Recurring revenue is the golden ticket of income, it’s the pinnacle of everything and can make life so much easier. In this blog post, we’ll explore what is recurring revenue, why you need it, how you can achieve it and how it can work for your business.
You will be familiar with this model through pioneers in the field such as Netflix, Spotify, and big beauty boxes such as Birchbox. But it’s not just something for big businesses, it can be lucrative for small businesses too!
What Is Recurring Revenue?
Recurring revenue is an income that repeats and is predictable, stable, and comes in at regular intervals. Typically it is associated with subscription models, digital products, and courses.
Whilst being a reassuring thing for the business owner, it’s also good for customers as they can be a bigger part of your business on a regular basis.
Why Your Business Needs Recurring Revenue
Having a recurring revenue model can really take off the pressure of figuring out where the next sale is coming from. Adding an additional revenue stream is not only helpful to the bottom line but can also help weather storms in unforeseen circumstances. If your business relies on you being at work to bring in money, it takes away the stress if you’re ill, on holiday, or even asleep!
It has been proven to be useful during the recent pandemic, businesses who already had multiple streams of income were able to pivot to comply with restrictions much quicker.
Recurring revenue typically requires less time and one-off labour as they are done on large scale, making them more profitable overall as you only tend to do things once or in large batches. Recurring revenue also ties in really well with passive income.
Types of Recurring Revenue
There are many different types of recurring revenue models that can be applied to different business types. The types given below are not only recurring but lots of them are passive too!
- Contracts – Contracts for your services or products tying customers in for a specific period of time
- Subscription Boxes – Tailored to your customers and containing your products
- Consumables – Products your customers use on a regular basis delivered on a regular schedule
- Digital Products – Putting your knowledge into an instantly downloadable product that can be digitally accessed over and over
- Courses – Similarly to digital products, putting your knowledge into a course
- Membership Programs – This is similar to Amazon Prime for example, giving them access to features and services for a fixed monthly cost
How To Apply A Recurring Revenue Model To Your Business
Now you have an idea of what recurring revenue models are, let’s look at how to apply them to your niche. I will use 3 examples – content-based businesses, service-based businesses, and product-based businesses. I will be using a variety of made-up business examples to show you what can be achieved.
Content-Based – Author
Digital Products – Release your books as digital-only options
Subscription Box – Book themed subscription box including your books and other bookish delights
Course – Pass on your knowledge and offer a course for writers or wannabe writers
Membership Program – An insider VIP club, first-look access to your books, opportunities to contribute to your books such as naming characters, read alongs, book clubs, etc.
Service-Based – Business Consultant
Contract – Monthly retainer for your services
Subscription Box – Business box including items like planners, books, stationery, anything your customers use
Consumables – Physical or digital consumables such as white labelling software services
Digital Products – Downloadable guides or manuals about business
Courses – Courses based around your expertise
Membership Program – Access to you on a regular basis with group mentoring, templates they can download, a vault of information they can refer back to time and time again.
Product Based – Electronics Seller
Contract – This can be a contract for a specific product such as pay for the product over X period, or an add on for a product you sell
Subscription Box – Gadget subscription box with a theme each month
Consumables – Batteries, or similar on a monthly subscription
Digital Products – How to guides on how to use your products
Courses – Courses that teach people how to fix or modify electronics such as Raspberry Pi hacks to enhance your products
Systems To Achieve A Recurring Revenue Model
Many of these ideas can be implemented very quickly and easily using WordPress and in most cases all can be achieved using 3 plugins.
Woocommerce Subscriptions – This is a Woocommerce shop add-on that handles subscriptions, whether it’s for a physical or a digital product. It takes care of the monthly payments on auto-renew and more.
Learndash – This is a sophisticated course delivery platform, it handles the user interface, delivery of content and integrates nicely with Woocommerce and Woocommerce Subscriptions for crossover of revenue models
There are many other solutions out there, both that do the same things like the ones listed above, and others that solve other problems.
Pitfalls To Bear In Mind
Although recurring revenue models should be explored by every business and offer many benefits, that’s not to say they are without fault.
- Fresh Ideas – Coming up with fresh ideas to keep customers engaged can be tricky
- Customer Churn – Inevitably customers will come and go and it can be hard to see the numbers drop
- Non-payment – Although with modern methods such as the ones discussed above, non-payment is still an issue that can be faced
- Management Issues – Models such as the subscription box can be an admin headache and take a lot of discipline to manage and ensure it goes snag free.
- Subscription Fatigue – Often customers will go through their expenses and see what they’re committed to, recurring payments are often the first to be dropped, especially if they are non-essential!
Whichever type of recurring revenue you decide to introduce, it’s definitely worth doing as it can provide stability and predictability, things that are often in short supply in business!
Do let me know if you go ahead with your very own new revenue stream, let me know in the comments below.