I've been on the procurement side of the technology industry for over 25 years, singing the praises of recurring revenue, and trying to help integrators attain it. While many understand the concept of recurring monthly revenue (RMR) and believe in its value, most end up expressing hesitation about even attempting to make a recurring revenue sale, like a technology-as-a-service solution sale.
I'm going to unpack these fallacies and put these common misconceptions to bed. Hopefully, those who have refrained from exploring recurring revenue opportunities because of these misconceptions will now better understand how attainable it actually is.
To better understand, let’s use an integrator's technology-as-a-service sale as an example to show you how these concerns can be avoided.
Let's assume a customer prefers a technology-as-a-service solution that includes a $50,000 solution plus a $21,000 five-year maintenance and support contract. With the right financing partner, the integrator will be able to sell this solution for a payment of about $1,350 per month.
→ The financing partner will bill the customer $1,350 for the next 60 months.
→ The financing partner will pay the integrator $50,000 upfront. So the integrator earns their full intended revenue and margin on the system, just as if it were a cash sale, and the integrator is able to pay their suppliers just as they normally would.
→ The financing partner pays the integrator $350 each month for the next 60 months representing the $21,000 maintenance commitment that was bundled into the technology-as-a-service solution format. (This should be a pass-through, no added fees attached.)
For a deeper dive into the numbers, functionality, and value check out our eBook, The System Integrator's Playbook: How to Make the Pivot to a Service Sales Model and Build Recurring Monthly Revenue.