Due to the increased diversity in customer requirements, many manufacturers are in the process of evolving from mass production to mass customization (MC) whereby products and services are tailored to specific customer needs. Even though MC strategy was described decades ago, its implementation within industry is hindered by the partial understanding of its underlying philosophy and operational drivers. A central question to be dealt with for a successful MC implementation is how to balance between products and services variety and their induced complexity. Modularity is one of the commonly used means for dealing with such as question. While this concept has been widely discussed in product design and operations management literature at large, its applicability to service or product-service systems is only poorly addressed. This paper addresses the question of how to deal with the service modularity and how this can be exploited jointly with product modularity to modularize an offering, in a way to increase offering variety and improve internal company performance.