Signals vs. Noise recently tried answering the question of how they moved from consulting to product development:

“37signals made the move from clients to products one day at a time. Basecamp was developed alongside client work and was treated as essentially a third client. It had to compete for resources on equal footing with other clients, which meant that every hour we spent on it had to really count.”

Given that we’re going through this process ourselves (we’re not yet close to doing only products so keep those contract gigs coming in :) ) this was a particularly interesting post.