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Recurring Revenue Business: 5 Factors to Consider Before Investing

by admin / Saturday, 21 May 2022 / Published in Uncategorized
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Predictable income, financial stability, and brand loyalty. Those are three benefits of focusing on earning recurring revenue rather than one-off sales. There are various recurring income business ideas; the key is finding one that fits your skill set best. Investing in a recurring revenue business is one of the smartest financial moves you can make—when chosen wisely. Here’s what to look for in a good investment.

What is a Recurring Revenue Business?

Having a recurring revenue business model means your business has income generated routinely, typically on a monthly or yearly basis. This business model has predictable and stable revenue streams. Knowing your expected income for the coming months allows you to plan accurately for the future.

One business that can easily predict a minimal yearly income is Mosquito Authority. The business from mosquito control treatments happens every year, which means you can expect to service your loyal customers at least once a year.

Factors to Consider Before Starting

While searching for a business idea with recurring revenue potential, there are five factors you will want to consider.

  1. Type
    Zoho Subscriptions, a billing software, defines eight recurring revenue business models, the most common being auto-renewal, hard contracts, and usage-based subscriptions. Auto-renewal continuously re-subscribes the customer until they give a cancellation notice. Hard contracts lock customers in for a specific time, allowing owners to predict future income more accurately. The customer receives a bill as needed or at scheduled intervals based on their need in usage-based subscriptions. The others include sunk money consumables, tiered billing, user-based billing, hybrid billing, and freemium.
  2. Pricing
    It’s key to evaluate the fair value of your product or service. Make sure it’s not too low that you don’t make any return on the investment, but not too high that people won’t return for more business.
  3. Tracking performance
    Depending on your product or service, you might see fluctuations in revenue. For example, pest control services are in high demand seasonally This is not a negative. It just means you must plan accordingly for the slower months. It is recommended to track your monthly and annual recurring revenue, customer lifetime value, or the number of new customers to follow your performance.
  4. Transparency
    This factor is vital in keeping customers. They want to trust you and feel they aren’t being taken advantage of. The best way to do this is to show transparency in your billing process. Make it clear to the customer what they are receiving for their payment.
  5. Payment Methods
    Customers will pay you routinely, so you’ll quickly rack up the number of transactions on one payment gateway. Make sure you choose a gateway that doesn’t cost too much for each transaction. For example, Venmo recently began charging fees for business transactions, which means they will take a portion of your customer’s payment.

Recurring Income Business Ideas

By providing routine service, you are free to focus on providing the best possible customer service with one of these business ideas.

  • Product Subscriptions: Customers receive a product on a routine basis. Examples include the Dollar Shave Club or Stitch Fix. AccessAlly recommends finding a simple product to ship out every month.
  • Software as a Service (SAAS): This is software sold on a subscription base, like Adobe. 
  • Affiliate: Someone who works as an affiliate is paid by companies to show off their products. Other affiliates have a link to the SAAS they use on their website and receive a commission when people click on the link. Influencers are often affiliates.
  • Subscription Service: This could be a variety of services. A graphic designer who offers routine website and marketing materials refreshes can charge by subscription. Lawn services and pest control can also work as a subscription base. For example, Mosquito Authority offers ongoing treatments for pest control throughout the season.
  • Online Courses: These can range from how-to videos to workout programs. The key to making a profit with online courses is that they are evergreen programs, and once you make them, they can continuously make you a profit. Once you have a library full of videos, customers can pay a subscription to have access to all of them.
  • Memberships: The most common memberships people think of are fitness related. People pay a monthly price to access whatever the business is, like a gym or spa.

Earn Recurring Income with Mosquito Authority

While many business ideas are great, one you can quickly get started with is pest control. Mosquito Authority allows you to hit the ground running and be on your way to earning recurring revenue.

Pest control services are seasonal. Performing it once won’t keep pests from coming back the following year. So, as a Mosquito Authority franchisee, you can earn recurring revenue because your clients will likely return to you year after year for service. In addition, you can quickly expand your client base by keeping customers year after year.

If you’re unsure about franchising, you can read more about how franchises work and how they can benefit you and your family. Then once you’re ready to commit, contact us.

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