Fewer Clients, More Money: How to Add Recurring Revenue to your Web Design Business
According to Marketing Metrics, the probability of selling to a new prospect is 5-20%.
If you provide web design, or another creative service, you probably create proposals tailored for each client. You spend time understanding the potential client’s business, their target market, expectations, budget, timeline, and then create a tailored proposal.
You do all this whilst assessing if this person/company is a good fit for how you work and what you provide. Then you hit reset and do it all again for a new prospect.
The more prospects you pursue, the more time you’re giving away for free.
What if you could reduce that time and effort, while maximising how much you earn?
Increasing the lifetime value of each client means you need fewer clients to meet your revenue goals. One of the most effective ways for creative services to increase customer lifetime value is by adding a recurring revenue model to the business.
We’ll discuss the numbers behind recurring revenue billing, the types of services that work well and how you can offer subscription based services to new and existing clients.
The numbers behind recurring revenue
Before looking at subscription based pricing, you may be tempted to raise your web design project rates.
As web design project rates increase, so do the expectations and demands. The difference between a 2k website vs a 20k website is not only in the deliverables. There will be more project management, calls, emails, meetings, presentation material, research, and lots more.
You’re not guaranteed a steady flow of these new higher paying clients. So you’re still at the mercy of the low conversion rate for new customers.
The goal is to earn more with less effort. So let’s look at how the numbers could work for a recurring service.
Let’s assume you create 10 website projects per year. Each website owner pays you $250 per month for an ongoing (recurring) service.
Within 12 months, you’ll have earned an extra $30,000. That 30k means 30k less revenue you NEED to achieve with new clients or projects. It takes the pressure off needing a steady flow of new clients.
Each year will add another 30k in recurring revenue to your business. Within five years, you will go from zero to $150,000 in recurring revenue.
- $250 x12 months= $3,000
- $3,000 x10 clients = $30,000
- $30,000 x5 years = $150,000
The Master Recurring Revenue Toolkit is a step-by-step guide on formulating, pricing and selling recurring services. It includes a 30-page guidebook, a revenue tracker and real world examples of services already bought by clients.
Types of recurring services
Essential recurring services
- Hosting
- SSL cert
- Domain renewals
- Cookie compliance system
Optional recurring services
- Website security
- Off-site backups
- Software updates
- Email marketing
Website hosting is an essential service. If clients are not paying you for hosting, they’re paying someone else.
People want less work and worry. Paying you for the hosting means a single point of contact, should they need help with anything website related. Your hosting has also been verified by an expert (you) as fit for client needs.
Optional services have a higher potential revenue but usually need more sales and marketing efforts.
A two-pronged approach to provide recurring services for new and existing clients
I recommend creating recurring revenue products that complement the web design services you already provide.
1) Contact existing clients offering them your new service
Existing customers are usually 60% more likely to buy from you again
Look at the existing clients you have. These are relationships you’ve built. You already have direct contact details and know the person will take your call or read your email. I’ve contacted existing clients and had paid subscriptions on launch day.
Recurring services provide an opportunity to stay in frequent contact with your existing customer base. Staying front of mind increases opportunities for future client work.
Typical client
Project completed three years ago. Now they need some new work done. They don’t even know if your business is still open in three years.
Client with a recurring service
After the website project, you began an ongoing website care plan. You email them a monthly report. Each email ends with, “If there’s anything else you need help with, don’t hesitate to reply.”
2) Add services to future proposals for new clients
The plan is to have fewer new clients, not zero new clients. Those new leads are also ideal candidates for your new recurring services.
You’re looking for good clients. Likewise, clients are looking for a web designer they can trust – an advisor who understands their business’s unique needs. You want to maximize that relationship as much as possible to the benefit of both sides.
One often overlooked benefit of additional services is how it makes people feel. Offering an ongoing service can be a way of saying, “You’re important to my business, and I’d like to keep working with you.”
Complimentary services can be added to pricing templates, becoming standard in your web design proposals.
This post covered the basics of recurring revenue – the numbers, type of services, plus selling to new and existing clients. There are many ways to bill for your work – but recurring revenue is especially suitable for creative businesses that benefit from ongoing relationships.
Ready to add a recurring revenue model to your business?
I developed the Master Recurring Revenue Toolkit as a step-by-step guide on formulating, pricing and selling recurring services. It includes behind the scenes insights on how I created real services that I’ve sold to clients.
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