a 10-20% boost in short-term revenue, is probably much better spent on the product for a much larger boost later...

Jason's got a great answer here, and I can't do better. I'd only add that a lot of the work you should be doing at this stage of your startup is product development and finding a product-market fit, which sounds a lot like what they want you to do for them. If you should be doing this anyways for yourself, why not do it and get paid for it?

You're kind of answering the question yourself - you're a SaaS company, not a consulting company. But based on what you're saying this might be a net advantage if you're disciplined. As a random idea, maybe not product integration per se, but a twice-weekly (hands-on?) office hours session (with a high billing rate) with a few good engineers onsite at a few key clients. This means your clients will be efficient with their time and yours, you can help them with the most important stuff, *and* they will help you figure out what you need to work on and why. Consulting can be a good short-term revenue booster, but it takes discipline to avoid getting sucked into a local maxima. At the end of the day, your focus as a team should be on your product and your customers, not just the integration or microimprovement of things for whoever can pay your rates.

There are no cons. The question is how to manage and charge for it. This answer comes from experience working with digital agencies/startups in the past and for past 3y as co-founder/CEO of SaaS startup TrackDuck - https://trackduck.com/en/ tool. Why there are no cons for SaaS startup to provide some professional services (at least in the begining) - because you will be doing it for free anyways: 1. You will be talking and consulting your clients on their business problem - otherwise how you'll be able to discover what to work on, which feature to develop next? 2. You will be or become an expert in the field and educate your client on how to solve their problem. Otherwise clients won't trust you / your service, you won't be able to solve their problem, they won't be loyal customers etc. 3. You will be solving their problem with your SaaS product. For that you may have to onboard/train their team, integrate, find and maybe even fix issues in their processes or tech etc, to make your solution work. 4. You'll be creating free content in blogs, social media, webinars, maybe even conferences and other events. So why not charge for it? In TrackDuck we have done QA for our client websites, consulted how to fix bugs, connected US/UK clients with agencies and freelancers in Eastern Europe (we're based in Lithuania/Belarus), made webinars, create educational content like http://blog.trackduck.com/2015/10/29/web-design-purposeful-creativity/ etc. So as long as you manage to stay focused on the problem you're solving with your SaaS product and charge properly for your work, professional services should only help to grow and learn more about your clients.

I just published a blog post on the topic: https://medium.com/the-astronomer-journey/professional-services-for-an-early-stage-saas-company-17bda2ade850 We’ve decided to pursue these engagements, for the following reasons: We’ll learn more about the problems we’re solving, and how it feels to implement our solution. We can involve others from our team that are newer to our domain, effectively acting as a training/development exercise. It’s an opportunity to delight a handful of customers, which become reference-able. We’ll seek to minimize the size of the engagement, and we recognize that we’re playing with fire a bit. We’ll be sure to remain focused on product, and to not steer too close to the sun :)

It's an absolute no brainer, as long as it suck up all of your time.  Here's why I have provided professional services early on in both of my businesses: Gets you close to your customer to ensure product fit Builds personal relationships with people that will need to be your references down the road You get first access to upsell opportunities Helps you sell future deals to new customers because you can personally speak about  implementations or customizations Cash is king early on, just don't forget ARR is the only thing that matters to investors.

I mostly agree with here, but I have some extra bits... Focus on services that make your service stickier.  Your services should focus on making your core product harder to get rid of.... think integrations, etc. Focus on margins For a company of your size I would highly consider growing via pro services, but I would make sure that you are getting decent profit on those services so you can put it back into your core product.  It is probably ok to cross that Lemkin threshold of 20% as long as you bring it back down later...