How to Turn One-Time Clients into Monthly Recurring Revenue
This guest post was written by Preston Lee, founder of Millo, a publication geared toward fostering freelance success. To learn more about Millo, visit their website.
A few days ago, I was on a call with a friend of mine who built a web design agency from scratch.
He started as a singular freelancer taking just about any job he could find, barely scraping by.
Four years later, he had built a team of over 20 people and was making more than $100,000 every month in recurring revenue.
That’s a million-dollar-a-year business from scratch in less than five years.
My friend’s name is Clay Mosley and these are the exact words he used to explain this massive accomplishment:
“The single biggest factor of how I grew super fast was we switched up the business model to doing nothing but monthly recurring revenue.
“So we were like ‘Okay, if you want a custom website, we switched it to $200 a month and our sales skyrocketed!”
I’ve always been a huge advocate for building more predictable revenue into your freelance business.
But so many freelancers just don’t know where to start when it comes to converting their one-time clients into revenue they can count on each month.
So today, I’d like to share a few of the easiest and most successful ways I’ve personally seen freelancers make the leap from one-time billing to recurring revenue:
- Adjust the type of client you’re targeting
- Build easy-to-understand monthly packages
- Pitch, pitch, and pitch some more
- Use technology to bring in automatic payments
- Make it predictable
Adjust the Type of Client You’re Targeting
The most impactful thing you can do in order to get more recurring revenue is to think more critically about the type of client you’re targeting.
There are some clients who are simply a better fit for a long-term recurring model than others.
For example, consider the kind of client you’ll find if you’re targeting companies that need a simple website.
Most likely, these kinds of clients will hire you once to build out their website and then move on to other projects. It’s a one-time transaction. The next month, you’re back to finding your next client.
Instead, consider what a difference it would make to target companies that already have a website but need constant updates, upgrades, and new features on their site.
These kinds of clients are more likely to agree to a long-term, monthly revenue model since you’ll be more able to deliver ongoing support and value over an extended period of time.
I’ve outlined a few concrete examples below so you can see what I’m talking about:
|POTENTIAL RECURRING-REVENUE CLIENT||PROBABLY A ONE-TIME CLIENT|
|Client with a frequent or repeating issue that needs solved.|
Example: A website owner who needs a new optimized blog post published every week.
|Client that has one small issue to be solved just in this moment.|
Example: A company that needs a landing page built on WordPress for a quarterly promotion.
|Client with a proven revenue model and proven track record.|
Example: A business that has been around for at least a year and has more than one or two founding employees.
|Someone with a good idea who’s just getting started. |
Example: Your cousin who has a pretty good idea for a blog and wants you to build him a WordPress theme.
|Client with an obvious long-term budget.|
Example: A business owner who is willing to invest in long-term work for long-term results.
|Client who challenges your pricing from the beginning. |
Example: Someone who takes more time negotiating the price of the project than explaining the work itself.
By reframing how you think about the kinds of clients you work with, you can quickly pivot your offering to match clients that are likely to be a fit with a recurring revenue model.
Build Easy-To-Understand Monthly Packages Clients can Say “Yes” To
Another way to improve your chances of converting one-time clients into monthly recurring revenue is to make it simple, clear, and easy to say “yes” to a monthly agreement.
Instead of billing by the hour, or even using value-based pricing (which many “gurus” recommend to freelancers), build packages your clients can select and agree to.
For example, you might go from charging $5,000 one time for a custom-built WordPress site to $499/mo for ongoing and unlimited WordPress updates and support.
As my friend Jake Jorgovan (who built a massive marketing business with a recurring-revenue model) says, “Website support is a true recurring problem that is not going anywhere.”
That means, if you can sign up a customer for $499/mo and then deliver on your promises to that client, they’re likely to stick around for a very long time.
To find the right package, consider your answers to the following questions:
- How much will my current clients be willing to pay every month?
- What will I promise them in exchange for their monthly payment?
- In what ways can I over-deliver in order to keep customers on longer?
- How many customers can I support at one time?
Before you move to the next step (pitching your clients on these new packages), it’s important that you feel confident at least some portion of the clients you pitch will say “yes.”
Start by considering the following questions:
- What real value can I offer my customers on a recurring basis?
- Is this service actually valuable in a repeatable way?
- Do I believe in the value I’m offering? If not, how can I make the offer more genuinely helpful? (This will help you better pitch or sell without feeling sleazy or salesy.)
It may help to collect feedback from people you trust (but who will be honest with you too) at this point.
Ask them for feedback on your new product offering and be open-minded if they have critical feedback or other concerns.
Eventually, you’ll find an offer that resonates both with you (your internal compass) and your clients.
That’s the offer to start with.
Pitch, Pitch, and Pitch Some More (In Your Own Way)
Once you’ve identified a valuable package of offerings you truly believe in, you’re ready to craft your perfect pitch.
If you’ve done the previous steps right, pitching should come naturally.
For example, if you finish a small project with a client and they’re satisfied with the outcome, a natural segue would look something like this:
“I’m so glad to hear your website is driving the early positive results we had hoped for. I’d love to help you reach some of the bigger goals we discussed by putting in effort every month on your site. I’ve got a couple of monthly package deals that….“
There’s really never a bad time to pitch this unique upsell (unless, of course, your client is mad or frustrated with you).
Agency-builder Chelsea Baldwin told me how she used the power of recurring revenue to grow her business:
“If you have an idea [of how to add value on a recurring basis], just pitch the idea. I tell freelancers to just put a pitch for a retainer in every proposal that they write.
Keep it low key and low-stress so they don’t feel like you’re pushing them real hard. Some people will buy into it; some people won’t. But it puts the idea there in front of them.
And then at the end of the project or when you’re close to the end of the project, you can pitch the idea again.”
If you have the right offer and enough persistence, your business will organically and naturally begin to build its recurring revenue as you continue to pitch as often as occasion permits.
While it can be scary or intimidating, remember: the worst they can say is “no.” Unless you’ve done something else to merit it, the odds of you getting “fired” by a client after offering this upsell are slim to none.
Use Technology to Bring in Automatic Payments
Once a client says “yes” to a recurring payment model, it’s important to set up some sort of technology to automatically bill your client each month.
This is important for a few reasons:
You Have Better Tasks to Focus On
Depending on how many clients you sign up on a recurring basis, you’ll soon find that managing monthly payments can be a huge hassle if done manually. Since providing value to your clients should be your top priority, you have better things to do with your time than send payment requests and chase down past-due invoices.
You Don’t Want to “Renegotiate” All the Time
Manually sending an invoice or asking for a payment every month opens the door to further negotiation on your pricing or terms every month. In order to get into a stride and scale this system to multiple clients, you want to avoid renegotiating frequently. Set the price once, set up the payment system, and get to work.
You Want to Focus on the Value you Bring, Not the Payment you Take
By asking for payment each month, you’re also forced to focus every 30 days on what your client is paying—instead of the value you’re offering them. By putting payment automation in the background, you bring your value and your partnership to foreground for more emphasis.
To set up a client on a recurring payment system, you can use something as simple as Freshbooks or Quickbooks to send monthly invoices to your clients.
But even more powerful than that, would be to set up automatic billing through a service like Stripe.
There are loads of WordPress plugins that can help you integrate with payment platforms like Stripe or PayPal so clients can add their own payment information securely and you can deduct from their account automatically every month.
With a nice technology setup, you can focus more on adding real value to your clients’ businesses and scale your business more reliably.
It’s All About Predictability
In the end, building recurring revenue into your freelance business is all about predictability.
The more predictable you can make your revenue as a freelancer, the easier you’ll sleep at night, the more you can plan for the future of your business (and life), and the better you can serve your current and future clients.
A sustainable freelance business thrives on predictable recurring revenue.
Following the advice I’ve offered today, should be a great first step in moving toward greater predictability and peace-of-mind in your business.