8K – Recurring Revenue
Onto week 5 of the 8 Key Drivers of Business Value: Recurring Revenue!
Having a reliable and consistent source of income without having to fight for every sale tooth-and-nail will not only make your business more valuable, but also far less stressful.
There are six main types of recurring revenue, which I will put in order from worst to best:
- Consumables – disposable products like toothpaste
- Sunk-money consumables – a customer invests in an item (called a platform) and buys supplementary items along with it. Razorblades are a good example.
- Renewable subscriptions – fixed-term subscriptions such as with magazines
- Sunk-money renewable subscriptions – purchase of a ‘platform’ with a subscription on top for information, such as the Bloomberg terminal that stockbrokers use
- Automatic-renewal subscriptions – subscriptions with renew automatically such as document storage
- Contracts – Hard contracts for a defined term. Think mobile phones
If you want to dive into the nuts-and-bolts of how to achieve a more valuable business, we’ve put together a short training webinar to help you out. You can get free access to it at: