5 Ways to Boost Recurring Revenue

In order to grow your business and stay competitive, recurring revenue must become part of your business model. Annuity services, payment for project delivery and pay-per-use are just a few revenue types that can boost your recurring revenue.

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5 Ways to Boost Recurring Revenue

“Recurring revenue is king,” said J B Wood, CEO of  Technology Services Industry Association (TSIA), at this year’s PSNI Supersummit in Dallas during his session, “Shifting Business Models for the New Realities of Tech.”

Recurring revenue and the benefits it can bring integrators is not a new concept, but installers across the board are still finding it difficult to incorporate recurring revenue into their business models.

There’s no doubt there is a need for business models to transform within the AV industry. Simply installing a system isn’t enough anymore. As technology becomes more complex, clients are looking to integrators to assist with training, maintaining and updating systems.

That’s where providing services comes into play, and that’s where integrators will find opportunities to incorporate recurring revenue into their business models.

“There is a new wave of growth coming. The question is, do you want to jump on it, or not?” said Wood.

Wood shared five available revenue types that provide recurring revenue opportunities to integrators. Do you see an opportunity to “jump on the new wave of growth” and incorporate these revenue types into your business model?

1. Product

Payment for a technology asset (hardware or software)

2. Technology Subscription

Payment for access to technology, ie customer pays monthly or signs an annual/multi-year contract to lease the technology

3. Annuity Services

Payment for a service capability that is renewed on an annual or multi-year basis.

  • Managed services: Includes outsourcing day-to-day technology management to a third party
  • Support/Maintenance Services: Includes support, maintenance, repair, spare parts and warranty contracts

4. Project

Payment for project delivery

  • Professional Services: Includes implementation, integration, technology consulting and business domain consulting
  • Education Services: Includes training of customers and business partners

5. Transactions

Pay-per-use, transaction fee for an adjacent offering of complimentary modules or capabilities that extend or enhance the value of the core offer.


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Rachel Quetti is the web editor for Commercial Integrator. She also works closely with sister publications CEPro, Security Sales & Integration and Campus Safety. Rachel has previously covered educational technology and local news.

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Comments

  • This is a great way for a company to even out their cash flow. We are now looking at ways to create recurring revenue. One idea is to offer service contracts/extended warranty for those customers whose original warranty has expired.

    • Rachel Quetti says:

      Absolutely, offering service contracts and/or extended warranty is also a great way to boost recurring revenue, thanks for your comment Jeffrey!

  • bob romano says:

    Post certainly true… but to be a bit granular on the AV ecosystem from my lens, just my thoughts:

    1) Most classical AV system integrators do not have more than service contracts or staff augmentation solutions to offer because they just never developed a culture or a product plan around MRR.

    2) Most AV system intergrators do not have the correct compensation plans to compliment the recurring model, nor do most know how to celebrate a 500.00 per month sale as they are project driven- one and done.

    3) The AV ecosystem has to: teach their sales teams how to sell MRR. to develop a solid set of solutions that are Hosted or otherwise in the MRR model, to build the gravitas and marketing to make it a viable consideration for clients to stay on after the project is complete. Bottom line- they don’t know how to sustain sales efforts nor have enough arrows in the wicker to offer.

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