Custom Software Services vs Solution vs Product: A Comparison

Nowadays, it’s not uncommon to see companies use the terms product, solution, and service for just one product. The line has become so blurred for so long that we don’t even notice it anymore and even we’re guilty of using these three interchangeably. 

While it may not seem like a big deal, this ambiguity can confuse the client about what you’re exactly offering. Your sales team may use the term “product”, the website may list them as “solutions”, and the customer support team may refer to them as “services”. The client simply doesn’t know what to believe. 

But, clients are not the only problem. Even you and your marketing team may not know what to promote because setting up a product marketing campaign is not the same as one for a service. So, we need to clear the air. 

Definitions & Characteristics

The biggest reason for such a level of confusion is that many are not clear about the exact meaning of these three terms and often use them interchangeably. So, we should start with the definitions so we can start to separate them.

Product

A software or technology product is usually a ready-made solution. It's not tailored to your specific needs, and everyone pays the same rate. Consider the Microsoft Office suite. You can purchase Microsoft Word in several different bundles, but it's still the same program. You can't request a different color scheme or special features for your company from Microsoft. It's likely that you don't have a product if you're frequently changing the price tag on it.

Or, consider Mailchimp; the company offers many plans at different pricing points, and you may sign up for whichever one suits your needs best. A combination of coding and cloud-based services. Just something easy and practical.

Another well-known “product” category belongs to SaaS systems like Microsoft 365. Companies sometimes choose not to spend extensively on proprietary products, but rather to find an "off the shelf" alternative, often in the cloud, to which you can pay regularly to obtain a certain service. 

One of the appeals of SaaS products is the simplicity of launch. With software that can be installed and removed with no effort, you won't have to worry about making a long-term financial commitment to inefficient programs.

Characteristics

• A distinct name: often protected by trademark law in all jurisdictions where the product is sold.
• Standard and specified features: including both the basic product and a range of add-ons.
• A well-defined price: such as the MSRP or the "street price."
• A specified method of distribution.
• More than one consumer may get the product at once.
• Repeatable: If I sell it to one person, it doesn't stop anybody other from buying it.
• Product documents: high-level descriptions of the product's most essential features.
• Competition: You can compare the product with other similar items based on different criteria, from the most basic, like cost per unit, to sophisticated variables like system requirements.
• Defined performance: All of the product's dependencies have been laid out for the consumer. The vendor guarantees the product will work as expected when all necessary dependencies are in place since they have tested it under such conditions.

Solution

Usually, a solution is designed to solve a specific need in a certain industry. It might be anything from a retail store to a hospital to an office. You come to the market with the answer to a widespread issue. 

For instance, you may create a program that enables stores to utilize their POS system for a wide variety of routine tasks, including customer loyalty programs, promotion campaigns, vouchers, and more. It provides a workable solution to a widespread issue.

Solutions, in contrast to products, can be modified for each customer. It's common practice to modify a solution based on the customer's unique requirements. This also means that the price will vary for every customer, depending on the degree of customization required to meet their particular needs. 

It's generally the case that you can't just go out and purchase a solution and start utilizing it the next day. It may take some time after implementing a solution and training the personnel before you can get a return on your investment.

Characteristics 

• Operating on a standard product: Standard product features utilized in a solution may be activated or deactivated, and/or have their functionality altered from what the product was designed to do.
• One or more substantial “changes”: The following factors contribute to these alterations: Unique qualities and needs of the industry, market, area, company size (in terms of number of workers or geographic reach), company mission, and/or client.
• Optional features: Potentially include third-party solutions, task management, and a delivery schedule.
• Varying price: The price may depend on several factors, including quantity ordered, retail price, and degree of customization.

For instance, let’s say you have an antivirus software program on your hands. Standing alone, the software is essentially a product, but once you mix it with other things such as a spam filter, and tailor it to your company’s vulnerabilities, you can label it as a solution.

Some of the most famous real-life examples of solutions are customer relationship management (CRM) or cloud computing platforms on the market. Here, we see companies often label software as solutions. Some of these solutions include Google’s Cloud Platform, Microsoft Azure, and almost all of the CRM packages that can be tailored to your specific needs. 

Service

While many often label a service as a product, there is actually a notable difference. Any kind of technical knowledge, strategic counsel, management, or consulting that makes technological tools more accessible is called a service. A service may be sold alone or as part of a solution or product package. Products and solutions can't stand alone without the help of services. Services aren't technology on their own.

Unlike actual products, services are generally intangible, something that you do for a third party. For instance, your firm offers graphic design services to other companies.

Another example is custom software development. Custom software is like having an outfit made just for you, fitting your body and needs precisely. The creators of customized software create programs tailored to the needs of a particular business or activity. The custom program has all the functions needed by a company. 

Characteristics

• A service is any action performed by one party for the benefit of another. It's a benefit that you provide, not an actual good that you deliver.
• Services, unlike tangible products, can't be examined up close and personal before buying. A service is an intangible concept.
• The functions of a service can't be the same or the same for all providers. The features can significantly vary based on client requirements.
• Unlike the sale of a tangible product, the cost of a service is not always the same because it can go up or down based on client requirements, scale, and the length of service provided.

Possible Challenges

So, by now, you probably know how the dynamics between product vs. solution, product vs. service, and service vs. solution work. Besides their characteristics, each of these three categories has specific challenges that set them apart as well. Let’s get to them one by one.

Product

• Little to no room for customization: Commercial ready-made software is simple to install, but it cannot be customized to meet the needs of a certain project. For instance, premium subscription tiers provide technical help, however, this may not be enough for certain businesses.
• Poor responsiveness to changes in the market: Users tend to upgrade their operating systems more often than retail software developers offer support for new features. Users tend to abandon an app if its features aren't sufficient to meet their demands. 
• Issues of scale: The rigidity of retail software's features means it can't easily be tailored to meet the unique requirements of all businesses, lowering the overall performance and efficiency.
• Problems with integration: Since the typical features of the turnkey program must be used, it may be difficult to include the external solution. If this is the case, you'll need to bring in other experts to help.

Solution

• Too many variables: Since solutions are tailored to specific company requirements, the number of third-party integrations, pro features, and even the milestones can be tough to manage. 
• Non-standard pricing: In many cases, neither the client nor the developer knows the exact final price because it can be based on a combination of volume, list price, and customization.
• No standard documentation: Unlike products, a solution does not come with a ready-made document because the specific functions of every solution can differ, and so will their documentation.

Service

• Larger upfront cost: Custom application software development usually costs more upfront since it often requires a creative software business to come up with an approach that works for your project. Nonetheless, you will see a return on your money spent once you start using the extra capabilities.
• Long Time to Develop: Packaged or custom development processes might take a considerable amount of time before full-fledged implementation — depending on the complexity and size of the application.
• Consistent Maintenance Custom software needs strict supervision and ongoing maintenance to operate at optimal efficiency and to give your organization a smooth-running experience.
• Finding the right provider is hard: Whether it’s graphic design or a healthcare software development service, it can be tough to choose from numerous options available on the market, each with unique benefits and drawbacks. 

Frequently Asked Questions (FAQs)

So, now you know all the positives and negatives that separate a product, service, and solution from one another. Let’s turn to some of the common questions that may be still on your mind. 

What is the main difference between service and product?

Products are often something that buyers can get their hands on and examine. For instance, Various companies buy marketing supplies from your company, making it a product. But, doing marketing for them is a service. Unlike actual goods, services are something you do for the client, not something you sell or physically deliver.

Can products and services work together?

Products and services that operate together to improve one another's value are called synergistic. Many businesses seek to increase profits by adding services to the product value chain; in most cases, innovative ideas that mix products and services are more successful in attracting and retaining consumers.

What are software products?

Many of the software programs we see today, such as Microsoft Office, Adobe Acrobat, AutoCAD, and many other mainstream programs have little room for customization. 

Can you separate product, solution, and service by industry or sector?

While each of these categories is more popular and common in some verticals, there’s no way to draw a hard line because there are simply many overlaps. For instance, you can offer custom software development for different industries such as retail, banking, healthcare, and even IoT. 

Is Custom Software development a product, solution, or service?

As the name suggests, a custom software program is tailored to specific company needs. So, it’s obviously not a ready-made product. Plus, software development is something you do for the client, not a tangible good you physically deliver. So, custom software services development is a service.