Essay: A Deep Dive Into Recurring Revenue

How to sell once and get paid daily, weekly and monthly.

The Recurring Myth

Recurring revenue is a mirage.

Recurring only recurs in hindsight looking back at what has already happened.

Many believe they have recurring revenue businesses but they actually have long duration products on pay plans.

The only real money in business is now money. Cash realised in a bank account.

The flip side is that if you take upfront payments you are incurring a liability.

The $20,000 you accept to work with a customer over 12 months has a delivery liability you must fulfill over that time period.

The delivery obligation is a liability.

Smart business is balancing assets and liabilities.

Clients are assets.

We generate yield from client assets by delivering agreed value.

To grow revenue we must either increase the number of clients, increase the value of each client or increase the lifetime of the client.

The best businesses do all three.

My definition of recurring revenue is revenue that showed up in the past.

I will not show you how to generate recurring revenue.

That is impossible as it’s only generated in hindsight.

I will take you into the future so you can build a model that generates recurring revenue when you look back into the past.

These principles increase the number of clients, generate the highest value per client and keeps them in your world for a very long time and does this with the lowest level of complexity.

In the future you will marvel at the recurring revenue this has generated for you.

These principles put a client in motion.

If you have a large amount of clients in motion your business will flow.

I go into depth of each of the Principles and exactly how to deploy them in this essay:

The Flaws of The MRR Model

The most common model is to sell a 12 month program paying month to month.

It’s theoretically sound but falls apart in practice.