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NonRecurring Revenue in SaaS [with Playbook]
Vishal Rewari
Drove $350M+ impact across 70+ firms with our Data2Dollar Framework, Mixpanel Expert
When we look at SaaS, we think of subscriptions, recurring revenue
You start thinking about MRR, ARR, subscribers, revenue churn etc
But smart entrepreneurs have figured out a way to increase revenue over and above subscriptions
Doing the analysis of Public SaaS Companies of the 73 companies, on median and average, 11% and 14% of revenue is derived from non-recurring streams
What is this Non-Recurring Revenue?
Below is data at the time of IPO for the last 73 SaaS companies to determine the appropriate mix of recurring to non-recurring revenue.?
27 out of the 73 broke out non-recurring streams.?
We present the list below to show that some of the largest SaaS success stories derive significant revenue from non-subscriptions sources.
Of the 73 companies, on median and average, 11% and 14% of revenue is derived from non-recurring streams.?
Note companies like Evercommerce (31%), Qualtrics (27%), Health Catalyst (37%), Informatica (50%), and Zuora (28%) all derive a significant portion of revenue from non-recurring streams, and they all enjoy strong revenue growth and retention.
Playbook to implement Non-recurring revenue
There are 5 steps to add an extra revenue layer
Check
Check for the service request that you have been getting today that is taking up time or you are not fulfilling today. The ways to get idea is to look at customer support tickets, chat requests, customer support agents and customer success teams
Make a list of all the customer requests by frequency to prioritise, use the sheet above to identify the revenue potential and business priority?
Design?
There are ways to design a service,?
To deliver the service this can be done through 3 ways mentioned above , either you can outsource or set up the service in-house or 3rd develop a partner network
It is good to start with finding an outsource partner who can provide white-label service and then as and when it scales you can move it in-house
Validate
The next step would be to start validating the price by pitching the service next time you get a request
Stack up
Once the service is validated and you have delivered for 2-3 customers you can add it to pricing page and create an add-on, this will help them take a decision
Measure & Repeat
Include a set of metrics in daily, weekly and monthly tracking sheets to ensure services are being delivered and revenue that is being generated