Software factory vs digital product agency.

A software factory is a development company that operates like a production line: it takes specifications, assigns resources, and delivers code. Its advantage is speed and cost per hour. Its disadvantage is that it optimises for producing code, not for solving business problems. The result is usually technically correct but strategically wrong.

A digital product agency starts by understanding the problem before defining the solution. It integrates strategy, design and engineering in a continuous process. It doesn't just deliver code — it delivers a product that works for users and generates business value. The hourly rate may be higher, but the total project cost is often lower because the right thing is built from the start.

A software factory can be appropriate when you have very detailed and validated specifications, the project is pure execution with no pending strategic decisions, and you have an internal Product Manager managing priorities. For most product projects — where business hypotheses are not fully validated — a product agency is more efficient.

Warning signs: they always say yes to what you ask without questioning the why, the backlog is defined by features instead of outcomes, estimates are based on development time without business analysis, and when there are product problems the answer is always more development.