Steady income is a great thing for a web agency. It helps to pay bills, it pays employees, and it keeps the business going. Who wouldn’t want that? If you don’t currently have any recurring revenue, it can seem complicated and intimidating, but it doesn’t have to be.
The Importance of Reliable, Consistent Income
Project-based billing works, but it has its disadvantages in the business world. Perhaps the most obvious is that it doesn’t always lead to consistent recurring revenue that agencies and individuals can count on. It can be unpredictable.
Bringing on new clients all the time is costly, and we’re not just talking about the time factor. We’re paraphrasing here, but Bain & Company once reported that “it costs six to seven times more to bring on a new client than to retain a current client.” We haven’t even touched on the fun of chasing invoices and project delays!
For an agency (or any professional creative, really), a predictable revenue stream means more stability and breathing room.
In 2016, Inc. magazine published a great piece on recurring revenue. It breaks down and ranks five types of recurring revenues. The five include repeat customers, repeat revenue with a network effect, sequenced product purchases, good until cancelled revenue, and contractual recurring revenue.
Ideas to Add Recurring Revenue to Your Business
Create Retainers or Service Plans
A service plan or retainer in its simplest form is an agreement between you and a client that they will pay you for a specific amount or time, either weekly or monthly, whether they actually use your services or not.
As long as that retainer is in place, they can be sure that they have a guaranteed spot in your work calendar, should they need your services. A service plan is a package that includes, for example, regular refreshes to their websites or marketing materials, whatever your service offering may be.
Offer Supplemental Services
The first step to offering supplemental services is to determine what you could do to expand your offerings to include services that are in some way related to your main services. For a web designer, it might be hosting services; for a content writer, it might be editing or blog content audits. If you can solve more than one problem for your clients, you have a better chance of increasing your revenue and creating repeat customers, which means recurring revenue.
Use Payment Plans
In this situation, you don’t get your full payment up front, but break it into smaller chunks for a specified number of months. This is a great option when your clients may not have the full funding for your services in one fell swoop. It helps your clients get started and allows you to get paid, even if you raise your rates.
Things to Think About With Recurring Revenue
In order to set your company up for success, you should take some time to think about recurring revenue, and how you best serve your customers. It wouldn’t make sense to implement a strategy that isn’t in line with your company’s offerings or the parts or your business that are already successful.
What Brings Customers Back?
If you want to bring customers back, regardless of how you set up revenue streams, it’s important to think about what matters to customers. Typically, the quality or service and how a customer feels during your interactions are two of the keys that can influence whether they come back to your company for more work or if they go elsewhere. High quality customer service can turn a single job client into a repeat client.
What Kind of Strategy is Good for Our Company?
The strategies outlined here are just a few of the potential options that a company may embrace to create recurring revenue and it’s entirely possible that they may not be suitable for an agency (like a subscription box strategy, which has become popular for beauty and child-centered companies for example). There are others that, depending on the company, may work better.
At MaintainPress, we build recurring revenue streams with service plans that are billed for ongoing WordPress maintenance work. We offer several packages at different price points to serve WordPress website owners and digital agencies.
In addition, we work directly with digital agencies and freelancers to help them add their own recurring revenue streams by selling website care plans that they either mange in-house, or outsource and white-label with us. If you’re interested in learning more, reach out to us anytime by clicking the chat icon down below.