Exploring Revenue Models: One Time, Reoccurring, & Recurring
Revenue models drive how your organization generates income, plus enables growth in a sustainable and efficient manner. Let's explore each of these models, its benefits, and how it fits into digital strategy.
Here are what these revenue models are with an example for each:
One Time: a single transaction (e.g last Wednesday)
Reoccurring: multiple transactions at irregular intervals (e.g. two years ago and 17 weeks ago, maybe another before end of this year?)
Recurring: multiple transactions at regular intervals (e.g. every month)
What are the benefits of moving to recurring?
Simply put, it's easier to run and grow your organization with recurring revenue.
Cash flow is consistent and predictable
Easier to acquire new revenue based on the nominal value being lower (e.g. $10,000 per month is easier to approve than $100,000)
Marketing activities are focused more on communicating the value you provide (versus trying to do that and acquire additional revenue)
Specifically for corporations, if you're in the market for outside investment or an exit, you will see significantly higher EBITDA multiples with a higher proportion of recurring revenue.
Specifically for nonprofit organizations, this reduces the pressure associated with hitting individual campaign goals, enabling you to focus more time on the mission and retention of that revenue.
How does this tie into your digital strategy?
For starters, there are ways to introduce net new recurring revenue lines by using digital platforms (e.g. courses, communities, consulting) with no to low impact on your existing revenue lines.
There are also plenty of platforms that make it easy to collect recurring revenue without needing to build your own infrastructure.
The hardest part is deciding what your offering will be, not how to facilitate it.
TLDR: Look at your revenue mix. Define a path to grow the proportion that is recurring. Execute on that vision.
