diff --git a/.changeset/metal-weeks-kiss.md b/.changeset/metal-weeks-kiss.md
new file mode 100644
index 0000000000..90e453dd5c
--- /dev/null
+++ b/.changeset/metal-weeks-kiss.md
@@ -0,0 +1,7 @@
+---
+'@backstage/backend-app-api': patch
+'@backstage/backend-defaults': patch
+'@backstage/backend-test-utils': patch
+---
+
+Updated to support new `ServiceFactory` formats.
diff --git a/.changeset/short-mice-explode.md b/.changeset/short-mice-explode.md
new file mode 100644
index 0000000000..42ebfa9f5c
--- /dev/null
+++ b/.changeset/short-mice-explode.md
@@ -0,0 +1,5 @@
+---
+'@backstage/backend-plugin-api': patch
+---
+
+The `createServiceFactory` method has been updated to return a higher-order factory that can accept options.
diff --git a/packages/backend-app-api/api-report.md b/packages/backend-app-api/api-report.md
index 0f8806870d..ea149a44f2 100644
--- a/packages/backend-app-api/api-report.md
+++ b/packages/backend-app-api/api-report.md
@@ -28,10 +28,12 @@ export interface Backend {
 }
 
 // @public (undocumented)
-export const cacheFactory: ServiceFactory<PluginCacheManager>;
+export const cacheFactory: (
+  options?: undefined,
+) => ServiceFactory<PluginCacheManager>;
 
 // @public (undocumented)
-export const configFactory: ServiceFactory<Config>;
+export const configFactory: (options?: undefined) => ServiceFactory<Config>;
 
 // @public (undocumented)
 export function createSpecializedBackend(
@@ -41,28 +43,36 @@ export function createSpecializedBackend(
 // @public (undocumented)
 export interface CreateSpecializedBackendOptions {
   // (undocumented)
-  services: ServiceFactory[];
+  services: (ServiceFactory | (() => ServiceFactory))[];
 }
 
 // @public (undocumented)
-export const databaseFactory: ServiceFactory<PluginDatabaseManager>;
+export const databaseFactory: (
+  options?: undefined,
+) => ServiceFactory<PluginDatabaseManager>;
 
 // @public (undocumented)
-export const discoveryFactory: ServiceFactory<PluginEndpointDiscovery>;
+export const discoveryFactory: (
+  options?: undefined,
+) => ServiceFactory<PluginEndpointDiscovery>;
 
 // @public (undocumented)
-export const httpRouterFactory: ServiceFactory<HttpRouterService>;
+export const httpRouterFactory: (
+  options?: undefined,
+) => ServiceFactory<HttpRouterService>;
 
 // @public (undocumented)
-export const loggerFactory: ServiceFactory<Logger>;
+export const loggerFactory: (options?: undefined) => ServiceFactory<Logger>;
 
 // @public (undocumented)
-export const permissionsFactory: ServiceFactory<
-  PermissionAuthorizer | PermissionEvaluator
->;
+export const permissionsFactory: (
+  options?: undefined,
+) => ServiceFactory<PermissionAuthorizer | PermissionEvaluator>;
 
 // @public (undocumented)
-export const schedulerFactory: ServiceFactory<PluginTaskScheduler>;
+export const schedulerFactory: (
+  options?: undefined,
+) => ServiceFactory<PluginTaskScheduler>;
 
 // @public (undocumented)
 export type ServiceOrExtensionPoint<T = unknown> =
@@ -70,8 +80,12 @@ export type ServiceOrExtensionPoint<T = unknown> =
   | ServiceRef<T>;
 
 // @public (undocumented)
-export const tokenManagerFactory: ServiceFactory<TokenManager>;
+export const tokenManagerFactory: (
+  options?: undefined,
+) => ServiceFactory<TokenManager>;
 
 // @public (undocumented)
-export const urlReaderFactory: ServiceFactory<UrlReader>;
+export const urlReaderFactory: (
+  options?: undefined,
+) => ServiceFactory<UrlReader>;
 ```
diff --git a/packages/backend-app-api/src/wiring/ServiceRegistry.ts b/packages/backend-app-api/src/wiring/ServiceRegistry.ts
index 45b82aac56..e0509aecde 100644
--- a/packages/backend-app-api/src/wiring/ServiceRegistry.ts
+++ b/packages/backend-app-api/src/wiring/ServiceRegistry.ts
@@ -26,7 +26,9 @@ import { stringifyError } from '@backstage/errors';
  * @internal
  */
 export type InternalServiceRef<T> = ServiceRef<T> & {
-  __defaultFactory?: (service: ServiceRef<T>) => Promise<ServiceFactory<T>>;
+  __defaultFactory?: (
+    service: ServiceRef<T>,
+  ) => Promise<ServiceFactory<T> | (() => ServiceFactory<T>)>;
 };
 
 export class ServiceRegistry {
@@ -40,8 +42,18 @@ export class ServiceRegistry {
     }
   >;
 
-  constructor(factories: ServiceFactory<any>[]) {
-    this.#providedFactories = new Map(factories.map(f => [f.service.id, f]));
+  constructor(
+    factories: Array<ServiceFactory<unknown> | (() => ServiceFactory<unknown>)>,
+  ) {
+    this.#providedFactories = new Map(
+      factories.map(f => {
+        if (typeof f === 'function') {
+          const cf = f();
+          return [cf.service.id, cf];
+        }
+        return [f.service.id, f];
+      }),
+    );
     this.#loadedDefaultFactories = new Map();
     this.#implementations = new Map();
   }
@@ -57,9 +69,11 @@ export class ServiceRegistry {
       if (!factory) {
         let loadedFactory = this.#loadedDefaultFactories.get(defaultFactory!);
         if (!loadedFactory) {
-          loadedFactory = Promise.resolve().then(
-            () => defaultFactory!(ref) as Promise<ServiceFactory>,
-          );
+          loadedFactory = Promise.resolve()
+            .then(() => defaultFactory!(ref))
+            .then(f =>
+              typeof f === 'function' ? f() : f,
+            ) as Promise<ServiceFactory>;
           this.#loadedDefaultFactories.set(defaultFactory!, loadedFactory);
         }
         // NOTE: This await is safe as long as #providedFactories is not mutated.
diff --git a/packages/backend-app-api/src/wiring/types.ts b/packages/backend-app-api/src/wiring/types.ts
index 55009edbdf..febc6830c7 100644
--- a/packages/backend-app-api/src/wiring/types.ts
+++ b/packages/backend-app-api/src/wiring/types.ts
@@ -43,7 +43,7 @@ export interface BackendRegisterInit {
  * @public
  */
 export interface CreateSpecializedBackendOptions {
-  services: ServiceFactory[];
+  services: (ServiceFactory | (() => ServiceFactory))[];
 }
 
 export type ServiceHolder = {
@@ -56,7 +56,9 @@ export type ServiceHolder = {
 export function createSpecializedBackend(
   options: CreateSpecializedBackendOptions,
 ): Backend {
-  return new BackstageBackend(options.services);
+  return new BackstageBackend(
+    options.services.map(s => (typeof s === 'function' ? s() : s)),
+  );
 }
 
 /**
diff --git a/packages/backend-defaults/api-report.md b/packages/backend-defaults/api-report.md
index b5f1e154bb..050ebde759 100644
--- a/packages/backend-defaults/api-report.md
+++ b/packages/backend-defaults/api-report.md
@@ -12,6 +12,6 @@ export function createBackend(options?: CreateBackendOptions): Backend;
 // @public (undocumented)
 export interface CreateBackendOptions {
   // (undocumented)
-  services?: ServiceFactory[];
+  services?: (ServiceFactory | (() => ServiceFactory))[];
 }
 ```
diff --git a/packages/backend-defaults/src/CreateBackend.ts b/packages/backend-defaults/src/CreateBackend.ts
index 819a77ea11..5130d6733b 100644
--- a/packages/backend-defaults/src/CreateBackend.ts
+++ b/packages/backend-defaults/src/CreateBackend.ts
@@ -47,24 +47,14 @@ export const defaultServiceFactories = [
  * @public
  */
 export interface CreateBackendOptions {
-  services?: ServiceFactory[];
+  services?: (ServiceFactory | (() => ServiceFactory))[];
 }
 
 /**
  * @public
  */
 export function createBackend(options?: CreateBackendOptions): Backend {
-  const services = new Map<string, ServiceFactory>(
-    defaultServiceFactories.map(sf => [sf.service.id, sf as ServiceFactory]),
-  );
-
-  if (options?.services) {
-    for (const sf of options.services) {
-      services.set(sf.service.id, sf);
-    }
-  }
-
   return createSpecializedBackend({
-    services: Array.from(services.values()),
+    services: [...defaultServiceFactories, ...(options?.services ?? [])],
   });
 }
diff --git a/packages/backend-plugin-api/api-report.md b/packages/backend-plugin-api/api-report.md
index 5ea7f52c4b..30e58237af 100644
--- a/packages/backend-plugin-api/api-report.md
+++ b/packages/backend-plugin-api/api-report.md
@@ -109,16 +109,28 @@ export function createServiceFactory<
   TDeps extends {
     [name in string]: unknown;
   },
+  TOpts extends
+    | {
+        [name in string]: unknown;
+      }
+    | undefined = undefined,
 >(factory: {
   service: ServiceRef<TService>;
   deps: TypesToServiceRef<TDeps>;
-  factory(deps: DepsToDepFactories<TDeps>): Promise<FactoryFunc<TImpl>>;
-}): ServiceFactory<TService>;
+  factory(
+    deps: DepsToDepFactories<TDeps>,
+    options: TOpts,
+  ): Promise<FactoryFunc<TImpl>>;
+}): undefined extends TOpts
+  ? (options?: TOpts) => ServiceFactory<TService>
+  : (options: TOpts) => ServiceFactory<TService>;
 
 // @public (undocumented)
 export function createServiceRef<T>(options: {
   id: string;
-  defaultFactory?: (service: ServiceRef<T>) => Promise<ServiceFactory<T>>;
+  defaultFactory?: (
+    service: ServiceRef<T>,
+  ) => Promise<ServiceFactory<T> | (() => ServiceFactory<T>)>;
 }): ServiceRef<T>;
 
 // @public (undocumented)
diff --git a/packages/backend-plugin-api/src/services/system/types.test.ts b/packages/backend-plugin-api/src/services/system/types.test.ts
new file mode 100644
index 0000000000..29512d3a58
--- /dev/null
+++ b/packages/backend-plugin-api/src/services/system/types.test.ts
@@ -0,0 +1,89 @@
+/*
+ * Copyright 2022 The Backstage Authors
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+import { createServiceFactory, createServiceRef } from './types';
+
+describe('createServiceFactory', () => {
+  it('should create a meta factory with no options', () => {
+    const ref = createServiceRef<string>({ id: 'x' });
+    const metaFactory = createServiceFactory({
+      service: ref,
+      deps: {},
+      async factory(_deps) {
+        return async () => 'x';
+      },
+    });
+    expect(metaFactory).toEqual(expect.any(Function));
+    expect(metaFactory().service).toBe(ref);
+
+    // @ts-expect-error
+    metaFactory('string');
+    // @ts-expect-error
+    metaFactory({});
+    // @ts-expect-error
+    metaFactory({ x: 1 });
+    // @ts-expect-error
+    metaFactory(null);
+    metaFactory(undefined);
+    metaFactory();
+  });
+
+  it('should create a meta factory with optional options', () => {
+    const ref = createServiceRef<string>({ id: 'x' });
+    const metaFactory = createServiceFactory({
+      service: ref,
+      deps: {},
+      async factory(_deps, _opts?: { x: number }) {
+        return async () => 'x';
+      },
+    });
+    expect(metaFactory).toEqual(expect.any(Function));
+
+    // @ts-expect-error
+    metaFactory('string');
+    // @ts-expect-error
+    metaFactory({});
+    metaFactory({ x: 1 });
+    // @ts-expect-error
+    metaFactory(null);
+    metaFactory(undefined);
+    metaFactory();
+  });
+
+  it('should create a meta factory with required options', () => {
+    const ref = createServiceRef<string>({ id: 'x' });
+    const metaFactory = createServiceFactory({
+      service: ref,
+      deps: {},
+      async factory(_deps, _opts: { x: number }) {
+        return async () => 'x';
+      },
+    });
+    expect(metaFactory).toEqual(expect.any(Function));
+
+    // @ts-expect-error
+    metaFactory('string');
+    // @ts-expect-error
+    metaFactory({});
+    metaFactory({ x: 1 });
+    // @ts-expect-error
+    metaFactory(null);
+    // @ts-expect-error
+    metaFactory(undefined);
+    // @ts-expect-error
+    metaFactory();
+  });
+});
diff --git a/packages/backend-plugin-api/src/services/system/types.ts b/packages/backend-plugin-api/src/services/system/types.ts
index d622b3917f..a19c17bb9c 100644
--- a/packages/backend-plugin-api/src/services/system/types.ts
+++ b/packages/backend-plugin-api/src/services/system/types.ts
@@ -41,7 +41,9 @@ export type InternalServiceRef<T> = ServiceRef<T> & {
    * The default factory that will be used to create service
    * instances if no other factory is provided.
    */
-  __defaultFactory?: (service: ServiceRef<T>) => Promise<ServiceFactory<T>>;
+  __defaultFactory?: (
+    service: ServiceRef<T>,
+  ) => Promise<ServiceFactory<T> | (() => ServiceFactory<T>)>;
 };
 
 /** @public */
@@ -67,7 +69,9 @@ export type ServiceFactory<TService = unknown> = {
  */
 export function createServiceRef<T>(options: {
   id: string;
-  defaultFactory?: (service: ServiceRef<T>) => Promise<ServiceFactory<T>>;
+  defaultFactory?: (
+    service: ServiceRef<T>,
+  ) => Promise<ServiceFactory<T> | (() => ServiceFactory<T>)>;
 }): ServiceRef<T> {
   const { id, defaultFactory } = options;
   return {
@@ -90,10 +94,22 @@ export function createServiceFactory<
   TService,
   TImpl extends TService,
   TDeps extends { [name in string]: unknown },
+  TOpts extends { [name in string]: unknown } | undefined = undefined,
 >(factory: {
   service: ServiceRef<TService>;
   deps: TypesToServiceRef<TDeps>;
-  factory(deps: DepsToDepFactories<TDeps>): Promise<FactoryFunc<TImpl>>;
-}): ServiceFactory<TService> {
-  return factory as ServiceFactory<TService>;
+  factory(
+    deps: DepsToDepFactories<TDeps>,
+    options: TOpts,
+  ): Promise<FactoryFunc<TImpl>>;
+}): undefined extends TOpts
+  ? (options?: TOpts) => ServiceFactory<TService>
+  : (options: TOpts) => ServiceFactory<TService> {
+  return (options?: TOpts) => ({
+    service: factory.service,
+    deps: factory.deps,
+    factory(deps: DepsToDepFactories<TDeps>) {
+      return factory.factory(deps, options!);
+    },
+  });
 }
diff --git a/packages/backend-test-utils/api-report.md b/packages/backend-test-utils/api-report.md
index c0f6a43321..2fe4ed31d3 100644
--- a/packages/backend-test-utils/api-report.md
+++ b/packages/backend-test-utils/api-report.md
@@ -46,6 +46,7 @@ export interface TestBackendOptions<
     ...{
       [index in keyof TServices]:
         | ServiceFactory<TServices[index]>
+        | (() => ServiceFactory<TServices[index]>)
         | [ServiceRef<TServices[index]>, Partial<TServices[index]>];
     },
   ];
diff --git a/packages/backend-test-utils/src/next/wiring/TestBackend.ts b/packages/backend-test-utils/src/next/wiring/TestBackend.ts
index 98e979793e..f93b34cdd8 100644
--- a/packages/backend-test-utils/src/next/wiring/TestBackend.ts
+++ b/packages/backend-test-utils/src/next/wiring/TestBackend.ts
@@ -32,6 +32,7 @@ export interface TestBackendOptions<
     ...{
       [index in keyof TServices]:
         | ServiceFactory<TServices[index]>
+        | (() => ServiceFactory<TServices[index]>)
         | [ServiceRef<TServices[index]>, Partial<TServices[index]>];
     },
   ];