How-To Guide to Maximizing Your Recurring Revenue

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.

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.

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.