Kristin Luck
Service based businesses are notorious for revenue volatility, and that plays out to the extreme during periods of economic volatility (think back to the recession from 2007-2009, the COVID pandemic and even H1 of 2023) where ad hoc projects are often put on hold.
Recurring revenue streams create a stable cash flow, contribute to client retention, and ultimately strengthen your bottom line.
High customer concentration, little focus on customer retention, and a lack of recurring (or reoccurring) revenue streams can drive revenue volatility. These issues can also be easily fixed.
There is a misnomer that service based (non-SaaS) businesses do not lend themselves to recurring revenue streams and, as such, many executive teams of service-based businesses simply write recurring revenue off as the impossible. Not so! Recurring revenue is simply a business model that gives you predictable revenues at regular intervals with a relatively high degree of certainty. It is a product OR service that your customers keep purchasing on a predictable basis.
Recurring revenue streams create a stable cash flow, contribute to client retention, and ultimately strengthen your bottom line.
The following are just a few ways service-based companies can create recurring revenue streams:
- Master service agreements and/or rebate agreements with revenue minimums or retainers.
- Syndicated work that can be sold to multiple clients and requires a license (payable annually or monthly) to access.
- Hosting Masterclasses or peer-based Consortiums that require a quarterly or annual fee structure.
- Online courses or other instructional content that is evergreen and can be accessed on demand for a fee (check out Podia if you’re looking for an excellent hosting platform!).
How service based business can build successful product growth engines
No matter what type of business you run, recurring revenue offers predictability and stability while reducing risk and driving growth.
Looking to brainstorm recurring revenue ideas specific to your service-based business? We’d love to talk.