What do Netflix, Microsoft, your gas company, and your local coffee shop all have in common?
They are all recurring revenue businesses. Repeat businesses. As in, people keep paying them month after month.
Unlike the poor suckers who are fighting for clients and customers every month, repeat revenue businesses can often spend less time and energy on new customer acquisition and focus on delivering value to the customers they have. Recurring revenue gives you a predictable income, helping you to plan for the future.
There's something awesome about repeat business. When you build something that customers keep coming back to, or are willing to pay for every month or year, you've got a recipe for profitability.
In this article, we’re going to give you some recurring revenue business ideas. These repeat business ideas will help you design a business that keeps customers month after month, and is super profitable!
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What is recurring revenue?
Recurring revenue is when customers pay you again and again over months and years.
It could be a subscription business or membership business, these usually require regular payment. Your Netflix account pays Netflix recurring revenue, even if you shared the password with your cousin in Idaho.
Or, it could just mean you've built a business that customers keep coming back for – like Starbucks. These types of repeat purchase businesses also create recurring revenue. And the more frequently the customers come back, the more valuable the business.
Benefits of recurring revenue
Recurring revenue is the foundation of some of the most successful businesses in the world. At the intro to this article, we talked about businesses like Microsoft. Back in the day, you used to buy Microsoft Office in a box. You paid for it once and installed the CD-ROM on your computer (are we dating ourselves here?).
Now, you probably download it and pay a yearly fee. But unlike the $150 CD-ROM that you probably used once in 5 years and shared with all your friends, by turning their software into recurring revenue - where you pay $100 a year - Microsoft can make even more.
That's why increased revenue is one of the benefits of a recurring revenue business. Here are some others:
- Lower CPA. Any business needs to think about its CPA, or cost per acquiring a customer. Recurring revenue businesses don't need to keep reacquiring the same customers.
- Scalability. Recurring revenue gives you the ultimate scalability. If you can keep your churn rate relatively low, you keep adding new customers to your existing customer pool. That’s business growth!
- Freedom. A recurring revenue business can give you a solid financial foundation that frees you up to focus on delivering a great product or service.
6 Repeat business ideas
1. Community
Here at Mighty, we help people build one of the greatest recurring revenue businesses out there: community.
Membership communities just work. On the human level, this is because we all crave connection and meaning. By joining an online community, we can master something important to us and find people we care about.
But the business side of community is pretty dang cool too.
Imagine a business you could start for next to nothing and scale to $100,000 a month. We've seen it.
Community memberships are a powerful recurring revenue business.
To start a community, you'll identify an Ideal Member and a Big Purpose. Find a great community platform like Mighty that will let you build and host your community, adding your own brand and everything you need to sell. And you're off to the races.
From our research, we've seen that communities that charge for membership do better. They have more engaged members and are more successful.
This is because people value what they pay for.
Examples of communities as recurring revenue businesses:
2. Retainer plans
Another recurring revenue business is a retainer-based business. This is often seen with businesses that work advising other companies, and probably most famously with lawyers.
A retainer-based business means that a company will pay your business a set amount every month to provide a certain type of services. When it's services that are ongoing, you've got the basis for recurring revenue.
Retainer businesses are often overlooked as viable business models, but they can be really lucrative. If your company provides digital marketing services to 10 companies, charging them each $5,000 a month, you have an agency making 50k a month!
You get to focus on what you do well, and build a business around it. A company gets the benefit of your business's expertise, without having to hire an employee to do that thing.
Examples of retainer-based recurring revenue businesses:
- Lawyers
- Bookkeeping
- Digital marketing
- Content creation
- Financial advisor
3. SaaS
One of the sexiest recurring revenue business models is what's called SaaS – that means, software as a service.
SaaS businesses provide their customers with some sort of software that makes their life easier. In return, the customer pays a regular fee to use that software.
We discussed the example of Microsoft Office above. Technically, that part of Microsoft works on a SaaS model. Think about companies like QuickBooks, Adobe, Evernote, Zoom, and Dropbox. These are all companies that provide software as a service.
Actually, even Mighty Networks is a SaaS company. We give businesses and creators the software to build community, courses, content, and commerce, and in return, our members pay a flat monthly fee.
It used to be you'd have to know how to code to create a SaaS company. With the amount of no code and white-label options out there, it's definitely doable to get a SaaS company up and running - even on a bootstrap budget
Examples of SaaS recurring revenue businesses:
- Dropbox
- Microsoft
- Evernote
- QuickBooks
- Adobe
- Mighty
4. Local business
Moving from SaaS companies that reach around the world, let's talk about one of our local repeat business ideas: a local membership business.
Yep, if you look around your town, you will see all sorts of local membership businesses. The most obvious one is the gym, where you pay monthly to access their equipment.
You may have bumped up against recurring revenue businesses in the form of yoga studios, dance classes, kids sports, or music lessons. Each of these businesses provides a product or a service, and you usually pay regularly.
Or, look at your local coffee shop, masseuse, or hairdresser for repeat purchase businesses. They don't work on a membership model, but customers keep coming back again and again.
If you want to start a local repeat business, take stock of what people in your town pay for. What's missing? And how can you create a business that people will keep coming back to again and again?
Examples of local repeat businesses:
- Gym
- Yoga studio
- Bouldering cave
- Play cafe
- Hair salon
- Coffee shop
5. Subscription service (product-led)
Subscription services are another idea for recurring revenue business ideas. We pay for a lot of high-end subscription services, think Netflix or Disney+.
But there are a lot of subscription businesses doing well at a smaller scale. The rise of Substack brought an increase in paid newsletters, and the email provider Convertkit jumped on that bandwagon too.
Or how about a product-based subscription service? If you've ever paid for a wine-of-the-month club, you've tried one of those. From razors to whiskey to food to books to underwear, there are lots of options
Examples of subscription-based recurring revenue businesses:
- Wine club
- Book of the month
- Hello Fresh
6. Licensing model
Licensing is another one of those recurring revenue business ideas that's not as well known. With a licensing business, you own some type of intellectual property or patent. Your customers then pay recurring revenue to get access to that.
Last year, when Taylor Swift famously re-recorded her first albums, she did it to get around one simple issue: somebody else owned her music. Her label had the licensing rights to her music and was making all the money on it.
Franchising is not identical to licensing, but it’s closely related. If you buy a McDonald's restaurant, you are paying to use the name. In return, the head office gets to tell you how to decorate and what type of cups to use.
But you get a proven business name with a track record of success, and instant brand recognition when your hungry customers are driving by.
McDonald's – the head office, not your local restaurant – operates on a licensing model.
If you want to start a licensing business, you need to own some sort of intellectual property or brand. Once you do, you can get others to pay you to use it.
Ready to start?
Whatever recurring revenue business model you've got cooking up, we hope this article helped. There are a lot of repeat business ideas out there, and a ton of successful ones. Play your cards right and yours might be next!
And if you're building a membership or subscription business, come build with Mighty! Our powerful cultural software platform lets you mix community, content, courses, and commerce. And with our flexible Spaces, you can mix in live streaming, live events, discussion forums, member profiles, chat and messaging, and more!
You can charge in 135 different currencies or monetize with token-gating. And we've got a great app for every device, or you can even choose to get your own white label app.
If you want to see what you can build, come try it out! It's free to try for 14 days, no credit card required.
