Do you bill based on hourly work performed? Or are you working on a project basis? What are you doing about recurring revenues? With 2009 almost here, this is something I’ve been focusing on for my business.
In a past post about Freshbooks benchmark data for business owners, I mentioned their report that showed 20% of businesses using Freshbooks had recurring revenues. That stat made me think about my own Web working business and how I was not only a little skimpy on the recurring revs, but I was also failing to properly designated the revenues that were recurring in my Freshbooks account, namely monthly retainers.
As a long-time web worker who got my start with Internet marketing in ’92, I’ve always been loathe to set my clients up so they have to depend on me to get things done for them online. I’ve always felt like I was ripping them off hoarding their web site updates when someone on their staff could easily do them. I believed that empowering my clients to be able to do everything in-house was a better practice.
For many clients, however, time and technology limitations make my old theories on client empowerment unrealistic. I have to reframe my thinking to see that I’m actually helping my clients increase their efficiencies by doing what I do best for them and letting them do what they do best. A retainer is actually a good thing when they know what they are paying each month and getting in return, and as a business owner, I know what money I can expect even if my additional freelance jobs or contracts end.
I turned to a few experts – including some of my fellow WWD bloggers – for their thoughts on recurring revenues.
“Recurring revenues are the lifeblood of any business that expects to grow,” says Stever Robbins, the Get It Done Guy. “Without them, you’re starting from zero every year. With them, you have a financial base as your foundation.”
Robbins suggests that web workers need to make some component of what they do a web-delivered service. Think: service contracts, forums to share high-quality or rare information, retainers, etc.
Celine Roque shares her own recurring revenues strategy which is providing regular maintenance and updates for web clients and regular blog posts and newsletter updates for writing clients.
Says Roque, “Oftentimes clients need long term work, whether they know it or not. It’s just a matter of identifying their needs and keeping in touch with them even when you’re not directly selling anything. That way, you’re the first person they remember when they need additional work done, even if it’s not related to the initial project you were working on.”
Mike Gunderloy also encourages web workers to set up recurring revenues.
“One of the biggest issues is to believe in yourself enough to invest time in coming up with a recurring revenue source,” says Gunderloy. “If you’re billing $xxx per hour, then it’s easy to think ‘every hour I’m not billing a client I’m losing $xxx.’ Focus on that too much, and you’ll never take any of your working hours to build something that might pay back more in the future.”
Are you set for 2009 with a nice foundation of recurring revenues? If not, what are you doing about it?