Getting Started with Recurring Revenue

Episode 2 with Christine Thatcher

In this episode, Christine and I chat about how you can get started in creating your own recurring revenue income. We discuss what's worked for us and the options and streams we can tap into as designers and web developers.

For many, creating a form of recurring revenue is the beginning of finding freedom as a freelancer, not only can be an amazing way to take the pressure off finding new prospects and projects, but it can give you a consistent way to earn money and make longer-term business decisions.

Corey:
Hello guys This is Corey and Christine again from beyond freelance, thank you for joining in and listening or watching whatever you're doing or today for a question that we're gonna try an answer is what recurring revenue options should we recommend? Someone mentioned passive income related to this too, and I wanted to just start off by trying to explain that I think these two terms get lumped together and they're really quite different. And the idea with recurring revenue that stuff that you do ongoing and there's work involved, thats getting someone on a retainer or doing ongoing work, whereas a passive income is essentially getting money with doing no work, now up me and Christine were talking about this already. I'm not sure that there's any real win out there where you do no work and you magically get money. There's normally a... It's normally a lot of work involved, but the idea with the passive income is that it's places where you're essentially getting work for stuff that you alter done up front or for lower touch. And so, I think Christine that's a good thing to sort of chat to you about because one of those real big obvious places where passive income scenario sort of works is creating something big up front, like a book or a course which you've done and obviously with that is a lot of initial work, there's a lot of I guess risk involved as well as that sort of stuff but I thought I just to chat to you and get your thoughts on creating a course because that probably a big one for people to sort think about with passive income. Is that something I should go... I thought,

Christine:

Yeah, when you were talking, I was thinking about the difference between one-on-one, and leveraging your time leveraging your work. And I think that creating a course kind of falls under that. The hope of the income will that you're working in a leveraged way, and that you're gonna get a return on that time invested. And it's funny, I started designing to delight. I think the idea came around around 2015. I created the course did a beta run, didn't have... I had three really, like a launches under 10 and was ready to quit, and one of the things I discovered around creating courses is that I did not have a product problem, I had a marketing problem.

And so I think one of the big things that you take on when you create that when you're gonna do work in that way, leverage that you're gonna hopefully sell to a wider audience. Or You was saying lower touch, like lower price, more people... Go wide, you have to have your marketing dialed in, you don't have to but I mean this is not not going to be success. Where one-on-one, it's like you have a higher priced item that you're selling to one person, you or a smaller maybe small group mentoring or whatever, it's a little... I wouldn't say it's an easier sell, it's just it's the difference of being I think going deep and going wide. The marketing really need needs to be dialed in. And so like you said, I do get reoccurring for passive income, from those payments, but I've already done all that work. Yeah, so when you go... Oh, I had a lunch and it was 50 grand or whatever it was. I can guarantee those people have already put in that much or more time into that.

Corey:

Yeah, and also, like I said before, there's a risk element whereas with recurring revenue, we'll also to talk about some of those later, but with the recurring stuff versus something like writing a book or creating a course, or our product or something that you can sell up a SaaS product or maybe you wanna create a proposal templates or whatever. Those things are going, that's upfront cost, and there's risk involved in obviously for you that could have you might have spent 50,000 worth of your energy and time and you could have lost all of that, but then hopefully the idea is that you recoup more than that, something with that too. Is that around that idea around passive income? And how I put a bit of a question mark there. It becomes like lower touch for you now, once that that product is launch but you still need to nurture stuff and there's still work involved.

Christine:

Yeah, yeah, I would say the course. To me, he doesn't really feel like passive income is it's just... So much work, but I do have another product that is like a lower price that it has an automatic funnel running. So I guess you would call that passive income but without constantly getting people into my funnel, promoting my business to get people into my funnel, there's no sales. So it may be passive in the way that it's set up, but I have to actively get people into the funnel in order to get it in front of people, so it's never really truly completely passive.

Corey:

No, yeah, so there's some work involved in outreach or marketing to try and keep that at the top of people's minds, or else is gonna drop off so that passive income stream is going to dry up. That we sort of does improve that point that it is nothing is fundamentally perfectly, perfectly passive you know.

Christine:

Yeah, yeah, and I think the lower you price, it's almost just as much work to create something low price. In a sense. And so I think that if you're gonna go with lower price, you have to think about how many people you have to reach yeah, yeah, when I talk about my bigger course, I have to sell two, if I talk about my workflow, I have to sell to make the same as selling two. I have to sell like 15. So, it is, even though it's passive, it's a lot of work to get 15 sales.

Corey:

So I was just gonna quickly point out what I can see in the world is really easy. Passive income options for people, just in case they had never thought of them and some of the really obvious... And they're probably right in front of your face, but most of those sort of things are things that you can actually on sell and charge extra for. So, really good example is printing costs. If you're a graphic designer, it's actually harder. I believe it's harder for graphic designers to find some of these things than it is for people in the web world. There's a lot of digital stuff, that is really, really well set up for passive income, and also recurring revenue, which is again, talk about that part, recurring revenue stuff externally, in this conversation. But after... But, so some of those things could these things like printing, hosting, domain names, any thing that you do where you can just kind of add costs on... Maybe you set up a wholesale reseller account with someone and you're selling domain names and SSL certificates and those sorts of things and you're just actually adding costs on top. And there's things like creating products or maybe... Or even if it's just a lot guys that don't get approved, if you've created them, you could put them on marketplaces and actually sell them again... Again, with a lot of these things.

Christine:

Design fonts

Corey:

Yeah, all of those things. They're probably not going to go very far without some sort of marketing behind them. And, obviously, when we look at something like what you've done Christine, the bigger the ticket item and more you invest upfront into that the more marketing, you're probably need to do to recoup some of those costs. So for example, if you have created a logo or some vector assets and you put them on an a site that actually sells those things for you and you can let them run that and you might make a little bit of money, that's a passive income stream.

So yeah, I think I'd like to move on to what I consider Recurring Revenue. This is something that I do a fair bit of. I think the differences with those sorts of things, are they're actually just tasks that we do and spend our time on the customers come and pay us for and it's trying to guess essentially not lock them in, but get them to sort of sign up for our time, and then you can guarantee that income and that gives you some security around what you're earning that might help you scale and those sorts of things.

Christine:

It gives you a baseline every month.

Corey:
Yeah, that's exactly it. That that's a really important thing with that. And so, those thoughts of services are broader and I think, there again, they're more obvious in the digital space so that stuff like SEO and stuff like care plans. Again, that care plan gets a little close to passive income, because there's a lot of the care plans you can do, essentially, you set and forget stuff, you can have or very low-touch because you're going in... And if you've got 50 clients on your care plan you're going in and you're just updating plug-ins or whatever it is doing those.

Christine:
Sometimes you can get someone else to do that for you and then you just mark it up. If it's not like your thing exactly, you're just the one responsible.

Corey:
Exactly, you can hire a VA or if you've got a staff member that can do that sort of stuff, and you essentially find someone else to do that work. But yes, that's a very good point that brings up that risk factor again with the other passive income stream with courses and stuff, and there is that risk factor involved. But yeah, with the care plan, some people will package things like time in with those things that, as far as like I'll do one hours work of updates or two a week were to update for "X" ammount of dollars and then you can start to see... That's not very passive that's... That's work.

So things like SEO, things like content creation maybe you're doing social media, it could be content creation stuff or maybe it's managing accounts maybe you're doing pay per click so there's just a whole range of ideas that you can just find for recurring revenue options. What else, like email marketing for people.

Christine:
Would you consider a retainer for design, where you got a client who's a good established or whatever, and then they need you a certain amount. I remember you had maybe you can address this. You had a really good response months ago about retainers being about paying is the difference, but time and availability, it comes to recurring revenue.

Corey:
Yeah, that's really good one. So that's essentially like I was saying before, I think all of the stuff that I've just said then they're all more related to these digital stuff like web designers, and people that make websites.

When your graphic designer, it's harder to find those things. And generally it's a retainer, so that's a recurring revenue situation there. And it's hard for people to sort of work out how they can do that. 'cause obviously was something like SEO you can sell that as a monthly thing. If you stop doing this, you're going to start losing traffic. If I stop producing your social media content, or stop managing your social media feed, you're going to fall off the map, so it's easier to sell those things

Christine:
And they are kind of contained too, like you can set a parameter around what the work is involved, every month on that...

Corey:

Yeah, and something like SEO that clients are probably never going to send a request for. You're like doing the stuff in the background, they're not like going "Can you do this, can you do this?" You're actually just doing the work.

So with the graphic design and the retainer stuff, the way that I see that it's trying to set a way to make it so that you can sell it, you wanna make it so that as this incentive in there, and I think one incentive that people often do is make a price cheaper. So, they'll say I normally my normal rate is $150 an hour. If you're willing to sign up for five hours and a week of five hours a month, I can do the cost at $120 an hour. And you'll save monet and thats your incentive.

Some people will do that. And the thing that I think you're replying offering to is just the idea that I've talked about a few times which is that in that one of the main selling points that you can give to someone is your availability. So if someone is sending me random requests, it's like, Okay, I might be able to do that by the end of next week. Like we're busy. If you're on a retainer what you're buying into a what you're getting... As a part of that as a benefit is that we will do the work within this amount of time, we're allocating that we can do that week in week out. So that's really it.

Christine:

And then they will lose they'll lose if they aren't prepared versus somebody who might be just like on an hourly retainer trading time for money. It's like what happens if you... 'cause it does happen if your client isn't ready with whatever it is that you're supposed to work on that week, and you make yourself available. You have to think about what, what what happens there.

Corey:
Yeah, and I've thought of this before with our design retainers I've set it up works for me and this is the process that I have and that's essentially that we set a minimum term. Normally three month or six month depends on the conversation, and within that we allow for... Because there is a big question like someone wants a retainer. What if I don't spend that time?

So we have some flexibility. It depends on how hours someone is booking in but generally they're any booking in a couple of hours a week, or like maybe couple of hours a month. And it's people that we just do regular stuff, for and then... And so what we're saying is, you can roll over week-to-week, but not month-to-month, so if you don't give me something to do this week, then I can do four hours for you next week. But at the end of the month. Those eight hours, if you've done nothing with me and we've done no work for you that can't just keep transferring. So at the end of three months, we've got 24 hours worth of work to do in one day, that's not going to happen. And so, yeah, I think that's a fair way to do that. And then what we do is at the end of each sort of three months we step back and actually assess how much time someone's using because if they're using more time they get build accordingly, and if they're not using enough time, then that's not ideal for them either. So we're trying to make sure... And that's just the way that we sell with that. So it's like we're not just going to ping you for life and just keep invoices for work that no one's doing but for some people, they're not using all of their time, but it's enough for them to sort of be able to guarantee that they can get that work done, and I don't have to think about it.

It's not a huge amount of... Of money that they're investing, and they know if they've got something. Its often where they have a relationship, or business, it up where someone, a staff member, can actually email us? Maybe it's like a communications manager and they dont need to get approval and stuff that's just be just sending this and we can turn around and do it.

Christine:
And that's kind of nice comfortable work that's a nice way to, it's a nice mix when you have something establish, the brand, the person you have a good relationship and you can kind of just you can mix in with your stuff that takes more mental energy or whatever you can, they have those kind of production days where you work on the recurring revenue work.

Corey:
Yeah, so I think I... That's probably the most that I can give around recurring revenue and passive income. Like breaking down those differences is really important and it's just really like looking for the services that you have. And trying to find ways that you can actually package those up so you can sell them to people.

Christine:
Wouldn't you say recurring revenue is like that, similar to that one-on-one sale? And maybe how we're defining it in this conversation in the past is more something that is... So one thing, sold wide is that.

Corey:
No, I totally agree. And that's probably, again, if you go back to some of those ideas that we just chopped around with making a font you're never going to be able to make that profitable, by selling that to one person,

Christine:
So you might sell SEO to 50 people, but you're selling it individually. One at a time. And establishing that baseline of clients to create that raking revenue where the passive stuff is more of a one thing that you're trying to leverage.

Corey:
Yeah, and I think with the recurring revenue, I think it's really important that that's really closely related to the service that you offer like you've done so to go and stretch yourself too far and think, Well, or other people do that and they make recurring revenue. So for example, Peck campaigns. Do you wanna actually do AdWords do you want... Do you want to offer that service, do you wanna spend that time doing that? That's not something that we do, I don't do it, I personally I'm not interested in it if I have clients that need that sort of stuff. I've got preferred suppliers, we all work together, we have an open relationship. No one's white-able, it's all good. But I think it's really important that if you're going to start to try and look for recurring revenue options that they're just really in line with what it is that you do, so you're not mixing your message, you're not over complicating our process, we just talk about the processes before.

Christine:
Yeah, to be honest I hate hosting issues and launching... And to me, that was the first thing I handed off and I honestly, I don't think I've launched the website in six years because it's just Ian't, I just don't enjoy it. So that's what I always outsource. And so for me to be somebody who manages people's host thing, that's not in line with who I am and what I enjoy. And so for me, it was like not something that I was really that interested in offering. I would rather give that off or outsource it, or whatever to someone else just because it just didn't line up with who the kind of work that I do.

Corey:
Yeah, and that reminded me, stuff like affiliate marketing, that's again, that's a big passive income thing that people talk about. I don't think it's hugely related to our industry. I think that's almost like an entrepreneur or someone that's like a social influencer. Potentially with what you've done, where you've created a course there would be opportunities for someone like you to be able to promote people, and make money from affiliate marketing and... But I generally for person that's running a small studio or a freelancer again, they're almost like, "Don't fall yourself in trying to go out and find these things that, here are the people are talking about that don't really align to the work that you do.

Christine:
And to that point, I really feel like that they were two separate businesses. Two separate audiences. It is possible to create like a passive product to a client base that you're already serving. For me, they were completely separate businesses. It was really hard to switch back and forth between the client work, the one-on-one stuff and the passive stuff, it was almost easier to just take one and run with it or take the other and run with it. The energy involved. So that's just my own personal experience that I always found myself wanting to do one or the other, but it was difficult to do both.

Corey:
Yeah, you can't spread yourself too thin. We've just list it out all ideas around, We're remember you're passive in comments like that if you wanna just focus on things to work for you, and I think that's related to what you're doing, if you can find that recruiting revenue source that compliments what you're already doing, that's the best place to start, I think.

Christine Thatcher

Christine has more than 20 years of experience, and in that time she's honed her skills and created cohesive brand experiences over web, identity, print, and other media platforms for businesses of all sizes. She can be found at: www.christinemariestudio.com
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