When COVID hit in March 2020, project-based businesses were hit hardest. Clients paused engagements, delayed decisions, and froze budgets. Businesses with only project revenue went from a full pipeline to near-zero income overnight.
The businesses that survived had one thing in common: some form of recurring revenue. Retainers, subscriptions, or maintenance packages that continued paying regardless of the chaos. That recurring base — even a small one — provided enough runway to be strategic instead of desperate.
That pattern permanently changed how I think about revenue. One-time project fees are exciting. A large engagement feels great when it lands. But it also ends. And when it ends, you are back to zero, searching for the next one. Recurring revenue — predictable, monthly income that renews without constant sales effort — is the foundation that makes everything else possible.
Here is how any service or product business can add recurring revenue to their model.
Why Recurring Revenue Changes Everything
The impact of recurring revenue goes far beyond financial stability. It changes how you think, plan, and operate.
Predictability enables strategy. When you know €8,000 is coming next month regardless of sales activity, you can make strategic investments — hiring, tools, marketing — without the anxiety of “can I afford this?” One-time revenue creates a constant low-level panic. Recurring revenue creates calm.
Compounding growth. If you add two new recurring clients per month at €2,000 each and retain 90% of existing clients, your monthly recurring revenue grows exponentially. After twelve months, you’re at €20,000+/month from recurring alone. Each new client adds permanently to the base rather than replacing a depleted one.
Higher business valuation. Businesses with recurring revenue are valued at 3-8x annual revenue. Businesses with only project revenue are valued at 1-3x. If you ever plan to sell your business or even just want to understand its worth, recurring revenue is the single most impactful lever. I discuss this more in my thinking about exit preparation.
Deeper client relationships. Recurring arrangements keep you connected to clients over months and years. You understand their business more deeply, deliver more value, and become harder to replace. This creates natural retention and generates referrals because clients who’ve worked with you for years trust you deeply enough to recommend you confidently.
Five Recurring Revenue Models for Service Businesses
Not every business can sell subscriptions. But almost every business can add a recurring element. Here are five models I’ve tested:
Model 1: Advisory retainer. You provide ongoing strategic advice for a fixed monthly fee. Includes regular meetings (weekly or bi-weekly), email access, and a defined scope of advisory topics. My retainers range from €1,500-3,500/month depending on the client’s size and the meeting frequency. This is the easiest model to implement because you’re selling access to your expertise, not a specific deliverable.
Model 2: Managed service. You handle an ongoing function for the client. Marketing management, operations oversight, financial review, or tech support. The fee covers a defined scope of service delivered monthly. Higher commitment from both sides but also higher revenue and stronger retention.
Model 3: Maintenance and optimization. After completing a project, offer an ongoing maintenance package. “We built your systems. Now we’ll keep them running optimally.” This is a natural upsell from project work and works especially well in consulting where initial implementations need periodic adjustment.
Model 4: Membership or community. A paid community with exclusive content, networking, and expert access. I’ve built this at €49-99/month for business builders. Lower per-member revenue but highly scalable. The community building approach I use provides the framework for making this model work.
Model 5: Productized service. Take a specific deliverable you provide repeatedly and package it as a fixed-price monthly service. “Monthly operations review and report: €800/month.” Same deliverable for every client, which means it’s efficient to produce and easy to scale.
The key insight: you don’t need to choose one model. I use three simultaneously — advisory retainers, maintenance packages, and a membership community. Together, they create a diversified recurring revenue base that’s resilient to any single client loss.
The Transition from Project to Recurring
If your business is currently 100% project-based, you can’t flip to recurring overnight. Here’s the phased transition I recommend:
Phase 1 (months 1-3): Add a retainer option to existing clients. Approach your best current clients: “After our project wraps up, I’d like to offer you an ongoing advisory arrangement so you have continued access to support as you implement what we’ve built.” About 30-40% of project clients will accept a retainer if the project went well.
Phase 2 (months 3-6): Include recurring in new proposals. Every new proposal includes both a project phase and a post-project retainer option. “Phase 1: Implementation (3 months, €X). Phase 2: Ongoing optimization (€Y/month).” Presenting them together normalizes the retainer as part of the engagement rather than an upsell.
Phase 3 (months 6-12): Develop a productized recurring offering. Take the recurring service you’ve been delivering individually and standardize it. Define the scope, the deliverables, and the price. Create a landing page. Make it available to clients who haven’t done a project with you. This is your first scalable recurring product.
Phase 4 (month 12+): Aim for a 40-60% recurring revenue base. At this level, your business has the stability to weather downturns, fund growth initiatives, and support strategic risk-taking.
The financial management system from Profit First works beautifully with recurring revenue because the predictable income makes allocation percentages much more reliable.
Retention: The Key Metric
Recurring revenue only works if clients stay. A high churn rate turns your recurring model into a revolving door that creates the illusion of stability without the reality.
Target retention rate: 85%+ annually. This means losing no more than 15% of your recurring clients per year. At this rate, even modest client acquisition creates meaningful growth.
How I maintain retention:
Quarterly value reviews. Every 90 days, I sit down with each retainer client and review what we’ve accomplished. Specific metrics, specific outcomes, specific value. This makes the abstract (“ongoing advisory”) concrete (“you avoided three operational crises and saved approximately €45,000 this quarter”). Clients who see concrete value don’t leave.
Proactive communication. I don’t wait for clients to come to me with problems. I surface issues proactively. “I noticed your team’s response time has increased — here’s what I think is causing it and what we should do.” Being proactive demonstrates that you’re engaged and watching, which is what retainer clients are paying for.
Continuous improvement. The retainer service should get better over time, not stagnate. I add new resources, update frameworks, and evolve my approach based on what I’m learning. Clients should feel that the value of their retainer increases over time.
The right clients. Not every client is suitable for a retainer. The best retainer clients are those who: (a) value ongoing access to expertise, (b) have evolving business challenges that benefit from regular input, and (c) can afford the commitment without strain. Signing retainer clients who can’t really afford it leads to churn.
Pricing Recurring Services
Recurring pricing should reflect ongoing value, not discounted project rates. Here’s how I think about it:
Don’t price by the hour. “10 hours per month at €150/hour = €1,500/month” commoditizes your expertise. Price by the value and scope of access you provide. “Monthly strategic advisory with weekly calls and email access: €2,500/month.”
Use annual pricing with monthly payment. “€30,000 per year, billed monthly at €2,500.” Annual framing anchors the full value while monthly billing reduces the perceived commitment. Offering a 10% discount for annual prepayment improves cash flow and locks in the relationship.
Tier your recurring offerings. Similar to the tiered pricing approach I use for projects: Basic (monthly check-in call + email), Standard (weekly calls + priority email + quarterly review), Premium (everything plus on-demand access and annual strategy day). Most clients choose Standard.
Raise prices annually. Recurring clients should see a 5-10% annual price increase reflecting the growing depth of your understanding of their business and the increasing value you provide. Grandfather timing: 60-day notice, applied at the annual renewal date.
Measuring Recurring Revenue Health
Monthly Recurring Revenue (MRR). The total of all recurring revenue for the current month. Track the trend: growing, flat, or declining?
Net Revenue Retention. Total recurring revenue from last year’s clients as a percentage of last year’s MRR. Above 100% means expansion (existing clients are spending more). Below 85% means you have a retention problem.
Customer Lifetime Value (CLV). Average revenue per recurring client multiplied by average retention period in months. This tells you how much you can afford to spend acquiring a new recurring client.
Churn rate. Percentage of recurring clients lost per quarter. Below 5% quarterly is healthy. Above 10% requires immediate investigation.
I track these in my weekly CEO review and do a deeper analysis quarterly. Recurring revenue health is one of the most important indicators of overall business stability.
Takeaways
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Aim for 40-60% of revenue from recurring sources. This base provides stability that enables strategy, reduces anxiety, and increases business valuation.
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Choose from five models. Advisory retainer, managed service, maintenance package, membership community, or productized service. Combine two to three for diversification.
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Transition in four phases over 12 months. Start by offering retainers to existing clients, include recurring in new proposals, develop a productized offering, and build toward your target recurring percentage.
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Retain 85%+ of recurring clients annually. Quarterly value reviews, proactive communication, and continuous service improvement prevent churn.
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Price on value, not hours. Tier your offerings, use annual pricing with monthly billing, and raise prices 5-10% annually at the renewal date.
