How We Made $2.3 MILLION In New Recurring Monthly Revenue  We launched a brand new product in September, which is by far the biggest thing we’ve done since launching UniBul.

It’s one of those things that completely transforms How We Made $2.3 MILLION In New Recurring Monthly Revenue:

It can also change your own business, even if it opens up a potentially huge new source of income for you.

In this post, I want to share with you one of the most powerful tools I know for turning your average online store into a trusted brand with a much higher conversion rate, far fewer customer complaints and returns, and a significantly lower chargeback rate.

In fact, your chargebacks will be at least halved. Of course, all of this translates into significantly higher sales and profits for your business.

In addition, we give you the opportunity to profit from our new product, not only by using it for your own business, but also by helping others to benefit from it.

The recurring revenue model is a reliable way for you to build lasting relationships with clients and gain their loyalty. It also ensures a stable and predictable income stream for your business in uncertain times.

When an agency uses a recurring revenue model, it not only allows itself to budget its expenses in advance, but also allows for planned growth and expansion.

A loyal client base and a steady stream of income at scheduled intervals basically contribute to two important things: agencies have to spend less time and money on acquiring new clients, which increases their valuation in the eyes of investors and currently attracts more investment. and future growth .

First, let’s look at what a recurring revenue model is.

Then we’ll discuss the types of recurring revenue models and how you can make them work for your agency.

Content
What is a recurring revenue business model?
8 Types of Recurring Revenue Models That Work
Pre-determined service fees for a certain period
Repeat purchases for permanent use
Automatic subscription renewal
Scheduled billing based on product usage
Per user billing model
Multiple levels in the pricing structure
A combination of recurring and one-time billing models
Free lifetime access to the base product or service plan
The benefits of a recurring revenue business model for your agency
Ideas on how to make a recurring revenue business model work
Recurring Income Models as Used by Professionals
Our Agency Partnership Program gives you additional benefits as your agency grows.
We offer agencies premium support, an intuitive website management dashboard and excellent collaboration features How We Made $2.3 MILLION In New Recurring Monthly Revenue .

What is a recurring revenue business model?

A recurring revenue business model is a type of revenue model where sellers allow buyers access to a product or service and charge a recurring fee, usually monthly, quarterly, or even annually. Subscription and membership services are derivatives of this business model.

8 Types of Recurring Revenue Models That Work
Here are the different types of recurring revenue business models you can use to secure your income stream, even in uncertain times. Choosing the right model can help you stand out from the large number of business offers online.

1. Pre-determined service fees for a certain period
Hard contracts – a type of recurring revenue model
This type of recurring revenue model comes in the form of fixed contracts How We Made $2.3 MILLION In New Recurring Monthly Revenue .

With fixed contracts, you and your customers are in a close relationship until the end of the contract period. If they plan to quit early, they have to pay a cancellation fee. Your customers can continue to use your service after their contract ends by continuing with a floating monthly contract for the same pre-determined service fees.

Example: How elegant a theme uses this type of model
An example of a company that follows this recurring revenue model is Elegant Themes, a developer of WordPress themes and plugins. They offer one annual subscription plan for $89/year. So it is a one year contract that you enter into to use their features by paying a fixed amount.

If you are an agency, you can use a fixed contract to benefit from this type of recurring revenue model. Your clients will pay a fixed amount to use your services for a set period of time, ensuring a long-term commitment.

2. Repeat purchases for permanent use
Repeat purchases for permanent use
This type of recurring revenue model involves consumable sunk money. It means that a customer buys a product or invests in a platform and later has to make repeated purchases to use the product or service permanently.

Example: How Amazon Prime uses this type of model
Amazon Prime is a great example of this type of recurring revenue model because it incorporates subscriptions into their pay-per-product business model. They do so through borrowing and in-app purchases.

You can make this model work for your agency by selling a one-off package or platform like software, and in order for your clients to keep using it, they have to keep buying and promising you a steady stream of income and a loyal customer base. These purchases may include premium, exclusive or newly launched features that were not included with the software at the time of purchase How We Made $2.3 MILLION In New Recurring Monthly Revenue .

3. Automatic subscription renewal
automatic subscription renewal (Source: 500px support center)

In this type of recurring revenue model, businesses charge their customers automatically until the customer opts out of using the service.

If you want to apply this type of recurring revenue business model to your agency, you can introduce your clients to a program that offers more benefits than the standard package they receive. You may automatically renew their subscription to this program until they voluntarily cancel their subscription How We Made $2.3 MILLION In New Recurring Monthly Revenue . Watch our Recurring Income Webinar with Automatic Privacy Policy Updates

Example: How Netflix uses this type of model
Netflix is ​​a great example of this model. Your subscription automatically renews until you unsubscribe from the platform.

This kind of automatic subscription renewal would create a strong relationship between you and your clients and promise your agency recurring revenue and a higher client retention rate. In your case, selling a SaaS product would be a great way to implement this type of recurring revenue business model into your agency How We Made $2.3 MILLION In New Recurring Monthly Revenue .

4. Scheduled invoicing based on product usage
Planned invoicing based on product usage (source: barmetrics)

Businesses that follow this type of recurring revenue model charge customers at scheduled intervals based on their use of a product or service. To do the same, define metrics by measuring the usage of your services, set rates, time intervals and bill accordingly How We Made $2.3 MILLION In New Recurring Monthly Revenue .

Example: How Digital Ocean uses this type of model
An example of a company using this model is Digital Ocean. They provide their services and charge per hour of active use. Usage is measured and billed according to two specific metrics: data volume/bandwidth and the amount of time the virtual machines (droplets) are active during the month How We Made $2.3 MILLION In New Recurring Monthly Revenue .

Kalungi is a B2B SaaS marketing agency that uses a similar pay-for-performance model. If you think this type of model can work for your agency, you can use the above strategy. However, if you believe it is impractical for the type of services you offer, you can skip this type of recurring revenue model and choose an alternative How We Made $2.3 MILLION In New Recurring Monthly Revenue .

5. Per-user invoicing model
Per-user billing model (source: Microsoft 365)

A per-user or per-seat billing model is a type of recurring revenue business model where businesses bill the customer based on the number of people who use the product. As the number of users increases, so do the fees, which can be monthly or yearly.

Examples of companies using this model are team collaboration applications such as Slack, Microsoft 365, which charge a per seat fee of $69.99 per month. Another How We Made $2.3 MILLION In New Recurring Monthly Revenue .

Most people know that having good products or services and marketing them well is important to a successful business. But it’s just as important to track your financial metrics because you are what you measure.

One of the most important metrics in the subscription space is monthly recurring revenue (MRR).

In a subscription business, there will always be new customers signing up and some existing customers leaving. This causes constant fluctuations in your income How We Made $2.3 MILLION In New Recurring Monthly Revenue . MRR captures this movement to show whether your sales are increasing or decreasing and by what percentage How We Made $2.3 MILLION In New Recurring Monthly Revenue .

The regular calculation of monthly income does not take into account annual subscriptions and changes to the subscription plan, so it creates a misleading impression about the financial health of your business. In addition to showing your current conditions, MRR makes it easy to accurately forecast future revenue so you can make informed decisions about budgets, investments, and scaling.

Monthly Recurring Revenue (MRR) – Definition, Calculation and Types
Monthly Recurring Revenue (MRR) is the predictable total revenue generated by your business from all active subscriptions in a given month. Includes recurring charges from discounts, coupons and recurring add-ons, but excludes one-time charges How We Made $2.3 MILLION In New Recurring Monthly Revenue .

Using MRR, you can evaluate the current financial health of a business and project future profits based on active subscriptions.

How to calculate MRR?
Calculating MRR is simple. Just multiply the number of monthly subscribers by the average revenue per user (ARPU).

MRR = Number of subscribers within the monthly plan * ARPU

For example, let’s say you have 5 subscribers on a $300/month plan. MRR will:

(5* $300) = $1500

For annual plan subscriptions, MRR is calculated by dividing the annual plan price by 12 and then multiplying the result by the number of customers in the annual plan How We Made $2.3 MILLION In New Recurring Monthly Revenue .

For example, if a customer subscribes to your product with a monthly renewal contract for $500 per month, the ARR will be $500 * 12 = $6,000

What are the different types of MRR How We Made $2.3 MILLION In New Recurring Monthly Revenue ?

MRR creates a correlation between customers and their accounts and sheds light on their subscriber behavior. An increase in MRR indicates an increase in customer acquisition, an upgrade plan, or both. A drop in MRR means increased downgrades, cancellations and exits How We Made $2.3 MILLION In New Recurring Monthly Revenue .

To understand the specific reasons for the rise and fall of MRR, you’ll need to track the various factors that influence this metric separately. When you break down MRR into more specific types, each type offers distinctive insights into revenue, customer behavior, and business health How We Made $2.3 MILLION In New Recurring Monthly Revenue .

New MRR
New MRR is the additional revenue from new customers acquired during the month.

For example, if your business gets 5 new subscriptions on a $500/month plan, the new MRR will be 5 * $500 = $2,500

Upgrade MRR
Upgrade MRR is the amount of additional revenue generated from subscriptions that move from existing price plans to higher plans during a given month. Add-ons associated with subscriptions are also taken into account when calculating upgrade MRR How We Made $2.3 MILLION In New Recurring Monthly Revenue .

For example, if an existing customer who subscribed to the $50/month basic plan upgrades to the $200/month standard plan and purchases an add-on for $25/month, then the MRR of the upgrade will be 200 – $50 + $25 = $175 .

Downgrade MRR
Downgrade MRR is the reduced revenue from a subscription that has moved from an existing plan to a lower plan during a given month.

For example, if a customer downgraded from a $500 higher plan to a $100 base plan, then the downgrade MRR will be $500 – $100 = $400.

Extension of MRR
Expansion MRR is the additional revenue earned from existing customers in a given month compared to the previous month How We Made $2.3 MILLION In New Recurring Monthly Revenue . Additional revenue in Expansion MRR is generated through add-ons, upselling and cross-selling. A positive MRR expansion means that you have been able to retain your customers by gaining their satisfaction and loyalty. This is great for your bottom line because there is no customer acquisition cost (CAC) involved in this sale to existing customers How We Made $2.3 MILLION In New Recurring Monthly Revenue .

You can also calculate the MRR expansion growth rate per month:

(MRR expansion in that month / Total MRR at the beginning of the month) * 100

For example, let’s say your business has an MRR of $800,000 at the beginning of the month, and over the course of the month, it received $17,000 in additional revenue from its existing customers from expanding MRR (through add-ons, up-sells, and cross-sells) How We Made $2.3 MILLION In New Recurring Monthly Revenue .

Then the MRR expansion growth rate per month is How We Made $2.3 MILLION In New Recurring Monthly Revenue :

($17,000 / $800,000) * 100 = 2.1%

Reactivation of MRR
Reactivation MRR is the monthly revenue generated by previously dismissed customers who return to a paid plan. It indicates the profit earned by winning back lost customers.

For example, if 5 of your canceled customers reactivated their accounts in the same month and each subscribed to a $50/month plan, then your reactivation MRR for the month is $250 How We Made $2.3 MILLION In New Recurring Monthly Revenue .

Contraction of MRR
Contraction MRR is the amount your business loses due to cancellations and downgrades during a given month. You will experience a contraction in MRR if a customer cancels their subscription, downgrades to a lower priced plan, suspends their subscription, uses credits, receives a discount, or stops a recurring add-on.

Some of the reduction in MRR is due to the reduction in MRR, but because other factors contribute to the reduction in MRR, it is different from the reduction in MRR.

For example, let’s say you’ve decided to reward 50 of your longtime customers by offering them a $30 discount for a specific month. Your contract MRR will be 50 * $30 = $150.

Discard MRR
Churn MRR is the total amount your business loses due to unsubscribing during a given month.

For example, if 3 of your customers who were paying $1,000 a month each cancel their subscriptions in the same month, then your MRR at a loss for the month is $3,000 How We Made $2.3 MILLION In New Recurring Monthly Revenue .

A clean new MRR
Net New MRR shows how much your revenue has increased (or decreased) this month compared to the previous month. You can calculate your net new MRR using this formula:

Net New MRR = New MRR + Expansion MRR – Consumed MRR.

If your net new MRR is negative (meaning the sum of your new MRR and expansion MRR is less than your exit MRR), that means you’ve lost revenue. If the net new MRR is positive, then you have earned revenue.

Let’s say 5 new customers subscribe to your service during the month, each paying $100 per month. Meanwhile, 10 current customers upgraded from $100/month to the higher-tier plan for $200/month. But 3 of your customers, each paying $200 a month, churned How We Made $2.3 MILLION In New Recurring Monthly Revenue .

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