Productize Your Way to Profit

Are you trapped in the feast-or-famine cycle of consulting, constantly trading time for money? Jay Melone shares how he achieved an extraordinary 1,810% profit growth by transforming his consultancy from selling time-intensive services to creating scalable products. Drawing from his experience working with clients like Google, Amazon and Home Depot, Jay reveals his 'reverse flywheel' approach to productising services without compromising value.

Learn how to package your expertise into accessible toolkits and training materials that generate passive income whilst serving as powerful marketing tools for your premium services. Jay emphasises the importance of giving maximum value in your entry-level products rather than holding back—a strategy that earned him $80,000 from toolkits he created four years ago that still generate leads today.

Discover practical steps to break free from the consulting hamster wheel and build a more profitable, sustainable business model.

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Chapters

• 19:15 [Ad] Everyday AI: Your daily guide to grown with Generative AI
• 20:02 (Cont.) Productize Your Way to Profit

Transcript

Jim James (00:00)
How does 1,810% profit growth sound to you? Just a moment of silence as I can hear the roar and the screaming from the audience who are all saying, me, me, me, I'd love it, I'd love it. Well, I know I would love that kind of growth. The challenge for most of us, especially those of us in the consulting business, is we run out of time and then we try and charge more and more money for the time when we priced ourselves out of the customer group

that we were originally serving. It's a fairly well-worn problem that so many of us get into that flywheel. But my guest today has found a solution. He's gone from consultant to managing to help people to productize their services. So I'm really delighted to have Jay Melone joining us today from New Jersey to talk about the profit ladder and how he's managed to generate

1810% profit growth. Jay, welcome to the show.

Jay Melone (01:01)
Hey Jim, thanks for having me. Great to be here.

Jim James (01:04)
It's great to have you because I've seen you on LinkedIn and watched the posts and you've got an amazing and amazing blog, is at profitladder.net where you've got all sorts of articles about looking for passive income, how do you productize your service, how to niche down. So you've created this amazing body of work, but I wanted to save us all some time by getting you as the mastermind onto the show.

Jay, tell us a little bit about your backstory and then how do you help consultants, and let's face it, I'm one too, go from selling time to selling products.

Jay Melone (01:44)
Yeah, well, so it started in 2010. Just like you, Jim, I was faced with the same challenges that I help people with now, which was I was building a very much a service-based business selling consulting and training services. We started as a web design studio over time. We sort of evolved and transformed into a group that sold high-end product strategy and innovation to companies like Mailchimp,

Google, Amazon, Ford, Home Depot, great names, great logos, and very hard to win the business from those people. I'm selling to, at the time I'm selling to VPs of product management, chief strategy officers. These are people that you don't just send them a cold DM and they jump into a call with you. These are 12, 18 month, 24 month sales cycles. And so when I started the business, the business is called New Haircut. It actually still exists.

It's just my new found love of Profit Ladder has taken its place a bit. But when I started the business, I never imagined, I think it maybe as most entrepreneurs, you imagine that you're just gonna offer a service out into the world, you feel great about it, you feel a commitment to do that work. And what nobody tells you is you still have to go out there and let people know that it exists. You have to prove that you're someone worth hiring because

you know, there's always going to be competition on them out in the market. So you have to demonstrate your unique ability to help your specific avatar, your specific person. And I just really never wanted the job of owning marketing and sales for my company. So at a point we grew to 35 people, but it always fell on my shoulders to take that job of sort of beating the drum and bringing in new clients or

going deeper into the companies that we were selling and opening up new opportunities. And so I avoided that job. I tried to give it away. I tried to hire people to do it. I tried to outsource it to marketing agencies, lead gen companies. And because I didn't really, never owned the sort of end end job there, it was very difficult for me then to just kind of give that job away. And I also, I never really felt like the person who wanted to hunt,

who wanted to like go out and knock down doors and find people. I was very much more of the person that wanted to put good ideas out into the world and then have the right people come back to me. So much more of a farmer. But, you know, all the, even in there creating endless amounts of content, speaking on podcasts, doing all the things, it's still, like very much like feast or famine cycle. So the business would go through these long slogs where we just didn't have enough work

and so that went on for about 10 years and eventually what I started to experiment with was figuring out how do I go from selling this, these six month long contracts that I was selling for 50 to a hundred thousand dollars. How can I make that simpler to buy for my exec, even my executive buyers or their sort of second and third in command? How can I demonstrate that working with me and my team

is the right fit, we're going to solve the right outcomes, we solve problems in the ways that produce the things that you have challenges with. And so we just sort of stepping backward. And at a point we went from selling high end consulting to selling one and two day training workshops. So instead of doing the work for people, we said, you know what, there's a lot of people that ask us questions about how we do what we do. So why don't we teach them? So we would fill, we would fill workshops of 30 to

40 people and teach them our frameworks. And that was a major uptick toward that 1,810%. So instead of using six or seven people that would make 50,000 bucks over three, four months, we were making that in one or two days. So was from one or two trainers. So that got our attention real quick. And then we just, like, as we go through this conversation, what we started, we kept doing over and over again is asking,

okay, if it's easier to sell the training, how can we get more people to buy the training more quickly? Or how can we get people that can't afford a thousand dollar training workshop or can't attend it in New Jersey or Berlin or the UK, wherever we were, how can we give them the learning without having to be there with us? So we took the training and we started to package it into online and sort of self-paced materials. And a lot of it was just an experimentation as we went.

And the real thing that I was trying to do was to make my job of marketing and selling easier so that could spend less time doing that and more time doing the work, which is the whole reason I started a business to begin with.

Jim James (06:47)
Jay, and having built my own agency in Singapore and China and selling to B2B and to corporates, I know exactly what it's like. You pitch for months to many people and then you're one of four in the final bid. Then when you get the job, if you're lucky enough, then the payment term negotiation starts. And those big companies have got the worst payment terms of all. So the full sales cycle actually becomes very painful

especially in those B2B corporate pitches. So completely empathize with you on that. So you've had a journey to get to a place where you understand the product itself and then you've changed the delivery and helping to train people to do it. What's the

practical mechanism because there are many, many people out there as consultants in all manner B2B and B2C that are currently doing what you were doing, which is building teams, going out, getting a head count. How did you, or what did you do to get that content into a format that people would pay for without you being in the room? Because that's the key, isn't it?

To scale.

Jay Melone (08:10)
Yeah. Yeah. And so like, there's, there's the reverse version of this before I answer the question, which is you see a lot of like the side hustle crowd talking about taking a thing that they've done a couple of times or a job that they have as a full-time employee and sort of like building a course, but they've never like sat in the, in the trenches with the person that's going through that material. They've done it as a job and so they sort of build it from the ground up

by trying to start with free and low ticket content. And the challenge I have there is that it's the reps of doing the work that you do with a variety of the clients within your niche that you work with. I think that's where you build up the armor and sort of you understand that when I get to this point, they're gonna ask these three questions and they're gonna have these two or three self doubts about what we're able to achieve. So I'm gonna preempt that with some

homework that I'm going to give them to do, where they do a reflection, they come prepared with a couple things that I've asked them to gather. And then I'm also going to have them sort of like visualize that, or I'm going to give them a template to fill in. And as you do that work over and over again, elbow to elbow with your client, can turn that, instead of like you showing up to do that work time and time again, that can be a thing that you pick up out of your work and you give to the person that's considering or like,

about to need your help, but not quite sure that they're there yet or they can't afford it. Like the way that I, the way that I approach it is this reverse flywheel that I think about is start with the premium service that you're already doing today. That's already selling it has, it has fit people are buying it, but it's long, it's hard to sell. It's hard to understand the value that people are going to get. Maybe it's expensive. It's hard to access. requires a lot of your time requires your team's time.

And so the only way that you can scale in that fashion is to hire more people that can sell more of that work. And in that way, your growth is sort of slow and linear. So what I think about is take that premium service and start to chunk out parts of the work that require the most bit of your time and start to package that in training formats, whether it's live and in person, maybe teaching groups of people

or giving packaging it into online content that people can start to access whether for free or low ticket. If you make it free, you're going to get like more access and more brand awareness of what you're doing. If you find a way to make it low ticket, so take a premium service, you sell it for a couple hundred bucks. What you're doing is you're almost paying for your customers to become aware of what your services are. So it's almost like profitable marketing, which is

it doesn't make sense at first, but you're taking your tools and your knowledge and your expertise, your resources, and you're making it far more affordable. So instead of $10,000 for your thing, you make it 200 bucks. You just don't have access to me. So that person very easily, they buy it and they say, this helped me with these kinds of problems. I'm going to go back to Jay or to Jim because clearly they're the experts in this very specific problem that they helped me solve on my own.

Jim James (11:30)
Jay, that's an interesting approach that what you're offering or suggesting is that people are starting with really kind of the end to end of what they do professionally. You know, I built this Academy with a podcast guest blueprint, show people how to get prepared to be on a podcast and all the media training that I've done for 25 years as a PR person, put that in there and then, you know, how to prepare for the podcast and so on.

And then how to repurpose the content afterwards. But then that's potentially a high ticket course. So are you suggesting then that people, or that I would start to break that down into smaller modules that could then be sold at sort of $99 a piece to get people into the, I guess the bottom of, to your metaphor, the bottom of the ladder. Is that the way that will work?

Jay Melone (12:25)
Yeah. Yeah. You know, because like your, your client is at any different stage before they're ready to commit the time. And most of it, most of it, I mean, honestly, most of the companies that hired me paying me 50 grand, a hundred grand for Home Depot to spend that money. It's not even pocket change. Don't know what it's below 10 degrees, 10 steps below pocket change, but it's the time the team has to commit to spending three to six months with me.

So making it easier for them to take a couple of those steps on their own or through maybe like something that's a little bit more packaged. So we're only gonna spend a week and you're gonna get these three steps. So it's more about making, de-risking what you're ultimately trying to do is just to win those major contracts, but to do it in a way that you don't have to spend all of your free time trying to get that person in the door and to buy from you.

So let them educate themselves on your expertise, let them get their own wins. And then when they're ready, depending on where they come into your ladder, they'll either take the next step up or they'll be so convinced and so ready and the timing will work out that they'll kind of jump to your premium service. But it's really remarkable that I mentioned this first business I built. I built those products.

Jim James (13:41)
Okay.

Jay Melone (13:49)
I called them toolkits. I built them four years ago and I haven't touched them since. And to this day, for a business that I'm not actively operating, I have people downloading those toolkits, buying the premium ones and sending me emails to ask me to come help them with the related service that it offers for them. Very much, I know that passive income is a hard nut to swallow for a lot of people and it was for me as well. But if

if you're making money off something that you don't touch that you built four years ago that's still giving value to the person using it, that feels passive to me.

Jim James (14:25)
Yeah, well, it's adding value, isn't it, without having to be actively involved. And that's evergreen. Can you give us an idea then Joe, when you say toolkits, from a practical point of view, what are those things? Because one of the challenges in this space, whether it's the side hustlers, for example, or the course, I'll build you a course and you can take my course, know, merchants.

There's a lot of of bait and switch, right? You find that actually there's not a lot under the hood. So when you say toolkits, for a practical point of view, is that a PDF download on eBay or Amazon? Is it a Kajabi webinar? What does that actually look like, Jay, from a practical point of view?

Jay Melone (15:17)
Yeah. Yeah. I, that's another big thing that comes up, especially now all the online courses, there's so much snake oil out there, which is giving like anyone that's trying to build a business and scale it in this sort of way is bumping up against that predisposed idea that any sort of like online training or communities or subscriptions are just filled with a lot of empty promises. So that's why I like the reverse flywheel because you're starting with

doing a thing that you've been doing for years now, and you know that it creates value, but it's just hard to sell and it's hard to buy. So in a toolkit, the reason I like the word toolkit and the sort of the format to it is I see a toolkit as both educational and enabling. So when I created my toolkits, I took the frameworks that had taken me a decade or so to master.

And with that, with the frameworks, there were templates I used, there were scripts I ran, there was ways I did customer research, there were ways that there were sort of like worksheets that I would sit and co-create with my clients. So all of my bag, my entire bag of tricks and everything that I'd learned about sort of these innovation frameworks I used, I would package them into these three separate toolkits and they were everything I had. And so like the mindset that I had,

which is hard to develop, is you're going from this thing that you might sell for five figures or six figures, and you're turning it into these low ticket offers, a couple hundred bucks, less than $1,000. And so the mindset that you might get tripped up on is if I'm making it this cheap or this affordable, affordable is a better word, I'm gonna hold back. I'm not gonna give them everything. But

I think that's the wrong mindset. I think you should give everything that you've got. And so my toolkits, I didn't want them to upsell. My goal was I want to make this thing so good that they can use it entirely on their own. And for many people that will be the case, but when you're a small business, you can't work with a thousand clients simultaneously. So if I sold, I wound up selling $80,000 worth of those toolkits.

Jim James (17:30)
No.

Jay Melone (17:35)
And if only a small fraction of them raised their hand to say, used your toolkit. It was great. I was able to accomplish this project. And now the stakes are higher. There's a bigger project. The team is busy. I just don't trust myself versus what you could do. We want to hire you to do the thing. But if I had held back last thing, if I had held back in that toolkit, people can smell that and they'll be like, well, he's just trying to bait and switch me, which is where you were going with it.

Jim James (17:53)
Right, right, I think it was.

Yeah, and I think that what we're seeing, especially since chat GPT is the proliferation of people saying, you can build a course and sell it and just use chat GPT. And here are the prompts, right? And that, I don't want to call that disingenuous, but what you're talking about really is authentic skill sharing, almost as if you were training someone to come and take your job.

Right? So if you're an employer and you're saying, I'm going to train you up to do this job, these are the tools I use. This is the skills that you're going to need and have the integrity to transfer that value, but just in a different form. So rather than you being in the room, it's on Kajabi or Coursera or wherever it is you're doing it. Jay, you're in New Jersey. How do you help people that have got these skill sets? And of course they could be people

who have been consultants, but it also could be someone in-house, right? Who's maybe an internal manager of some kind that's got those skills and they maybe need to go out of house for whatever reason. How do you help at Profit Ladder to do that?

Jay Melone (19:16)
Well, so I think the thing that gets in people's way is, and what got in my way is how can I, the owner of, I mostly work with business founders of small business service-based consultants and coaches. What mostly gets in their way is they've got this high ticket thing that they sell and they're sort of all in and spending all their time selling it. And that's what pays the bills. So it's hard to justify pausing or finding like stealing time

to go and build a thing that you're gonna sell for a hundred bucks or a couple hundred bucks. But it's those peaks and valleys and feast or famine cycles that I'm trying to help them smooth out and earn that predictable revenue so that when things slow down or when they wanna go build a new service or when they just wanna grow their income without spending more of their time working longer hours, I have to first help them understand that this is more of a medium term and long term game that they're getting into.

And then when I do, my process is fairly simple. I take them through a three-step process where I basically am pulling the right offer out of their head. Because most entrepreneurs, myself included, when I want to do this, I hire a friend of mine who's a strategist. You can't read the label from inside the jar, right? So you've got a bunch of things that you do. I do all these things. I teach these people. I consult over here. I coach this, I could do anything.

Or before they even get started, they're thinking, there's nothing that I can package and productize. So I help them get out of their own way. We plot out, we visualize a bunch of different offers, and then I step them through so that we agree upon the right thing for them to turn into their offer. And then I build them a plan so that they know exactly how to build the offer, how to market it, how to get it in people's hands, and how to upsell it into their premium offer. That's the work. It takes about

four weeks start to finish and then I leave it with the person with the plan so they can build it themselves.

Jim James (21:15)
Right. As you say, can't read the label when you're inside the jar. And for most of us that are entrepreneurs and consultants, we do have range, right? We're flexible because we have to be able to pick up the money as and when it appears in the marketplace. And it's not always exactly what we're selling that someone wants to buy. When you're helping people to do that, Jay, how do you help them to get over the anxiety? Because, you know, I've spent time building a course.

And I know that every hour I'm building the course, I'm not building a client. And I'm hoping that in the future, someone will buy that course and that more people will buy the course than would have bought the hour. Right? That's the equation that we're trying to do. How do you help them with the mental side? Because there's a detachment from what your comfort zone is. And then there's the taking the risk. So how do you help them with that?

Jay Melone (22:12)
Luckily, my background is in product. I was a software engineer for a number of years, then I moved into product management and product strategy. So the sort of the central theme there is having a very experimental mindset and thinking in small iterative chunks. What I, almost from a day or two after we find their offer, I have them going out and doing, I help them go through rounds of research so that they can get validation on their ideas.

So throughout what the plan that I lead them with takes anywhere from 90 to a hundred days for them to sort of like go through the process and build it all out throughout there are moments in there where they're getting this sort of like feedback loop that they're on the right track. Sometimes they're not, but they learn very quickly and then they sort of reorient and they're back on path. That's the thing. The thing that's getting in our way is what if this doesn't work? Or if I'm going to do this thing, it's gotta be worth it.

And some of our timelines and expectations don't make much sense. I've got to be making six figures in a month after I build this course that I sell for 50 bucks. It's all that sort of the background work and the foundation. So what I try to instill in them from day one is having this mindset that the thing that they're creating is a prototype that's going to build and build and build. And I'm going to help you

gain conviction and confidence that it's the right thing for you to build. And I also tell them to think about it in two ways. You're going to make predictable, passive, a new revenue stream from this thing. The biggest benefit to a service-based business is all of the 24-7 marketing and selling it does of your premium offer. So it's going to be a door opener. So almost from day one, they've got a landing page of the offer that they're going to create.

And that is a way for them to start a conversation on LinkedIn or Twitter or wherever you are. Say, hey, I'm building this thing. It's going to help with these three problems, which are now crystallized in my head because I'm figuring out how to package that in an offer. So you can speak about it so fluently versus before where you're sort of like a little all over the place. So just, just, just the fact that you have that offer that you can open up doors and start conversations with it's almost the time to value is almost immediate.

Jim James (24:27)
And.

And I can see as well, Jay, but that by doing that, you're helping consultants to take the low value work that they might've been not able to charge for and productize that and say to clients, well, if you want me to work with you on this particular piece of like taking a brief, for example, in PR world, you'd sort of take a brief, you give them the course to take for free or otherwise

and it frees you up to be in the high value zone in the top right hand side of the quadrant where you're really doing what you're best at and what people are willing to pay you most for. So I can see that gives you a real benefit as well. You took that profit ladder.

Jay, what about when people kind of want to walk up the ladder and then step off the ladder? Is this something that it just leads to a recurring high ticket sale or does it lead to some kind of an exit of the business?

Jay Melone (25:35)
Yeah, I think however you want to structure it is really up to you. So some people like the idea of building a system that they can completely step away from, that they can package and sell and exit from, or just one that gives them more freedom and more time in their life. So depending on how you build it, there's a way for you to kind of take either any path that's open to you. I mean, like I mentioned, my past company.

That is a system that I built that has so many entry points. I built it over years. This isn't something, this isn't an overnight poof and I created it. But over the course of time between my newsletters, my blog articles, all my posts on social media, all of the assessments I created, the checklists, the templates, the worksheets, the toolkits, the in-person training, the virtual training, the premium offer, like that whole system exists.

So I have my choice, it creates money for me, but I have my choice to enter into some of that work if I want to, that like really high end work. So while I'm focused on profit ladder and new haircut is still running in the background, if Nike or Disney or Patagonia or REI, like a brand that I'd love to work with comes in and says, hey, we used your thing, we wanna talk to you about a project. It's now my decision whether I wanna work on that or I wanna go focus on something else.

But what doesn't change is sort of the inbound audience growth that keeps happening and the resulting revenue that comes from that.

Jim James (27:13)
Very nice. It's giving you giving you recurring income and it's giving you the choice, Jay, isn't it? So Jay, if there's a, if you like a mistake that you see people making when they're trying to transition from full-time consultant into having, if you like a portfolio mix of some evergreen content and some consulting, what mistake would that be?

Jay Melone (27:40)
I think it's probably like double click into what something I said earlier, which is holding back on your sort of like gateway offer. So there's of all the things that you create, there's probably one that has it's it has this perfect sweet spot of being accessible and affordable, but premium value. Sometimes those are assessments or calculators or

Jim James (28:02)
Mm.

Jay Melone (28:07)
a free version of a toolkit that I've created in the past. And the mistake I made in the past was that I would, especially those free toolkits that I first started creating. I would hold back on the value with the mindset of if they really want it, they'll upgrade to the premium one. But first impressions are lasting. So people use the free thing. There's an energy to it. I know that he's trying to get me to upsell into the paid thing rather than just

Jim James (28:24)
Mm.

Jay Melone (28:36)
give me what I need for this specific thing I'm looking for, and then let me decide if it's good enough that I'm gonna buy your whatever is the next step in my journey. So holding back is by far, I think give away your best stuff, because it's a big world. And I think there's a lot of people that are gonna raise their hand to ask you for help for the work that you're clearly an expert in versus them. I mean, a videographer or a content marketer or a consultant,

working for the roofing industry is clearly not an expert on productizing services. So why would I hold back on teaching them everything I know about how to do that in their work?

Jim James (29:15)
You know, on the grounds that they're climbing the ladder, aren't they? They're generating more income for themselves. They'll find the person who helped them to generate more income, which will be you, because they'll move up their own ladder too, won't they, Jay? They're not in a static place. Jay, fascinating stuff. If there is a book or a podcast that you would recommend, because you're plainly someone that likes to think

structure, codify information, where would you say some of your inspiration has come from?

Jay Melone (29:51)
I know he is polarizing, but Alex Hermosy wrote a hundred million dollar offers a few years ago and then like dog fooding this conversation, he took that book, which he spent a decade or so writing. Think he rewrote it 19 times or something like that. Sold it for as cheap as he could on Amazon. And then he went even further by creating a free training that made it even easier to consume the content.

When I went through his training, he had me hooked as I can't even buy anything from him because his only offer is to become an acquisition company and I need to be making a lot more money. But just like, have always appreciated his willingness to give away his best stuff and what I learned about creating, his sort of like catchphrase is create an offer so good that people feel stupid saying no to it. It's so simple and yet so powerful,

and way that he does it, and there's a value equation that he spells out for you that it's on my wall right here, and I always think about it. Whenever I'm creating something, I run it through his value equation, and it's very helpful. It's all about giving as much value and as little time and expense and effort to that person as possible.

Jim James (31:06)
Jay, well, you've done that for me, good. And there's a lot of value in a very little time and you've made it effortless for me, Jay, and for my listeners to understand what you're doing and also how we can do it ourselves. So you've got an offer for people, which would be great. Let's share that. Where can people get?

Jay Melone (31:20)
Yeah. So what I'm trying to do is, I want to work with a hundred entrepreneurs, service-based business owners over the next six to 12 months. So I'm dogfooding my own process. I have this profit accelerator that I do. It's what I described earlier. It's this four week process that I pull the right offer out of your head and then give you a plan to launch that. And I want to do that as many times as possible and help as many different entrepreneurs as I can.

And then from that, I'm going to start to productize my own offerings. And so to get as many people as I can to do that work, I do a free 45 minute session where I will start us down the path of pointing out some offers that you could turn into productized offers. And if we work together, great. If you take what we get from the conversation and you do it yourself, perfect, amazing. The more people thinking about and

creating productized offers and getting off that sort of hamster wheel of burnout and building a consulting business the old way, the happier I'll be.

Jim James (32:24)
Jay, wonderful. And that's at profit-accelerator.profitladder.net. And I will put the details in the show notes, of course. Jay, if people want to find out and contact you personally, how can they do that?

Jay Melone (32:38)
I'm on LinkedIn a lot. Otherwise, profitladder.net is where I share lots of ideas and inspiration about building a profit ladder.

Jim James (32:46)
Yeah, Jay's got an amazing archive of articles on his newsletter, so subscribe to that. I know that having found that, I'm going to be reading that avidly because there's a lot of great content in there that I can learn from. Jay, thank you for joining me all the way from New Jersey today.

Jay Melone (33:01)
Thanks, Jim. Great to be here.

Jim James (33:03)
Well, as a person that's run consultancy businesses for nearly 30 years, and my solution was to start to import sports cars to China, to import drinks, and also to start this podcast and to write the books as my ways to build products that go beyond the hourly service fee that we can charge for our time and our expertise. I'm so keen to have Jay on because this is an occupational hazard as a consultant

is that we we can kind of keep going and then eventually just kind of drift away. So I was really excited to meet Jay, who is a man with integrity, who has got a proven formula, talks about 1800% increase in profits. And now we know how he does that. So good idea to reach out to Jay. And as he's offering a free consultation, got absolutely everything to gain to move up the ladder with Jay.

So thank you for listening to this episode of The UnNoticed Entrepreneur with me, Jim James. I'm a fellow entrepreneur and consultant, so really feel where you're at. And if you enjoy the show, do please share it on your player and review it. And until we meet again, I just encourage you to keep on communicating.