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Introduction
I’m a big fan of recurring revenue. I believe it’s the most sustainable and stable way for a company to build its business, and it works particularly well for digital products that have recurring value over time. However, if you’re not careful, implementing a recurring revenue model can lead to problems down the road.
I’ve come to believe that subscription-based products are, in many ways, the logical next step for even traditionally one-time buyers
I’ve come to believe that subscription-based products are, in many ways, the logical next step for even traditionally one-time buyers. Why? That’s what we’ll explore here.
- Subscriptions are predictable revenue streams.
- Customers are loyal to a recurring payment because they’re paying for something they use regularly and enjoy having access to it (think Netflix or Spotify).
- Costs are fixed with subscriptions versus variable costs like inventory or shipping costs when selling physical goods like clothes or books online (though there is some overhead associated with maintaining your product and customer base).
You don’t do it in the right way, it can be a distraction that takes away from your core business
Like any company, you need to be smart about recurring revenue. You don’t do it in the right way, it can be a distraction that takes away from your core business. But if you’re careful and strategic about how you treat recurring revenue, it could be the thing that helps you grow your company exponentially.
The first thing to keep in mind is whether or not recurring revenue is really something that makes sense for your business. Do you want recurring revenue? Do you need it? Is it going to help your bottom line more than just one-off sales would? If the answer to any of these questions is no, then don’t go out of your way to try and make this work for now—it’s better off being a secondary consideration until later on when maybe all those things are true but only because they’re worth doing at all costs!
Next up: What kind of plan will work best? What kind of pricing structure suits our needs best? How much time do I have available before I need this up and running again so we can start making money off our hard work!
Do it right, you open up a whole new revenue stream with minimal additional work
Recurring revenue is not a magic pill. It takes time and effort to set up, and it can be hard to get started with recurring revenue if you don’t have enough clients yet.
However, if you do it right, you open up a whole new revenue stream with minimal additional work—and that’s worth the effort!
Here’s how I see recurring revenue working out for me:
For the companies at which we’ve seen recurring revenue succeed, the product first and foremost delivers value, then finds
Let’s begin with the most common and obvious lesson. The first thing to consider when thinking about recurring revenue is that your product must deliver actual value for it to work. This seems like a no-brainer, but too often people forget this or look at it from the wrong angle.
What does “delivering value” mean? It means delivering something that makes customers happier than they were before they used your product! It means solving their problems in ways that are significantly better than the alternatives. If you can’t do this with your product, then don’t try to sell recurring revenue—you’re wasting both their time and yours.
A way to justify monthly or yearly fees instead of a one-time purchase
Recurring revenue is an efficient way to increase your bottom line.
A recurring revenue model allows you to make money from customers who are subscribed to a service rather than paying for each product they purchase from you. Instead of selling each customer one thing, they’re purchasing access into your system on a recurring basis. You can use this type of model in any industry, but it’s especially helpful in subscription businesses and software development where there are fees associated with maintaining or accessing the service or product (e.g., Salesforce).
If this business model sounds familiar, that’s because it has been around since the dawn of time when we first started buying groceries every week instead of once per month! By signing someone up for regular payments—whether that’s monthly or annually—you can build up a large amount of recurring income over time that can fund both your core business as well as other projects like new products and services without having to go back to either investors or banks for more money every six months (or whenever).
A recurring revenue stream can provide stability for your business
Recurring revenue is a way to provide stability for your business. It’s a good way to build a business, and it can help you plan for future growth.
Recurring revenue streams are the best kind of revenue because they help you plan for future growth, which means that if you want to take on more staff or expand into different offices across the country or even around the world, you know exactly how much money will be coming in each month so that you know how much money is going out each month.
Conclusion
We’ve seen time and time again that recurring revenue is a powerful tool for companies of all sizes. It can provide stability for your business, allow you to plan more effectively and even open up new opportunities in terms of hiring talent or expanding into other markets.