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
Great insight Jim. This is key to being sustainable. At some point you can sit back, stop worrying about sales goals and focus on product quality and enhancements.
We do this with Walkout Video. It's a monthly flat fee per domain, or certain tiered domain cluster amounts (5, 10, 15) and then a flat rate for each ad we produce.
It's hard to wrap your mind around subscriptions for some of us. I would love to achieve a recurring rate for completed work. Thought about stock photos, web themes, applications, etc but I just can't justify the time that goes into the latter. And stock images…that are just so many already it doesn't seem feasible to invest time into.
Thus is business though I suppose. You need to invest adequate time into something to make it worth a purchase. The key is figuring out how to prioritize your time to have the best of everything.