January 31, 2024
min read

What is a Product Studio and What Does One Build?

Software development companies and product studios both contribute massively to the tech landscape, albeit in distinct manners. Their differences can be best understood by diving deep into their operational methodologies, output focus, and the myriad of disciplines they engage in.

Wes Botman
CEO, Founder

Software Development Companies vs. Product Studios

At its core, a software development company is specialized in crafting software solutions. Their primary objective is to transform a client's requirements into a functional software piece. They might occasionally extend their services to allied areas, but this isn't the rule.

On the other hand, product studios offer an expansive, end-to-end solution, starting from the initial conceptualization of an idea to its final execution and post-launch strategy. They don't just code; they ideate, validate the market, focus on user experience, monitor market trends, and even strategize business avenues. Their strength lies in their holistic approach, making them an ideal choice for ventures like tech startups and SaaS companies.

Specialization's Double-Edged Sword

Specialization is a signifier of expertise, but it's essential to differentiate between domain specialization and industry specialization. While some agencies boast a broad service range across industries, compromising on quality, product studios like Eli5 exhibit depth in product development, irrespective of the industry. Their versatility, gleaned from cross-project learnings, enhances their product-building prowess, catering to diverse clientele needs.

Deciphering Product Types

Understanding the vastness of the digital product ecosystem helps in discerning the aptness of development agencies versus product studios for specific projects.

1. SaaS (Software as a Service)

SaaS Examples: Asana, Slack, Notion, Figma

These are the champions of the digital workspace, aiming to increase productivity and efficiency. The essence of SaaS products lies in addressing specific challenges, offering solutions that often revolutionize workflows. Their revenue model primarily hinges on subscription services, either periodic or pay-per-use.


Primarily through subscription models, either periodic or pay-per-use. Some employ a freemium model, offering basic services for free while charging for advanced features.


  • Scalability: With cloud hosting, SaaS can easily cater to an increasing user base.
  • Regular revenue stream due to subscription-based models.
  • Easier to update and maintain, providing consistent value to customers.


  • Fierce competition, given the low entry barriers.
  • Dependency on continuous internet connectivity.
  • Requires significant post-launch support and consistent updates to keep users engaged.

2. Marketplaces

Marketplace Examples: Airbnb, eBay, Etsy, Fiver

Acting as centralized hubs, marketplaces are instrumental in bringing supply and demand onto a singular platform. They offer tools and features that ensure smooth transactions, benefiting both the supplier and the consumer. They monetize mainly through transactional fees, advertisements, or hybrid models.


Through transaction fees, listing charges, premium features, or advertisements. Some adopt a hybrid model combining multiple revenue streams.


  • Ability to scale without holding inventory.
  • Facilitates direct interactions between buyers and sellers.
  • Continuous data inflow from user interactions, aiding decision-making.


  • Trust-building is pivotal and often challenging.
  • Ensuring consistent quality across listings is a struggle.
  • Vulnerable to external factors, like regulatory changes.

3. Social Platforms

Social Platform Examples: Facebook, Reddit, Twitter, Stackoverflow

Social platforms thrive on user interactions. While giants like Facebook cater to broad demographics, there's an emerging trend of niche platforms catering to specialized interests or communities, proving that there's still space in the market for innovation.


Predominantly through advertisements. Also, through sponsored content, partnerships, and, in some cases, premium memberships.


  • High user engagement levels.
  • Continuous content generation by users, keeping the platform fresh.
  • Opportunities for targeted advertising based on user data.


  • Requires stringent data privacy measures.
  • Vulnerable to rapidly changing user preferences.
  • Maintaining a healthy community environment is challenging.

4. On-Demand Services

On-Demand Examples: Uber, Deliveroo, Instacart

Fulfilling the contemporary need for instant gratification, on-demand services have permeated numerous sectors. Their business model involves charging a fee for facilitating a service, often acting as intermediaries between consumers and service providers.


Charging a fee for facilitating a service, either from the consumer, service provider, or both.


  • Meets instant needs of consumers, ensuring repeat usage.
  • Scalable as it's not tied to physical inventory.
  • Offers flexibility to service providers, democratizing income opportunities.


  • High operational logistics and support required.
  • Maintaining consistent service quality is challenging.
  • Often faces regulatory hurdles and market saturation.

5. Utility Platforms

Utility Examples: Skyscanner, Google Search

By offering an aggregation of information, utility platforms serve as invaluable tools for users. They pull data from various sources, making the search process more streamlined and effective for users. Their monetization strategies are diverse, ranging from affiliate marketing to ad placements.


Through affiliate marketing, advertisements, premium services, or partnerships.


  • High user retention due to the inherent usefulness.
  • Scalability, given the digital nature.
  • Potential for partnerships with other platforms or services.


  • Requires constant updates to keep information accurate and relevant.
  • Often faces stiff competition from niche platforms.
  • Dependency on other platforms or data sources can be a vulnerability.

6. Content Platforms

Content Platform Examples: Yelp, YouTube, 9GAG, Dribbble, Medium

These platforms act as repositories of user-generated content, attracting creators and consumers alike. Their revenue is primarily ad-driven, although subscription and freemium models are becoming popular.


Primarily ad-driven, but some also offer subscription models, paid promotions, or freemium options.


  • Continuously refreshed content keeps users engaged.
  • High potential for virality, given the right content.
  • Provides a platform for creators to monetize their talents.


  • Navigating copyright issues is a constant challenge.
  • Maintaining content quality and curating a vast amount of content is daunting.
  • Monetizing without alienating users can be a delicate balance.

Closing Thoughts

Both software development companies and product studios have their unique strengths. While the former is excellent for custom software solutions, the latter's holistic approach is ideal for end-to-end product development. Knowing what each brings to the table ensures that businesses can make informed decisions, optimizing their chances for success in the digital age.

Wes Botman
CEO, Founder

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