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How-To Guide to Maximizing Your Recurring Revenue
The truth is that many subscription business mode companies are constantly leaving money on the table. While they have managed to build a constant and consistent revenue stream, there is always room for more. A successful business will seek out all opportunities to increase recurring revenue, including creating buyer personas or learning how to price SaaS correctly. To start this quest the right way, you first need to keep tabs on your predictable income. The way to do that must consider the very Saas metric, MRR.
So, if you are interested in tactics to maximize your revenue, keep reading our guide and apply the strategies you believe will function for your Saas business, while keeping an eye on your MRR price.
Raise your price
The most popular strategy to increase monthly recurring revenue is raising the price you have set for your products. Sometimes, we undervalue our work and all too often, we have no idea how to price SaaS. This is a common problem in most subscription businesses, especially the ones that have only recently switched to recurring revenue models. They see pricing as the boogie man and prefer to lower it as much as they can afford, thinking that this way, they will draw the attention of their customers. However, after some time, they realize that they are simply underpriced. They are not swimming in a sea of subscribers, and this affects the MRR. So, the first thing you could do is raise your price until it reaches your real value. You can start by doing by you should have done in the first place. Analyze all the aspects that influence your price, the work you have put into creating your product, customer acquisition costs, customer support, and product development expenses.
No more free plans
When looking to raise awareness, offering free plans is a good choice of action. However, when looking to maximize your profit, freemium isn’t helping your business. You might be able to see how many users you have gained, but your SaaS will generate recurring revenue without obtaining monthly payments. So, the plan should be to switch to paid monthly subscriptions that allow you to achieve predictable cash flow through recurring sales. In this process, you might end up losing customers. But it won’t matter in the long run because those customers are not building your recurring revenue stream. They never have. So you might be losing users, not profit.
A strong recurring revenue strategy to increase profits is to void selling all your product features into one self-standing package. Do something else instead. Split up your parts and sell them as separate add-on services. The fact of the matter is that users will not fully benefit from all of them. Each user category has specific needs and will use only some of your product features. In other words, removing them will not affect the functionality of your product. So, as long as the core value of your products remains untouched, you can easily remove some of the features and offer them as add-ons.
Increase your up-selling revenue
A great way to maximize recurring profit is to look toward up-selling opportunities. Up-selling is a great tool to boost your user’s monthly spending. There are various ways you can benefit from this practice, but one, in particular, will allow you to improve future revenue. Encouraging and convincing users to switch to higher-priced packages is a way to up-sell your products. To successfully achieve this process, you need to reach the customer when they are open to this idea. Having already split your features will come in handy at this point, as you can use additional features as a reason to make the switch.
Final thoughts on maximizing subscription revenue
When understanding how to value recurring revenue and increase profits, it is relevant to consider your approach. Presenting your offer will help you find the correct ways to boost customer retention and regular income. Each SaaS business is unique, including those in the same market. Focus on achieving customer success, understand your users and expectations, and apply appropriate tactics based on your findings.
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