How to build a recurring revenue business that earns $10,000/month

What is recurring revenue? (And what it isn’t!)

Recurring revenue is any product or service that customers purchase on a predictable basis.

Think of subscription-based services where customers pay monthly or annually for an on-going service.

This system makes it easy for companies to calculate accurate ROI projections and to reduce the amount of time spent hustling up new clients.

Creating a membership site is one of the most effective ways to add recurring revenue to almost any business.

Some well-known examples of recurring revenue include:

• Streaming services (Netflix)
• Shopping memberships (Amazon Prime)
• SaaS (software-as-a-service, like Canva or Notion)

Recurring vs. non-recurring revenue

Businesses love recurring revenue because it’s stable and easier to scale, and customers love it because they get more bang for their buck.

Non-recurring revenue, on the other hand, depends on one-off sales with no promise that customers will return.

This type of revenue usually depends on a proactive marketing strategy to make sure that new customers keep coming in.

Examples of non-recurring revenue:

• Grocery store (Whole Foods)
• One-off ticket sales (Ticketmaster)
• Short-term housing (AirBnB)

Spotify’s impact on the music industry is a perfect example of the epic battle between recurring vs. non-recurring revenue, and recurring revenue keeps coming out on top.

There was a time when music used to be sold one album (or song) at a time.

Even after music went digital, Apple was still selling songs and albums individually rather as a subscription.

Spotify, however, had more creative plans.

They cut a deal so that they could rent unlimited songs to their subscribers for a recurring monthly fee.

As long as customers keep paying, the songs keep playing, and music lovers around the world subscribe in the millions.

But monthly recurring revenue isn’t just for big companies like Spotify, local businesses are getting in on the action too.

Recurring revenue businesses are all around you

Believe it or not, the recurring revenue revolution has already gobbled up most of the world, and if you haven’t noticed, it’s probably because you’ve been living in the belly of the beast for so long.

Your everyday life is already full of recurring revenue businesses.

Amazon Prime is yet another “prime” example, but recurring revenue is just as common with small local businesses.

Your local juice bar

Even traditional brick-and-mortar stores are getting in on the recurring revenue action.

When I interviewed membership expert Stu McLaren, he told me a story of a juice bar he visited in San Francisco.

He was walking through the mall and popped in for a drink.

Off to the right, there was a little section of the menu that read “membership pricing,” and the way it works is that members pay $10 a month for two free green juices, and then every drink thereafter is at the member price of $5 instead of $6.50.

It’s a great deal for members and an even better deal for the juice bar because it almost guarantees loyal return customers.

Your local massage studio

Massage studios have been picking up the baton, like Mary-Claire Fredette, who went through Stu’s TRIBE program.

Her massage business was suffering from sporadic cash flow, and she needed a way to increase her average monthly income, so she decided to launch a membership site.

Mary-Claire got 17 people to sign up for her launch with just a small email list.

That’s at least 17 people coming in every single month for a massage, and many of them were upgrading to 90-minute massages.

Your local car wash

Stu also shared a story about a car wash across from his office that uses a membership program.

You can either go through the car wash once for $11 or get an unlimited number of car washes for $12 a month.

Sounds like a no-brainer to me.

Stu has a membership for his and his wife’s car, and now that one car wash has his family’s business indefinitely.

While most car washes around the city hope and pray for customers to come back, Stu’s car wash is worry-free.