How Startups Generate Recurring Revenue Without a Subscription Model
You can encourage repeat business without shoving a square peg into a round hole
Are you going to hit your revenue targets this year?
There’s never been a worse time to have to answer that question, but there’s never been a better time to create more predictable revenue forecasts.
The key to solving the forecasting puzzle is, of course, establishing a consistent and growing run rate. In other words, if your revenue target for the next 12 months is $1 million, your focus is on a consistent number of $83,333 per month, every month.
But no business has consistent revenue — unless of course they have recurring revenue. That’s the pot of gold at the end of the traction-and-scale rainbow, and subscription pricing models seem like the natural means to those ends.
One problem. As I wrote a couple weeks ago, subscription pricing doesn’t work for every product or service. Subscription models only make money in cases where the customer’s demand cycle fits the timing of the subscription model.
Most products and services don’t fit that model. So what do you do?
I’ve got over 20 years experience building, selling, and especially pricing products and services to get to traction and scale with recurring revenue. Here are five alternatives to a subscription model that can encourage repeat business.
If you have customers, you don’t need machine learning or big data to start predictive marketing right now.
Put simply, predictive marketing is sending your customers a reminder of your product or service before they need that service, and good predictive marketing gives them a reason to act. That reason could be an effective message, a discount, or just good timing.
Basically all you have to do is get one of those right.
If a subscription pricing model encourages customers to buy based on your schedule, predictive marketing encourages customers to buy from you on their schedule. It’s much easier for your forecasting model to conform to the customer’s actual usage…