Recurring Revenue Model: Benefits of Investing in Recurring Revenue Businesses

As a franchisee, you want to make the most of your business investment and be competitive in whatever market you enter. Having a solid, reliable business model that can support your desired growth is vital to the long-term success of your business. One effective way of getting this reliability is by using a recurring revenue model. In this blog, we’ll look at how a recurring revenue strategy works, different types of models, and how they benefit a franchise like Altitude Trampoline Park.

Recurring Revenue Overview

A recurring revenue model is a business strategy where you charge regular fees in exchange for regular access to goods and/or services. The model has been growing in popularity, though it’s uncommon outside the business-to-business market. According to a report from data management software provider DigitalRoute, subscription-based businesses (a type of recurring business model) were growing 4.6 times faster than the S&P 500 as of 2023. Despite this growth, DigitalRoute’s report goes on to say only 24% of businesses worldwide used subscription models, so there’s a lot of growth opportunity for those who adapt early.

The main purpose of this business model is to provide steady revenue flow to your franchise while offering convenient and dependable services to your customers. There are several different ways to do this; let’s look at several of the most popular ones:

Multiple Models

Different types of businesses and franchises have different needs, so recurring revenue models come in multiple forms:

Subscriptions: A customer pays a regular fee and receives consistent services or products. This model is popular with media companies and software-as-a-service (SaaS) providers.

Memberships: A customer pays a regular fee in return for exclusive or special benefits. Altitude uses this model, allowing its franchisees to offer special bonuses for regulars who pay for a membership for services unavailable to walk-in customers.

Usage-based: Customers are charged different fees depending on the amount they use a service or product. Utility companies and cloud service providers often use this model.

Freemium: Customers are provided with a basic service or product for free, while encouraged to purchase advanced features and services. Software companies, particularly SaaS providers, are among the biggest users of this model.

Retainers: A customer is charged a recurring fee to retain services or access to products as needed. Consultants, legal services, and third-party administrative services will use this model with clients who require intermittent service.

Licensing: Customers pay a licensing fee to use a product or service, frequently for professional use. This is one of the few models that lends itself to B2B businesses, such as software companies that license their programs to other companies.

The Benefits of Recurring Revenue

Businesses and franchises with recurring revenue streams, like Altitude, receive several perks from having a steady and reliable flow of revenue. Having reliable revenue makes financial planning easier, as well as ensuring your business or franchises’ financial stability. A franchise like Altitude also sees improved customer retention, since its memberships encourage regular visits to build up a good relationship with your customers and improve the overall reputation of the brand.

Regular revenue also serves as a good foundation for scaling your franchise. The combination of being able to budget for expanding a location or opening a new one and more easily build up the seed funding to do so is a boon unique to businesses and franchises with recurring revenue built-in, like Altitude. Lastly, regular customers and offering special/exclusive/premium services like the ones Altitude offers through its membership provides upselling opportunities, enabling franchisees like you to encourage walk-in customers to become regular visitors.

Get Firm Financial Footing with Altitude

There’s a place for you on our franchising team, and we’re thrilled you’re interested in joining. We’re ready to provide you with everything you need to start your Altitude location, with multiple revenue streams, including special offers as a membership business. You’ll receive all the training you require to open and operate your own trampoline park, and administrative services to help you keep the behind-the-scenes systems running smoothly. Fill out a franchise form today to learn more about your franchising opportunity with Altitude.

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