Recurring Revenue vs One-Time Revenue: Finding the Right Balance

Recurring revenue has always been a double-edged sword for me. On one hand, the idea of having a product with a steady stream of customers who pay a monthly or yearly fee sounds great. But on the other hand, every time I’ve tried to implement it, I find myself hating it.

I’m no stranger to the concept of recurring revenue. About a decade ago, I had a successful open-source software business that relied on recurring license fees for support and updates. Unfortunately, as the market for that software declined in popularity, the revenue eventually dwindled, and I made the tough decision to sunset it.

More recently, I experimented with setting up a membership for my online courses, hoping to generate recurring revenue. However, after two years, I made the choice to discontinue the membership model.

Whenever I come across a product that boasts impressive Monthly Recurring Revenue (MRR) numbers, I can’t help but wonder if I should have pursued a similar path in the past. But, truth be told, I have several reservations about it.

First and foremost, building a meaningful MRR is no small feat. As someone with a long list of unsuccessful projects under my belt, I’ve learned that it’s easy to fall into the trap of thinking that the next app or service will be the one to take off. However, more often than not, it’s just wishful thinking.

One of the biggest challenges is churn. When I experimented with monthly memberships for my online courses, I noticed that the number of new members joining was roughly equal to the number of people canceling their memberships. As a result, growth stagnated at a level that didn’t justify the effort I was putting in.

Another concern is the issue of lock-in. Once you have customers using your product, especially if it requires ongoing support or maintenance, you become responsible for them. Depending on the number of customers and the fees they pay, this can turn into a full-time job. What happens if you decide you no longer want to continue with the product? While it may seem counterintuitive to abandon a successful venture, I’m more interested in pursuing creative work that can be considered “finished.” Hiring employees or contractors to take over isn’t always the ideal solution for me either.

That’s why, lately, I’ve been drawn to the idea of one-time sales. While many iOS apps are moving towards recurring revenue models with subscriptions, as a solopreneur, I prefer to work on projects I enjoy, without feeling locked into a service. After all, my preferences and interests may change over time, and I don’t want to be tied down to a business that no longer brings me joy.

With my online courses, I’ve discovered a solution that works for me. I create a course, launch it, and hope that it provides enough value to attract customers without the need for ongoing monetary relationships. The course remains available, requiring no updates, bug fixes, or additional support, aside from addressing any questions people may have.

This concept applies even more profoundly to digital products like ebooks. Once written, a book is a finished product that doesn’t require any further attention.

For now, my focus lies in creating products that have a sense of completion. Of course, this mindset may change in the future, but for the time being, it aligns with my current goals.

Tags: recurring revenue, one-time revenue, MRR, memberships, solopreneur, digital products