July 28, 2015
3 Steps to Recurring Revenue
Some MSPs more successful than others at establishing and managing recurring revenue models. Is it the services they offer? How the services are packaged? The technology vendors they partner with?
Yes, yes and yes.
It’s important to first identify what you mean by recurring revenue. A post on Inc. looks at five kinds of recurring revenue. The entry point is simply Repeat Customers. While good, you can’t always count on specific amount each month, and what’s to prevent them from going to another MSP? The goal for many MSPs is Recurring Revenue with a Contract.
1. Services Offered
Most MSPs agree that Total Data Protection solutions are instrumental to establishing a strong recurring revenue model. It’s a solution that businesses must have, it’s a solution that’s easy to sell, and with a cloud-based component, it’s easy to establish a recurring billing cycle.
For Atlantic, Tomorrow’s Office, “Backup and recovery services really helped us gain additional recurring revenue and bring new clients on board. It would be key to the growth of any company’s reoccurring revenue.”
2. How Services Are Packaged
Some MSPs find that the HaaS (hardware-as-a-service) model matches better with how businesses structure their spending. This enables businesses to commit to a monthly service fee without an upfront capital expenditure, that often needs layers of approval.
London-based Foration is experimenting with what they call “IT in a box”. The ability for the MSP to market and sell a structured set of solutions eliminates the need for complex customisation, thus making it easier for the customer to comprehend and easier to implement.
3. Choosing Your Technology Vendor
MSPs should look for technology vendors that will support how they want to bill their customers. With the growing HaaS model, for example, it’s key that a vendor offer a variety of solutions at varying price points, from entry-point to large enterprise. Also look for a vendor who offers fixed cloud pricing, this will make it easier for you and your customer.