Product Studio vs. Software Company - What is the Difference?

Your company needs to develop a new digital product or to solve a problem with the existing one, what should you do? Usually, you’ll look for a company that does that. When you start looking for a company to do that for you, you’ll find out that there are lots of them, but you’ll spot one big difference. Most likely, you’ll come across 2 basic terms: a software company and a digital product studio.

What is the difference between the digital product studio and software company and how to make the right choice? There is a huge difference between the digital product studio and software company, and it is in their approach to product development which can make or break your business. Keep reading on and you’ll find out what is the difference and best option for you.

What does product development mean?

First of all, we need to tackle the basics - what product development means and what is a digital product. Product development is the complete process of delivering a new product or improving an existing one for your customers. There are many types of products - from software to hardware, to consumer goods and services, in this article we are going to consider only the digital ones. Knowing your customer is also very important, but we’ll cover that some other time.

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What is a digital product?

Digital products are tools based on software that provide value, utility or solve a problem for the user. They exist in digital form and can range from websites and platforms, to web-based or mobile applications or that provide you any help and interaction in any other way - e.g. sensors, audio interfaces. It is you who have an idea for a digital product and need to bring it to market and in front of the right users, but you’ll need to work with a number of different technical experts to develop it. At this idea stage, it is good to assess your needs and to know what to look for in terms of help, and a common dilemma arises; trying to build this thing internally, or get help from a company that does these sorts of things for a living?

Depending on your business and work organization, you might try to do this internally, which would require that you have enough domain expertise and a strong team that will be able to quickly build a team of experts, manage them and retain them. Another option is to find the right partner to help you on your entrepreneurial journey. . . The main difference to start with choosing between the 2 main options out there - a software development company or digital product development studio is whether the software is or is not the core of your business, which we will explain in a minute.

What is a software development company?

Software development companies design, develop and maintain applications, frameworks or other software components for businesses or consumers. If you hire a software company to develop the digital product for you, it’ll be up to you to provide all of the details about your product idea. In a nutshell, software companies are order takers only, not idea shapers. A good software company will take your idea and develop the app you have described and requested. The software will do what it is expected to do, the code will be stable, but they’ll simply create the digital product for you without tackling how it’d fit the market, what are the most applicable features besides the ones you asked for, and plus without providing feedback on creative direction, testing it in real-time and users… Basically, the software company is looking to fulfil your order for the digital product development, which will be safe and functional. The responsibility for the product and what it becomes is fully in your hands, as well as what to do with the code you end up with. Plus, you would most likely need to find a visual design partner to add the visual appeal. Again with this aspect you are the one that would control UX and how the product delivers the value to your target customer. Visual design and engineers are usually disconnected and they do not talk with each other to make the best solution, instead each side works within their narrow focus.

What is a digital product studio?

To simply put it since this is still not such a defined term, a digital product development studio is actually a creative team composed of many professionals such as product managers, designers, strategists, marketers, and engineers. Digital product studios' core strengths are collaboration and validation to take your digital product from a simple brief for building your product to something more customized. Their team is looking to ask all the questions to improve the products they design through may market and user research, iterations, testing, a quickly built MVP to be tested on real time users and adopted accordingly, and many more. It is best to look at it as a net gen comprehensive product development, which will provide product market-fit for you resulting in your product to be more likely loved and used by your users.

Product studio has processes and cross functional teams on-board that are focused on delivering products that capture and refine business value continuously. With a product studio you get a committed shareholder at your side.

What are the differences between the software company and product studio?

Is the product studio the best thing for your business? It depends on what capabilities you already have sorted out. Even if you have a product figured out, a product studio would probably provide greater value. We want more people to understand product development and best choices for their case, so here we give you more of the simple differences between digital product studios and software companies. You first need to figure out what your company needs, besides the fact that software is or is not your core business (though today every company is a software company), and then you’ll be able to make a good decision on what to choose from.

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Pros and cons of hiring a software company

• Software company is there to follow your direction and create the digital product you ask for through a brief or questionnaire. You’ll act as a creative director, product manager, market researcher, tester of this digital product project.
• Software companies are there to efficiently develop and deliver what you ask for—nothing less, nothing more.
• In terms of the budget, they’ll fit in the estimate provided to you, regardless if anything more needs to be done. Software companies can be an excellent choice for an organization where software and digital products are not the focal business points, having you daily manage and organize the work. On the other hand, software companies can be a very costly solution should you need a product market-fit and product that actually will be welcomed by your target market since you’ll need all other aspects of a product development process, like UX/UI, product managers, marketing, scaling, etc. to have it developed successfully.
• When it comes to people, you should pay attention to that especially since you may expect junior developers assigned to your project who often have little experience.

Pros and cons of hiring a product studio

• You will have category experts brought in easily to overcome obstacles.
• A digital product studio’s main goals are to listen to your idea, ask questions, make suggestions, have lots of meetings with you and your users, understand deeply what should be done, shape the business goals with you and to develop a digital product that is truly something your users are looking to use or buy.
• If digital products are essential enough for your business, then the company should invest in having the best products they can with the help of a digital product studio, which will develop the best teamwork and quality.
• Digital product studios are for businesses that plan to have digital products as a focal point of their success. They are best suited for forward thinking businesses and startups that want to create a perfect product market-fit, to solve some major issue with the existing product or to conquer the market.
• Product studio takes care of arranging the right skill set for every stage of the business with you.
• Everyone in the product studio is trained to understand the final outcome and the benefit of it making every decision in the process optimized for that case (software architecture, design, UX).
• Product studios measure business impact vs vanity metrics like the lines of code or story points.

To conclude

If you have a need for a digital product project without cross-functional product teams involved, a software development company may be an OK choice for you. But be aware of the product market-fit, quality of code and future possibilities to change the code, developers involved in the project.

If you are a startup with a challenging project with the right people/partners on your end that will take care of the product, technology decisions and be capable of leading and orchestrating external teams and you want to have a well-thought-out MVP to start a business, a digital product studio is a better choice. Or, if you are a forward thinking established business that wants to conquer the market with a new but trending product or to solve a problem with a poorly developed product, then a product studio is the best fit for you too. You can expect the best possible quality and support of the team consisting of interdisciplinary specialists, plus you don't need to worry about developing and maintaining a web or mobile app, or the code that will be all well prepared and tested for it and optimized to accommodate growing and changing user needs.

If you have an excellent idea for developing the next big thing, or need help scaling your business or solving problems with an existing product development, reach out.

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