30 Unique & Inspiring Recurring Revenue Business Ideas
You're an entrepreneur or business owner. And today's the day when you run the numbers for your business.
Normally, this is an Asana task that you change the due date on at least twice. It's never fun to confront all those ups, downs, and refund requests.
But today, something feels different. You feel optimistic for some reason.
So, you login to your Stripe dashboard to see how your business has performed over the past 6 months. As you pull up your revenue graph, you notice something strange.
Instead of seeing the dramatic peaks and valleys you're used to, you see a steady line that's trending upwards. When you dig into the numbers, you realize that your business has started to earn $30,000 per month consistently!
You realize that the membership offer you put together last year is now wildly successful. As a result, it's created a super stable and predictable form of revenue for your business.
As you breathe a sigh of relief it dawns on you…
You've finally achieved the predictable recurring income you've been chasing for so long. Gone are the sleepless nights and awkward conversations with your accountant. It's even looking like you'll be able to pay off your mortgage earlier than expected.
This sounds pretty good, right? This idea of consistent, predictable, and stable revenue? Here's the good news: this doesn't have to be a pipe dream.
This is the power of building a recurring revenue business. And that's what this article is all about.
In it, you'll discover:
- What recurring revenue is
- A simple example that illustrates the power of recurring revenue
- The pros and cons of recurring revenue businesses
- 30 unique recurring revenue business ideas
- And much more!
If you're looking for ideas and inspiration about how you can create this type of recurring revenue, this article is for you.
Let's dive in.
What Is Recurring Revenue?
To kick things off, let's take a look at what recurring revenue is all about.
Recurring revenue is the income a business generates by selling products like memberships, subscriptions, or retainers. These types of products are billed on a repeating and scheduled interval that you define as the business owner.
For example, a recurring revenue product can be billed daily, weekly, monthly, quarterly, or annually. The key characteristic of a recurring revenue product is that access to a product, content, or service is directly linked to the continued payments of your customers. Meaning, if someone cancels their membership, subscription, or retainer, they'd lose access to your product or service.
One of the most attractive things about recurring revenue is that it can provide a stable financial base for your business. Instead of continually finding new customers to buy your products, you can focus your efforts on retaining your recurring customers and maximizing their lifetime customer value.
That said, building a recurring revenue business is no cakewalk. While you might not need to find crowds of new customers each month, you will need to develop strategies to fight churn and increase your customer retention rate.
Recurring Revenue: A Simple Example
As an entrepreneur, you know how chaotic and unpredictable building a business can be. There are so many ups and downs on the journey to success.
That's one of the reasons so many entrepreneurs have woken up to the power of recurring revenue. Recurring revenue can be an extremely stable and predictable form of income for your business.
Here’s an example that illustrates the main benefit of recurring revenue.
Imagine that you're an online retailer who sells coffee. In order for your business to be profitable, you need to earn $20,000 per month from your coffee sales.
For the sake of simplicity, let's say that your coffee sells for $12 per bag. And, the majority of your customers buy two bags of coffee from you. Therefore, in order for you to earn $20,000, you'll need to sell 1,667 bags of coffee to 834 customers each month.
Over the course of a year, that means you'll need more than 10,000 total orders to meet your revenue goals.
That's a lot of orders!
But here's the thing: this is how things would look using a regular, individual purchase model. Things start to look a lot different with a recurring revenue business model.
Now Let’s Bring Recurring Revenue Into The Picture
Sticking with our same example, let's imagine that you decide to offer a coffee subscription to your customers.
For $24 per month, you'll send two fresh bags of coffee straight to their door. And because this is such a great offer, you get 834 of your most loyal customers to sign up right away. Now, you have a recurring revenue base of $20,000 per month! Woohoo!
But not so fast… remember how we mentioned churn and retention above? Even though recurring revenue is a very stable form of income, you will experience people cancelling their subscriptions.
Churn rates can vary wildly depending on your business and industry, but let's say that your coffee subscription business has a churn rate of 10%. That means that out of your 834 subscribers, about 83 cancel their subscriptions each month.
So, in order to maintain your $20,000 in revenue, you'll need to add at least 84 new subscribers to your business each month. That said, over the course of a year, you'll only need to add about 1,000 new subscribers to your business to stay profitable. That's only a tenth of what you'd need using an individual transaction model!
Are you starting to see the power of recurring revenue?
The Benefits of the Recurring Revenue Business Model
Now that we've defined recurring revenue and examined how it can look in your business, let's take a look at some of the main benefits of recurring revenue.
1. Predictable Cash Flow
A recurring revenue business model can provide you with a more consistent and predictable form of income. This can help stabilize and simplify your financial planning, budgeting, and growth decisions.
2. Increased Customer Lifetime Value
The main goal of a recurring revenue business is to build a long-term relationship with your customers. When you do this successfully, you can dramatically increase the lifetime value of your customer. Instead of focusing on one-time transactions, recurring revenue businesses aim to build what Robbie Kellman Baxter calls the “forever transaction.”
3. Growth & Scalability
Because of the stability and predictability of recurring revenue, this business model has the potential for scalable growth. When you have real data about your lifetime customer value, customer acquisitions costs, churn and retention rates, you can accurately plan and prepare to scale.
4. Customer Friendly Pricing
Another great thing about the recurring revenue model is that you can create approachable pricing plans for your different categories of customers. Because a customer is billed monthly, they don't have to pay for your entire product up front. Charging $50 a month can be easier for people to consider, versus asking for $600 up front.
5. Improved Customer Engagement
Recurring revenue businesses tend to require ongoing interactions with your customers. This creates a lot of fantastic opportunities for engagement, feedback, and personalization. Each touchpoint you have with your customers is an opportunity to strengthen your relationship, better understand their needs, and meet emerging demands in the market.
6. Competitive Advantage
Creating a membership or subscription model for your business can be a great way to stand out from a sea of competitors. This is especially true if most of your competition offers one-time purchases. Plus, if you succeed in delivering an amazing experience to your customers, they will be more likely to stick with you instead of exploring your competitors' options.
7. Increased Business Valuation
Recurring revenue business models are highly valued by investors and potential acquirers. The predicate and steady cash flow generated by membership and subscription businesses can greatly enhance the overall value of your business. Don't believe us? Check out this in-depth interview with John Warrillow – an expert in buying and selling recurring revenue businesses.
8. Ability to Upsell and Cross-Sell
Selling additional products or services to your existing customers is a great way to increase the profitability of your business. This can be much easier to do when someone already has an active membership or subscription with you. For bonus points, you can create a 1-click upsell that takes advantage of “card on file” functionality and doesn't require your customers to add their credit card details. This can make for an easy and enjoyable buying experience for your active customers.
9. Flexibility for Growth & Innovation
With the steady and predictable cash flow you get from a recurring revenue model, you can be a bit more flexible when it comes to developing, growing, and investing in your business. This can help you continually evolve your product as the needs of your customers change.
10. Enhanced Customer Data & Insights
Recurring revenue business models create many opportunities for first-party data collection. This can give you insight into your customers' behavior, preferences, and needs. With this data in hand, you can optimize your marketing strategies, improve your products and offers, and drive business growth.
The Challenges of the Recurring Revenue Business Model
As you can see, there are many incredible benefits of the recurring revenue business model. That said, there are some unique challenges that come with this model as well. Before you decide whether or not to go all-in on building a recurring revenue business, let's take a look at some of the downsides of this model.
1. Initial Customer Acquisition Costs
Building a loyal membership or subscription base is no easy task. It can require a significant upfront investment in product development, marketing, and customer acquisition. One reason for this is that it takes time to recoup your expenses with a recurring revenue model. Because your customers are paying for your product or service incrementally, it can take months or years to recoup the investment required to acquire a customer.
2. Churn & Customer Retention Challenges
Remember how great an ever-increasing lifetime customer value sounded? Well, churn and retention are the foes you'll need to conquer in order to reap those benefits. You'll need to ensure you have an excellent product, stellar support, and strategic onboard to ensure your new customers see the value in your product and start actually using it. Otherwise, they'll cancel their membership or subscription.
3. Increased Customer Support Demands
Recurring revenue businesses typically provide products or services that are designed to be used continually. Because of this, this model can require a higher level of customer support. Plus, your customers are paying you each month or year, so they'll expect more support from your business. When done right, your customer support can increase retention. Done poorly, and it can be the main reason someone churns as a customer.
4. Market Saturation & Competition
We're not going to sugarcoat this one. Recurring revenue businesses like memberships and subscriptions are everywhere in 2023. And “subscription fatigue” is a real thing. As you do market research, try to get a sense of what pricing options your competitors offer. And speak with real prospective customers to learn whether or not they'd prefer a recurring revenue or one-time transaction model from your business.
5. Pricing & Value Perception
Setting the right price point for your recurring revenue offer might be one of the biggest challenges you face with this model. It can be so hard to get it right. You need to ensure you're providing enough value to your members or subscribers. And at the same time, your pricing needs to be high enough to keep your business afloat. Our advice is to test a few different pricing options and check to see which attract your best customers.
6. Revenue Dependency on Customer Base
With the amazing stability that comes with the recurring revenue model also comes the potential for stagnancy. If you hit a growth plateau, it can feel impossible to get your business to the next level. An important metric to keep an eye on here is your churn-to-retention ratio. If you begin losing more customers than you acquire, your business is heading for trouble.
7. High Customer Expectations
We alluded to this earlier, but members or subscribers often have higher expectations of your business compared to one-time customers. Because they're paying on a recurring basis, they expect ongoing value, regular updates, and continuous product improvement. Make sure you have a plan in place to meet or exceed your customers' expectations so that they remain satisfied.
8. Regulatory & Legal Compliance
We're not lawyers, so don't take this as legal advice. But certain industries or business models involving recurring revenue come with specific legal requirements. Before you start a membership or subscription business, make sure you understand what it means to be in compliance with your data protection, privacy, and subscription cancellation policies and laws.
9. Financial Risk with Long-Term Commitments
Specifically in B2B contract-based recurring revenue models, you may face financial risks if customers default on their payments or if market conditions change. This could make long-term contracts less profitable or burdensome for your business.
10. Limited Flexibility in Pricing or Offering Changes
When a customer signs up for your membership or subscription at a certain price point, that's the price they'll expect to pay forever. This can make it extremely challenging to make significant changes to your pricing plans and product offerings. If you do decide to raise your prices or change your offer, expect to get a few strongly worded emails from your long-standing customers.
30 Unique Recurring Revenue Business Ideas To Get You Started
Nowadays, nearly any type of business can become a recurring revenue business. That said, we wanted to give you a comprehensive list of recurring revenue business ideas. We hope these ideas stoke your imagination and show you the power and flexibility of this business model.
To keep things simple, we’ve divided these recurring revenue business ideas up into 7 main categories:
1. Niche Communities: Creating a place for people to connect about their passions and interests is a fantastic idea for a recurring revenue business. Longtime MemberMouse customer Backpacking Light is a great example of this. Remember: the more specific your niche, the better!
2. Art Classes & Instruction: Learning how to paint or draw can be a lifelong pursuit. If you’re an artist, why not create a membership where you can share your knowledge and expertise with aspiring creatives?
3. Online Tutoring & Education: Imagine you’re a kid who lives in a small town. You dream of going to MIT to study robotics. But there’s no one in a hundred mile radius who can teach you advanced mathematics. Finding an online tutor who can help you ace your exams makes a ton of sense.
4. Personal Coaching & Mentorship: Whether you want to improve your mindset, eliminate bad habits, or achieve a big goal, coaching and mentorship can help. Offering your coaching services as a membership can be a great way to build long-term and profitable relationships with your clients.
5. Mastermind Group Membership: Masterminds are incredibly popular among successful entrepreneurs and business owners. In fact, many people pay upwards of $25,000 – $50,000 per year to be members of these elite groups. Could this be your breakthrough idea?
6. Online Courses: Just because you offer online courses, doesn’t mean you need to sell lifetime access to them. In fact, we’re seeing more and more people sell limited access to their courses on a monthly or annual subscription model, so much so that we even include our own Courses builder and LMS with MemberMouse.
7. Software as a Service (SaaS): Subscription pricing has become the norm for software companies. If you can make your tool a “must have” in the tech stack of your customer, you can often create a customer for life. Think about companies like Adobe, Google, and Notion.
8. Exclusive Content: If we’ve learned anything from the “creator economy” it’s that people are willing to pay for just about any type of content. Simply browse through Patreon or Substack if you need proof! As long as you can consistently provide content people want, you can charge a recurring fee for it.
9. Stock Media Subscriptions: Have you ever scrolled through a standard stock photo or video site? If so, you know the options can be somewhat underwhelming. Nowadays, it’s becoming more and more popular for niche creators to build their own stock media platforms. If you’re a talented photographer or videographer, this could be a wonderful recurring revenue business idea for you.
10. Web Hosting & Domain Services: Web hosting can be an incredibly profitably recurring revenue business. That said, there is a major learning curve required to start this type of business. Make sure you know your stuff before you go with this business idea.
11. Special Interest Magazines: Think your idea for an online magazine might be a little too niche? Think again! We’re seeing special interest magazines create small pockets of superfans. For example, Digits & Threads is an online publication built with MemberMouse that focuses on the Canadian fiber and textile arts and crafts. How’s that for nailing down a niche!
Physical Subscription Boxes
12. Specialty Food and Drinks: Do you have a passion for hard-to-find Belgian ales? Or maybe you’re obsessed with Japanese snacks. Chances are, there are many other raving fans out there who’d love to have a box of their favorite goodies show up on their doorstep each month.
13. Hobby & Craft Supplies: Did you know that 641,000 people search Google for hobbies each month? What if you offered a hobby or craft subscription box that introduced people to their new favorite pastime? This idea could be a winner!
14. Health & Wellness: Keto, Paleo, Vegan… these days, people are passionate about their unique approach to health and wellness. But it can be hard to find products locally that support these unique lifestyles. Why not make it easy for these folks to explore these diet-friendly products?
15. Books: We all know someone who’s really into a specific genre of books. They speed through fantasy, mystery, or self-help books like it’s their job. A monthly subscription box that sends a new title to these avid readers could be just what they’re looking for.
16. Children’s Educational Kits: There’s only so much Cocomelon or Ms. Rachel that you can let your kids watch (and that you can tolerate!). Children’s education is a gigantic market and the perfect fit for a monthly or quarterly subscription box.
17. Maintenance Services: This might sound boring, but there’s good money in offering regular maintenance services for things like house cleaning, pool maintenance, and landscaping. Sometimes the best recurring revenue business idea is an old one!
18. Personal Wellness Services: When someone is ready to take their health, fitness, or wellness seriously, they can be in the perfect place to sign up for recurring packages like personal training, meal planning, or meditation guidance. Plus, the accountability they’ll get from you can help them make meaningful progress towards their goals.
19. Investment or Financial Planning Services: Are you a financial planner or investment advisor? If so, you’re in a field that’s well-suited for the recurring revenue business model. As you provide expert level guidance to your clients, you can often create profitable relationships that last for years.
20. Marketing Services: For anyone in this field, you know that marketing isn’t a task you do once. It’s something that needs to happen each day in a business. In fact, marketing tasks are what Robbie Kellman Baxter calls a “forever problem.” Now it’s up to you to create a “forever solution” in the form of a recurring revenue business.
21. Premium Technical Support: Running a successful online business often requires advanced knowledge of highly technical skills. If you’re an expert in a key tool a business needs – like WordPress or HubSpot – you can offer retainer packages that create recurring revenue for your business or consultancy.
22. Product Replenishment: This approach combines the best of the transactional eCommerce model with the recurring revenue model. If you sell a product that people use on a regular basis – like pet supplies, cosmetics, or coffee – you could consider offering them on subscription.
23. Curation Model: This is a fun one! If you’re an influential person and people trust your taste, you could offer hand-picked products based on your customers’ preferences. This could work really well for fashion, home decor, and health & wellness brands.
24. Access Model: In some industries, people are willing to pay for exclusive access in addition to products. Maybe you have a line of “private reserve” products or want to let your most loyal customers skip the line. Offering an “exclusive access” subscription could be a great way to add recurring revenue to your business. The hot sauce company Fly By Jing has a great example of this.
Mobile App Subscriptions
25. Productivity Apps: In the age of infinite distractions, people are turning to apps to help them focus and get things done. If you have a unique approach to productivity, why not turn it into an app? The popular app Habit Tracker charges $34.99 per year for access to their app. With a few thousand subscribers, you could create a nice recurring revenue stream.
26. Mobile Games: Sometimes you just want to kick back and mindlessly play a game for a bit. And customers are certainly willing to pay to play. Just ask the millions of people who play Candy Crush each month.
27. Health and Fitness Apps: An app that helps people stay on top of their health and fitness goals is a great idea for a recurring revenue business. You could offer a standalone app. Or, you could bundle it into a bigger membership or subscription business.
28. Language Learning App: Maybe it’s an important business trip to Germany. Or maybe it’s a culinary tour of southern Italy. Or maybe it’s simply a lifelong dream to learn Spanish. Either way, people are always looking to learn new languages. A mobile app subscription that helps someone sprechen sie Deutsch could be a great idea for a recurring revenue business.
Professional Marketplace Subscriptions
29. Job Boards: If you’re an expert in your field, chances are people are routinely asking you for referrals, like: “do you know where I can find a good copywriter, designer, developer, etc.” In this case, it can be a great idea to create a job board where you can connect clients with contractors. The Digital Business Manager Directory is a perfect example of this.
30. Freelance & Agency Services: Another recurring revenue business idea in the professional marketplace space is to build a platform that connects business owners with freelancers or agencies. MemberMouse customer John Doherty did just this with Credo and built a very successful business.
How To Build A Recurring Revenue Business
As you can see, the sky's the limit when it comes to building a recurring revenue business. The good news is that if you’re looking to build a membership or subscription business, there are many great tools and resources available to help you.
One of the most popular ways to build this type of business is to use the tools available in the WordPress ecosystem. This is especially true if you want to create a content, community, or online course business.
There are a few basic tools you’ll need in order to build a recurring revenue business with WordPress, like:
- A WordPress host that can handle the unique requirements of a recurring revenue business
- A powerful and easy-to-use theme to design and style your site
- A WordPress membership plugin to handle content protection, recurring payments, and member management
While we don’t provide hosting or themes (there are a TON of great companies out there who do), we do happen to know a thing or two about membership plugins.
If you’re looking for a platform that can support the growth of your recurring revenue business, we recommend checking out all the features of MemberMouse here. Our platform has been designed from the ground up to support entrepreneurs building recurring revenue businesses of all shapes and sizes.
We hope you’ve enjoyed this in-depth guide about recurring revenue business ideas. We covered a lot of ground in this article and appreciate you sticking with us.
By now, you should have a much clearer picture of what recurring revenue is, how it can look in your business, and its pros and cons. Plus, with the 30 recurring revenue business ideas we gave you, you should have a few ideas and a spark of inspiration to start building your own membership or subscription.
If you have any questions or comments you’d like to share with us about this article, please leave us a comment below. If you liked this article, be sure to follow us on Facebook, Twitter, and LinkedIn! And don't forget to subscribe to our blog in the box below.
Matt is our enthusiastic Content Manager here at MemberMouse. Originally from Chicago, Matt now resides in the Pacific Northwest with his wife and cat. He loves reading, writing and getting outdoors.