A product development agency works with their clients to strategize a meaningful product that customers really want, as opposed to an agency that always requires direction from their client.
When an agency owner or representative assures you that they can help with your “project,” what they’re really saying is that they have the technical skills to bring your vision to life.
But when an agency claims to be able to build your “product,” they’re more likely promising that they can help you determine what that product should be, validate it, build it, analyze it, test it, and reiterate on it.
People use words loosely. So, it’s not enough to just check the wording. You need to vet the agency for real product-led initiatives.
In this guide, we explore why more executives and entrepreneurs are hiring product developers versus traditional agencies or freelancers and what to look for in an agency. Plus, we provide a list of the best product development agencies.
Why product-led strategies are on the rise
You’re well aware that product management roles have boomed (and still are). The fast growth in these roles have led some to call it the “Golden Age of Product Development.”
But knowing that product-led growth and product management are trending isn’t enough. You need to understand why these things are growing, so you can be better prepared to choose the right development agency.
B2B software products have been consumerized - Over the past decade and a half, traditionally clunky software has been consumerized. Corporate and small business users no longer want to put up with slow, frustrating software. They want tools that are just as simple as the apps they use in their personal lives. This places increased pressure on software companies to deliver not only business results, but also enjoyable product experiences.
Subscription based economy makes it easier for customers to switch products - You can’t fight the flow of change. The fact is that most software companies make it easy for users to cancel their subscription or downgrade. Rather than attempting to make it difficult (and angering customers), most companies are complying with this trend. In order to keep customers from cancelling, you need to offer the best product on the market.
Siloed departments affect the overall customer experience - Traditionally, software companies were broken up into engineering, marketing, and sales departments. Today, there are still departments and teams of course, but there are interdisciplinary teams and leaders, like CX leaders, product managers, and chief revenue officers. That’s because, with increased competition, ease of competitor switching, and higher quality demands, siloes just don’t work anymore. You need a cohesive, integrated approach to building a product, and it’s very hard to piece together different freelance resources or agencies by yourself.
Product analytics are more advanced than ever before - At the same time, we also have better product analytics. Tools like Heap, Amplitude, Mixpanel, Pendo, and Fullstory, provide insights into users’ unique journeys that didn’t exist before. This helps further break down siloes and foster collaboration that leads to better product experiences.
Product development agencies versus freelancers
Should you hire a product development agency or a freelancer? Let’s take a look at some of the differentiating factors to help you decide.
1. Product focused
A product development agency is by nature focused on developing products, but a freelancer may or may not be. The most talented freelancers niche their services down into one core offering.
It is absolutely possible to find freelancers who offer product management as a service. But you’d still need to find freelance DevOps engineers, Laravel engineers (or whatever you’re building with), and QA testers.
2. Management
When you’re working with freelancers, you’re in charge of hiring, onboarding, and managing them. Of course, a skilled product manager can do this for you, but they may not be able to manage every aspect of product development. For example, a PM might know how to condense user testing into feature decisions and assign backlog tasks to developers, but they might not know how to manage DevOps or QA.
By working with a product development agency, you can avoid the stress, time input, and potential mistakes associated with managing multiple resources by yourself.
3. Rates
Many entrepreneurs and executives choose freelancers because they mistakenly think that this will save them money.
However, agencies have relationships with talent, and provide them with regular, ongoing work or full time employment at more affordable rates. So, hiring an agency is often a better bet.
When you work with an agency, you get access to their network of talent, who are fed regular work. So the cost is often lower than piecing together your own consultants, each of whom will charge 3 - 5X the standard hourly rate of an employee.
What’s more, agencies might be able to source offshore talent. At DevSquad, we hire skilled Latin American developers who work under our product managers, who are based in our Utah office.
4. Availability
When you work with individual freelancers, you are subject to their schedule. Some freelancers like to travel, and if they fall ill, they usually don’t have trained backups ready to go. Agencies, on the other hand, are more accustomed to handling scheduling changes. For the most part, you should be working with the same talent (the same product managers and developers). But if someone quits or goes on maternity leave, the agency can more quickly fill the gap.
5. Adherence to timeline
Product development delays are costly. The importance of speed-to-market on product success has been well studied.
What’s interesting is that delays are often not the fault of the service provider. Entrepreneurs and executives can get excited about their vision and commit feature overwhelm—building more features than are necessary. Maybe the users don’t even need the features, or maybe they do, but those features shouldn’t be part of the MVP.
It’s important not to hire a yes man. You need a strategic partner that will push back to prevent you from building an MVP that’s too big. Although some freelancers can be that strategic partner for you, most of them will take your lead, meaning it is up to you to stop feature overwhelm from happening.
6. Product launch
A product development agency is usually better suited than a freelancer to help launch the product.
Here’s everything that goes into launching a SaaS product:
Free trial, freemium, plan upgrading, and payment capabilities
User onboarding walkthroughs and setting up a knowledge base
Launching on product launch platforms like Product Hunt and AngelList
Getting approved by app stores, if you start with native apps
Because agencies have managed product launches before, they’ll be better at building success from the start and walking you through a stressful time.
7. Ongoing maintenance
Freelancers can be skilled at ongoing maintenance including QA testing, user testing, customer feedback, and backlog prioritization. But most freelancers require direction from you in order to execute on these things well. An agency, on the other hand, will delegate on your behalf.
Product development agencies versus software development agencies
What about more traditional software development agencies? How do they compare to product development agencies. The differences aren’t as stark as they are with freelancers, but there are a couple of things to consider.
When you hire an agency, the number one benefit that you’re getting is having someone who will take care of management.
But that doesn’t mean that the agency can help you launch a product that users will love (and pay for).
Essentially, you need to make sure that they offer the kind of management you are looking for.
Product development agencies are very different from software development agencies.
Product management - A product development agency should offer services like design sprints, prototyping, user testing, and MVP strategy alongside technical services like PHP and Laravel development.
Project management - A software development agency might not offer product strategy and decision-making, and instead will focus solely on delegating backlog tasks and keeping all resources on track.
What to look for in a product development agency
Even if you intend to drive strategy and product vision inhouse, it’s still smart to choose a product development agency instead of a traditional agency. That’s because they can provide the services you need to validate your product concept, and they can ensure a leaner adherence to that vision.
Here’s what to look for when selecting an agency:
1. True focus on product
Check that the agency has a true focus on product. You’ll be able to tell by their case studies, testimonials, services, and website copy. Companies that offer MVP strategy and design sprints have a product focus compared to companies that only offer software engineering.
2. Process for validating product before building
The company should also have a process in place to help you validate your concept before building. If you tell an agency owner about your product and they promise to help you build it without validating it, run. You’re at risk of wasting tens of thousands, or hundreds of thousands of dollars.
Validating should include:
Feedback and collaboration with strategists at the agency
Prototype development
User testing
Prototype reiteration
3. Helps strategize your MVP
The company you choose should help you strategize your MVP. When developing something as expensive as a software product, everyone could use an outside eye.
During the design sprint, your agency strategists should work with you to create a story map of the product. That includes what the users struggle with, and every possible solution. This is best done in person, but it can happen remotely too.
With an exhaustive list of problems and solutions all mapped out for everyone to see, you can then begin to select the most impactful workflows that need to be built.
4. Fully managed with all the resources you need
The agency should also be fully managed. Top resources include:
Product manager
Developers
DevOps engineers
QA testers
In order to meet your launch deadline, the agency should suggest the number of developers you need, most likely somewhere between two and six when building a brand new product.
5. Takes ownership of the product
The agency should also take complete ownership of the product. Aside from subject matter expertise and business requirements, they shouldn’t need any tactical direction from you. Otherwise, it’s too challenging to make sure that their resources are matching your vision. You should have just one or two contacts at the agency (business strategist and product manager). These resources should then manage everyone else at the agency so you don’t have to.
6. Offers DevOps services and handles launch
Development services like Laravel, Vue JS, Node JS, React, Angular, and Electron aren’t all that’s required to build a product.
To reduce stress and ensure successful launch, the company should offer DevOps and help you choose the right hosting and security products and services. What you don’t want is to be handed a bunch of code that your team is supposed to deploy.
7. Ongoing quality assurance and maintenance
The agency should also offer continuous deployment and QA testing. Immediately after launching to your beta users, there will be issues. The company should have a plan in place for collecting feedback from users, regularly testing the product inhouse, and pushing fixes.
When chatting with an agency owner or account manager, make sure that you ask them about this part of the process and what they offer.
Again, the more that the agency helps with continued development, the more evidence you have that the company takes full ownership of the products that they build. An agency without extensive maintenance services available is clearly one that just wants to finish “projects,” get paid, and move on. And that’s exactly the sort of agency that you don’t want to hire.
Top product development agencies
The agency you should choose depends on the type of product you want to build. Most agencies will specialize in a certain area, such as B2B SaaS, consumer tech, or hardware.
Here are some of the top product development agencies:
1. DevSquad
Best for: SaaS product development
DevSquad is a product development agency with extensive experience strategizing and building enterprise and small business SaaS products, as well as internal-use software. Core services include design sprints, MVP development, Laravel and React development, and more. The company is known for its unique pay-as-you-go subscription based model and truly minimum MVPs.
“Our relantionship and our level of communication is as if they were our own in-house team. They feel ownership in our product, they know our product really wel. Our development posibilities with DevSquad are endless” - Drew Sparks, CEO at SwellCX
“It really comes down to their experience building products for early stage companies. DevSquad knows how to build an MVP and it shows every day.” -Tyler Hall, CEO & Founder of Drivably
2. Very
Best for: IoT product development
Very is a product development company specializing in IoT. Their IoT-specific services include product design, mobile app development, hardware engineering, software development, and machine learning in order to develop truly connected products.
3. Method
Best for: corporate digital transformation
Method is a digital product and experience agency that specializes in digital transformation for established corporations and consumer brands. For example, they worked with American mall retailer Lush to establish new revenue streams for its ethical and environmentally friendly products. Method helped Lush come up with the idea for the Lush Kitchen, where customers can watch products being made. They also led the redesign of Lush’s magazine, which attracts the highest-converting online customers of any acquisition channel for the brand.
4. Encata
Best for: hardware development
Encata is a hardware development company that offers design, development, and manufacturing services. The company creates IoT products, robots, industrial equipment, and digital hardware.
Key takeaways
Ultimately, a product development agency is one that can help you validate your concept and bring it to market. The company should provide holistic services, from strategy through development and launch.
Ready to build a SaaS product users love? Get in touch with DevSquad.