A business model is categorized as recurring if it relies on repeated purchases to keep the business running. This can be done through online shopping, subscribing to services or investing in equipment that uses revenue to continue to function.
Many famous companies use this business model including Netflix, Amazon, and Apple. These businesses earn revenues from customers who purchase new content or memberships or buy new technology.
They also earn money through advertising during the service, products sold outside of the service or website, and other income streams.
With digital media, there are many ways to make passive income which allow you to spend your time doing other things! No matter how much work you put into your site, YouTube channel or Facebook group you will still get paid for spending your energy on something else.
This article will talk about some easy ways to start creating blogs and sites with recurring incomes. There will be no cost involved unless you already have an account at a free blogging platform like Blogger or WordPress.
Recurring revenue is defined as “business with which you will not necessarily see a steady, continuous flow of income,” says Andrew Moulton, founder and CEO of Aaptiv.
But this doesn't mean they are not profitable! In fact, it's the opposite — because they generate such consistent revenues, there are no high cost base products or services that can hinder their profitability.
Recurring customers also spend more money due to the longer engagement period, making it easier to market and sell additional products and services. This helps keep profit margins higher.
With these points in mind, here are some examples of companies that rely heavily on recurring revenue.
Many companies use the term ‘revenue model’ to describe how they make money, but some confuse the meaning of that word.
A revenue model is not about the type of product you sell or the way you market your products. A revenue model is actually what you do with the income you get after your expenses are covered.
This can be done in two ways: by having direct sales of products or services, or it can be through advertising or recruitment fees.
I will discuss each one of these types of models in more detail below!
Direct sale
Recruitment fee
Advertising
What makes a revenue model work
It must have enough income to cover your costs so that you earn more than you spend. This is what allows you to keep marketing and looking for new clients/customers.
It also means you don't need to find new sources of income because you have already put in all this effort and still have savings left over.
Many companies use what we refer to as “recurring revenue” to produce income that is not typically one time only. This is important to note because it makes your business more stable!
Recurring revenue comes in several different forms, but most involve you paying for an ongoing service or product line. This is how many large corporations make their money, for example Amazon (the online shopping site) and Netflix (the streaming movie company).
These businesses do not have a big initial investment, they start producing content or offering services and then they are paid over and over again. They are also investing in marketing strategies to keep drawing in new customers.
By having this type of income source, your business has stability. Even during times when there are no extra funds coming in, at least you have the part of the business that brings in regular income.
There may be times when there is nothing else going on so your budget looks very tight, but at least you know these things will still give you some income every month. You will also have to think about less expensive ways to promote your business during those periods.
Heck, maybe you can even drop some products or services while in such a slump! Read on for other examples of how various types of businesses generate recurring income.
Examples: small businesses, c ompanies, solo entrepreneurs
Small business owners deal with many similarities to the employees of larger companies.
A touchpoint is any activity or interaction that attracts your audience's attention and gets them to perform an action related to you or your product.
Most businesses have at least one touchpoint per week with average users. This means that there's a chance of exposure every week!
Something like checking out from YouTube to read our weekly article is a casual touchpoint for most people. More targeted ones are searching for products and services online, visiting a site about yours, reading a review about you, contacting you for business, and buying a product or service from you.
Conversion loops occur when someone does something related to you (or your product) on another site or app and then come back to you. For example, if I were planning on buying a new smartphone, I would first look at reviews of various phones before deciding which model to get.
I would then head over to Amazon to see what deals they had on this phone model and whether it was worth the extra money. Then I would pick up some goods off mobile sites to test out the device before making my purchase, all while adding these items to cart on Amazon.
A touchpoint is an activity or action that brings you closer to your goal. For example, going out for dinner is a touchpoint for anyone who wants to lose weight. It’s a small part of what makes eating healthier more appealing.
A recurring revenue model involves creating new touchpoints for your customers. You will not only need to think about how to create these new touches, but also how to keep them coming back!
Here are some examples of ways to do this with your biz:
Monthly membership sites
Weekly newsletters
Live events
Facebook groups
Mobile apps
Free reports
You get their information before buying anything else (hence the term ‘lens’)
This creates a constant reminder that you have something valuable for them. They want to see what you have so far, and then eventually buy another product or service from you.
The trick here is to find ways to make the experience worth it to them while still keeping to budget.
This is one of the most important questions you will face as an entrepreneur! As mentioned before, recurring revenue comes with its own set of problems that are often overlooked.
With regular income, there’s a clear end goal- to make enough money to break even or to earn a profit. It’s easy to track how much you need for this goal because it’s known up front.
But what about when your business has no clear ending? What if you’re spending all your savings keeping the lights on and paying off debt, but your goals have shifted to creating more opportunities for others?
What if you don’t feel like you’re making enough money to satisfy yourself and your internal bar for success? These can be tricky questions to answer because it doesn’t quite work like a normal job where you get paid at the end of the day.
You could keep running your business until you either run out of resources or you reach your self-defined threshold, but chances are that won’t change anything. You’ll just stop feeling satisfied, which is the true test of whether or not you’re successful.
A lot of business owners make the mistake of thinking that they can’t afford to produce less quality content or to cut their marketing budget. But this is not a good way to run a business!
Producing lower quality content or cutting down on how much you market are ways to create a recurring revenue stream. You will still be producing high-quality material, but you’ll be charging a lower price for it.
This article will talk about some easy ways to do this. We will also look at some examples of sites that have done this successfully.
Reduced prices don’t just benefit your income, but also help you gain credibility with your audience. If people know that you believe in product X as well as them, then they will trust you more.
That could mean leaving someone else to finance the products for you, or it could be through referrals and advertising revenues. Either way, you’re protecting your investment by releasing control over the product.
The best way to go about doing this is to hold small launch events. These can be free giveaways, private launches, or full sales. This way, your audience does not need to pay extra for the new product.
For example, if you're giving away a $100 gift card, there's no reason why anyone should not buy the product being promoted.
One of the most important things to look for in any business is whether or not they are using revenue-recurring methods as their main source of income.
Most large companies use direct sales, marketing materials, and/or advertising to generate initial profits. They then reinvest those earnings into more products and services to keep themselves busy!
Some small businesses rely heavily on direct sales to remain successful. But this isn’t very common because it doesn’t last long enough for them to reap the benefits of their hard work.
You will probably know (unless I am wrong) that Niantic has an app store model where people can download their own copy of The Legend of Zelda: Link’s Awakening. This is done through the company’s website and other third party stores like Google Play and Apple App Store.
However, there is an additional way to get the game if you are willing to pay up! You can buy directly from Nintendo via their online shop.
This isn’t only limited to video games either. Almost every major brand has an online shopping site where they sell all sorts of merchandise. These sites usually have frequent promotions and special offers too! It would be worth looking around to see what they have available.
There may even be some coupons floating around social media sites such as Twitter and Facebook.
