If you are a consultant, freelancer/contractor, or full time employee, the old saying "time is money" is something you are always reminded of. You work an hour, you get paid an hour. You work a day, you get paid a day. The flip side of that equation is that when you don't work a day, you don't get paid. Sucks to be you (and me).
It doesn't have to be like this. There is a land where you can get paid a proportion of your monthly revenue each and every month and rely on it. It is called recurring revenue.
The ultimate goal for recurring revenue for me and many others is pure products. Products like ebooks, training workshops and SaaS (software as a service). But that takes a long time to build up. So what do you do in the mean time? Productised consulting might be the answer. Productised consulting are like a half way house between pure products and pure consulting/freelancing. They are not fully automated, but they are not fully manual either. I'm using productised consulting as a general catch all term that can include retainers, training, reports and the like.
Daniel Tenner talks about accounting services as an example of productised services:
Though many accountants will charge for time above and beyond their "standard service", most of them have packaged things like "yearly accounts" or "VAT returns" into a fixed price deal. This leaves them free to optimise the delivery of those services so that they take a minimum amount of time, while still charging the client the same amount.
Building recurring revenue is something that has interested me for a while and when Brennan Dunn announced that he and Patrick McKenzie were going to put on a workshop on the topic, I got very excited. If you don't know who Brennan is, he is the guy who wrote Double your Freelance Rate and The Blueprint, built Planscope and is the teacher of the Consultancy Masterclass. If you have never heard of him, I strongly recommend his free weekly newsletter, Freelancers Weekly. Patrick McKenzie is the guy behind Bingo Card Creator and Appointment Reminder. His blog, Kalzumeus, is a treasure trove of excellent advice, especially if you are like me - a developer with a strong business interest.
The workshop lasted for 6 hours. That is 6 hours of two of the smartest guys around dispensing their advice. That is as good as gold to people like me. If I can implement just ten percent of what they talked about, it can make a significant impact on my business.
Brennan and Patrick discussed a variety of ideas for recurring revenue:
- Insurance: reducing risk for the client and might include things like managed backups or security updates for open source tools.
- Optimising: copy, conversion, App store, A/B Testing etc
- Business Consulting: Be a trust adviser, not a code monkey
- Training workshops: Online or in-person, public (anyone can buy a ticket) or private (just for one company)
- Content strategy
- Books, pre-recorded video, training materials
- Report generation
- Automate what people pay you to do now
In all cases, the idea is to package them as products and charge a price up front rather than invoicing later.
There was some great advice on pricing of consulting products. Creating tiers of pricing, rather than a single price point, seems to be the way to go. Check out Nathan Barry's great guest post on the topic.
This is the type of workshop where there is so much information that I need time to digest it all, write it up, mix it around and then come up with a strategy to implement some of it. It is not a case of Patrick and Brennan saying: do exactly this thing to get this outcome. We all have different skills and our consulting/freelancing businesses offer different things to different clients. We all need to take what we learnt and mould it to our businesses. That said, the general premise is that any business that does freelancing or consulting can generate recurring revenue through some element of productisation.
If you missed out on this workshop, there is another workshop happening in October 2013 -
There is some excellent free information on the topic around the web. Here are a couple of links to get you started:
- On the Kalzumeus podcast, Patrick McKenzie and Keith Perhac discuss ways to productise consulting. This is a great intro
- Brennan Dunn's podcast - 4 ways to Productize your Consulting Business
- Daniel Tenner talking about productised services
There are also a few great podcasts/posts on how to build pure products