WordPerfect had the best software tech support ever and they gave it away for free. Please don’t do that, the second part anyway. Be the best and charge for it on an ongoing basis.
Recurring revenue will sustain you through good times and bad. I can say this because it has worked for me. Several years ago, as we prepared to release an upgrade to our flagship software product, we accidently built a business process to collect support revenue. Our customers kept telling us how good our tech support was so we decided to put it to the test and start charging an annual fee.
Recurring revenue streams are a two way street. The only way a customer pays a recurring fee for any length of time is if you continue to deliver value. Not only must you maintain the high standards the customer signed up for but you must also keep raising the bar on yourself. Sounds crazy at first but if you continue to offer more you can eventually charge more or create tiers of membership for those willing to pay for more.
Design your product/service with recurring revenue in mind. When it came time to create our second product line we made it a subscription only model. This turns out to be win-win for both the customer and us, because we must continue to improve the product and deliver more and better features each year or they will switch to a competitor. It also allows us to charge less up front knowing we will have a recurring revenue stream for years.
Do you see ways you can add recurring revenue to your business model? It’s easier than you think. Let’s all share some ideas in the comments and grow some businesses!
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Photo Credit: http://www.flickr.com/photos/dan4th
