6 Ways to Work Recurring Billing into Your Business Model

Updated on January 17th, 2022

If you sell products or services, you’ve likely discovered the cyclical nature of consumer spending. You may be so busy over the summer, you can’t even take a day off. Then fall comes and your business slows so dramatically, you wonder how you’ll pay the bills. If only there were a way to create a reliable, steady income base each month.

Businesses are discovering a very easy way to do just that. Recurring payments, once reserved for magazines and gym memberships, are gradually making their way into almost every other industry. The Internet has made it easy for companies to offer services on a monthly basis, with automatic credit card payments and bank drafts making it easier for some customers to simply allow the services to continue rather than go through the process of canceling them.

For some businesses, recurring billing may not be as natural an offering as others. Depending on the type of service you provide, here are a few options for setting up recurring billing for your customers.

Subscription Box

This is perhaps one of the most popular types of recurring businesses. Each month, your business sends a box of products to the customer’s home. They get a sampling of your products and you have money coming in from each of those customers every month. With that income, you can create enough product to make a profit on the items you send to all of your subscribers while still providing a value to your customers.

Fashion and cosmetics retailers have latched onto the subscription-box model, finding customers are especially interested in receiving a gift box each month, filled with items tailored to their own interest. Birchbox and Pop Sugar’s Must Have Box are two examples of monthly subscription offerings that have resonated with consumers.

Maintenance Plan

One way businesses create recurring revenue is through offering maintenance plans. Heating and air specialists often provide these plans to their customers. In exchange for a recurring fee, customers have access to scheduled visits from technicians, who check over their systems, clean them, and replace any parts that need it. In addition, service plan customers receive priority service when they have a system malfunction.

This business model can also work for lawn care specialists, technology companies, and many other businesses that provide products or services. If a product wears down over time, yet it’s a product customers like to keep around for many years, you likely will be able to launch a maintenance plan that keeps that product operating in peak condition through many uses.

Auto-Delivered Essentials

The Dollar Shave Club is a major success story in the recurring-revenue arena. For a small monthly fee, new razors are sent each month to go with a compatible handle, also provided by the company. Customers no longer have to worry about rushing to the store to replace their razors on a regular basis and Dollar Shave Club has a small monthly amount coming in each month from customers across the country.

Dollar Shave Club’s success is proof that customers are willing to pay for even the smallest items if it makes their lives easier. If your business can specialize in a product that requires regular refills or replacements, you can set up a reliable revenue stream for your business. Amazon even offers this option to its merchants who sell items like refrigerator filters, single-serve coffee brewer cups, and other household items through its service.

Education and Training

Can your business provide a service that is in demand for your customers? A hardware store may have loyal customers who seem to always be embarking on ambitious do-it-yourself projects with no prior knowledge, for instance. Instead of answering those questions, your business could host workshops on a regular basis, charging a lower-priced subscription for those who want to attend the entire series.

Instead of on-site workshops, you could conduct training through a series of videos on your website. Put the videos and how-to tips in a special section of your website and invite customers to access those through a small membership fee. Even if you gain a small subscriber base, it will create regular income through the lean months.

Appointment Opportunities

If you’re an appointment-based business, you’re missing a valuable opportunity if you let customers leave without setting the next appointment. Hair salons, spas, and medical practices should always ask customers if they’d like to make the next appointment before they leave. Then follow up with a call or text a couple of days in advance of that appointment and ask that they confirm the appointment in order to hold it.

The downside to this is that you may end up with last-minute cancellations, leaving open slots in your schedule. This is especially true for appointments with a long turnaround time, such as annual medical appointments. However, for appointments like haircuts, hair coloring, and manicures with quick turnarounds, setting an appointment before the customer leaves could mean the difference between having that customer in every few weeks and never seeing that customer again, so a few canceled appointments make it well worth it.

Membership Clubs

Freebies and discounts are great at winning new customers, as well as fostering loyalty among existing customers. While you likely won’t want to charge your customers for those, there is a way to reward loyalty while also bringing in revenue. You could charge customers a monthly fee to gain membership in a “club” that earns them so many free visits or products within a designated period of time. A car wash could launch a summer program that rewards customers who purchase a three-month membership with unlimited car washes. Customers often show up frequently at the beginning of such a membership period, then taper off as the months go by and they lose enthusiasm about getting as many visits in as possible.

Instead of a membership club, you could instead sell visits in advance at a discount. Tanning beds have long used this business model, offering packages to each customer that they purchase and then use one at a time. The good thing about this business model is that there are a certain number of customers who will neglect to use all of them, which will offset the discount you’re giving. It also fosters loyalty because customers will continue to visit to use services they’ve already paid to receive.

If you’re interested in finding a way to create regular income, a recurring-revenue setup may be the best option for you. With these six ways to accomplish that, you can likely find a way within your own business to win monthly subscription dollars from your customers while still providing the best service possible.

Angela Ruth

Angela Ruth

Angela Ruth is a financial writer at Due. She has a passion for helping people get out of debt and live a better life.

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