Most businesses struggle to stabilize their cash flow. Their are many accounting, managerial and strategic benefits to having consistent revenues. As you can guess, a recurring revenue model is one of the best ways to help your business finances. The shift from one-off sales to residual income could be exactly what your company needs. As a business owner, you owe it to your company financials to give these recurring revenue ideas a try.
Also known as evergreen subscriptions, this recurring model is great for increased income. Traditionally, customers purchase your products or services on an add need basis. However, an auto renew option lets them reorder automatically. You might be surprised to find many customers prefer to do auto renewal so they don’t have to remember anything. Additionally, this model helps cash flow because the subscription does not end until cancelled. Once again, this recurring revenue strategy can work for all types of businesses.
Introduce Fee-based Addons
Customers hate unwanted fees. However, an addon fee for your services is a great way to increase revenues. For a financial provider or Farmers insurance agent, a small recurring fee can offer a substantial income with many clients. Moreover, it allows your business to offer another value-added service. As a result, your company cash flow will increase as your service fees improve liquidity.
Probably one of the best opportunities for mature companies, a membership program generate repeat revenues. In your business, you might have a few perks, favors or benefits that you can offer. Typically, business owners offer these to the best customers. Try packing them together in a membership program with an annual price tag. The additional revenue will contribute to your bottom line while offering customers added bonuses that they might not usually receive. Undoubtedly, the increased cash in the business is predictable year to year too.
Another amazing recurring model, SaaS (Software-As-A-Service) offers companies the ability to role out updates on the fly while receiving consistent income. For example, rather than having customer pay for a online trading account software upfront at $240, they pay a monthly price of $20 per month. Annually, the business makes the the same money…for the first year. However, by the second year, your business will collect additional sales that might not have repurchased the software. In any industry, write a software that will help your customers achieve their goals. Your statement of cash flows will reflect the difference.
Especially for retail businesses, consumable products generate predictable recurring sales. This revenue model works on products that are relatively cheap and inexpensive. For example, single cups of coffee at the oil change near me is a daily recurring revenue driver. Think carefully about a small, simple product that your customers can use on a recurring basis. Then, find a way to make it cheap enough for them to afford so they can make it part of their daily lives. If done correctly, the revenue will be highly predictable and easy to manage for accounting.
Regardless of what type of business you are in, recurring revenue models can work. You have to find out which model will work best for your business. Once implemented, they can be a serious boost to business income. They add predictability to the business and increase the company valuation. While the subscription revenue might take long to build up, the long term income is well worth it. Your company cash flow can significantly increased with the matching recurring business model.
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