Recurring Revenue vs. One-Time Sales: Finding Your Perfect Business Model

Transforming an idea into an effective business has never been more achievable. With a suite of tools, social media marketing, and accessible e-commerce platforms, content creators, entrepreneurs, and small business owners can transform their platforms faster than ever before.

However, while starting can be simple, building a sustainable business model that generates consistent profit and supports long-term growth can be challenging. That’s why it’s important to find the business model that works for you. Whether you implement a recurring revenue model, focus on a one-time sales strategy, or combine both in a hybrid system, the way you earn will determine your cash flow, customer relationships, and future scalability.

 In this comprehensive guide, we will discuss the nuanced advantages of all three models, examine how to evaluate which approach best suits your situation, discuss challenges and solutions as well, and provide frameworks for implementation for your unique content business.

 What is a recurring revenue model? 

 Recurring revenue models are those where financial income is generated regularly (usually monthly or annually) from customers who are paying for ongoing access to a product or service. More businesses are adopting this approach, which, in many cases, has been shown to increase customer lifetime value, enabling businesses to grow more sustainably.

For businesses where customer interaction is fundamental to brand identity, an income stream that supports stability and creates a connection with clients is essential. This is especially relevant for content creators, online coaches, and industry experts wanting to share their knowledge. In these cases, revenue forms can come through paid memberships and subscriptions, whether to online courses or delivered resources.

Recurring revenue models are popular among online creators and platforms as they enable steady engagement while earning a predictable income. More and more businesses are choosing to implement recurring revenue streams due to benefits such as long-term planning, greater business valuation, and increased customer lifetime value.

Customer lifetime value is the expected total profit a business can generate from a single customer over the course of their relationship with the brand. The customer lifetime value formula helps you understand how much a customer has spent and calculate how much they’re likely to spend in the future.

Customer Lifetime Value Formula:

CLV = (Average Revenue per Customer x Purchase Frequency x Customer Lifespan)- Acquisition cost 

<h3> How is Recurring Revenue Calculated </h3>

Many businesses choose to measure their recurring income on a monthly basis to measure patterns at a glance. 

The formula to work out  monthly recurring revenue: MRR = Number of Customers x Average Revenue per Customer per Month

However, if you choose to implement pricing tiers, as discussed further on, this calculation gets more complicated. It is usually calculated by price x the number of subscribers.

If you are working on an annual overlook of subscribers, the formula becomes: the number of customers x average revenue per customer year, alternatively, the MRR x 12.

Benefits of recurring revenue business model 

There are several reasons why many organisations are choosing to implement recurring revenue business models. Here are a few key benefits:

Predictable Cash Flow

 Receive a reliable income at regular intervals. This allows for ease of scalability when funding marketing campaigns, product development, and expansion.

Customer loyalty 

The recurrent visit to your site/service from customers creates rapport. This is enhanced through certificates, thank you’s, and recognition from your platform as they develop. Your support of their growth helps your business expand.

Sustainable business model 

 A reliable stream of income allows you to predict accurate financial forecasts based on a pattern of recurring purchases. With this data, you can highlight areas of investment for development.

Types of recurring business models 

If you are wondering how to create opportunities for recurring revenue, there are a number of ways your business can implement the structure, depending on brand identity. The following are a few ways you could introduce recurrent income to your business,

Subscriptions 

In a subscription model, customers pay a fixed fee monthly to access recurring resources such as online courses, SaaS platforms, and delivered goods.

Memberships 

A recurring revenue stream that involves membership allows customers access to exclusive content where they pay to be a part of a community. Examples of membership revenue include Online platforms such as Patreon and versions of Discord, whereas some content creators will host paid Q&As or early releases.

 Hosting and infrastructure 

This model of recurring revenue generates income by providing ongoing access, support, or management of digital infrastructure. Customers pay for continuous availability, maintenance, or enhanced services.  This can be achieved through web hosting or domain subscriptions.

 What is a one-time sales model? 

 A one-time sales model is a revenue stream achieved through customer purchase of a product or service on a one-off basis. Unlike a subscription service, in a one-time revenue stream, a customer does not make repeat purchases.

Products and services can include clothing, furniture, or downloadable resources or services such as web design or freelancing. They are usually priced higher than a recurring model, as a customer is able to reuse the product when they wish to, rather than waiting for a subscribed service.

As such, one-time revenue can be an important source of income for businesses as it allows them to generate funds without relying on long-term contracts or ongoing commitments.

 How is revenue generated by a one-time purchase calculated? 

 The formula for the single-time purchase model used to calculate the total income a business generates is:

 Total Revenue = Number of Units Sold × Price per Unit 

 Advantages of one-time sales 

 Having a one-time sale revenue stream benefits your business when customers may be hesitant to commit to a subscription service, you don't have the resources for recurring revenue, as you are just starting or your demographic may be wary of recurring billing.

Another scenario where it makes sense to implement a one-time sale model is if you are selling one-off purchases in a high AOV (Average Order Value) category, such as furniture or electronics. 

When using a one-time revenue stream, your business can benefit from immediate cash flow. This can then be used for marketing campaigns to acquire more customers or to fund new projects. Moreover, customers are usually more likely to make a one-time payment than commit to a subscription fee, making customer acquisition easier.

They are also easy to implement and manage with straightforward pricing and transactions without the need for an ongoing billing system in place.

With no recurring bills, customer retention strategies are more straightforward. Also comes with a predictable scale margin, which makes it easier to calculate profitability per product or service. 

Marketing campaigns can be flexible with seasonal promotions increasing sales, easier to create a sense of urgency with limited-time offers. One-time purchases are also a great entry point, especially if you upsell subscriptions later.

 Recurring Revenue vs. One-Time Sales: The Key Differences 

Choosing one or a mix of these streams can help transform engagement into sustainable revenue, whilst keeping the authenticity that defines your brand

 What is a hybrid revenue model? 

Hybrid revenue models combine multiple income streams, such as subscription, products, and commissions, to create a more sustainable business model through diversified income streams from one site. 

 Examples of Hybrid Revenue Models 

 Subscription and a one-time purchase 

In this model, customers can pay for ongoing access or benefits or make one-time purchases to upgrade the experience or access exclusive elements. This approach allows for flexibility for both customer and business as the subscription guarantees a steady stream of recurring revenue, whilst the one-time purchases allow for immediate injections of cash with customer-facing long-term commitment.

Course sales and community platform access 

In this hybrid revenue model, your business would sell one-time access to a course while offering optional ongoing membership to a community or coaching platform. The one-time purchase delivers a complete outcome-focused learning experience, while the recurring element provides customers with continuous value through live sessions and workshops.

This way, customers feel immediately benefited with the course, with the option to stay connected through feedback and support from live sessions. The business will benefit from upfront income and predictable recurring revenue from the community.

Benefits of hybrid revenue model 

This model integrates both the benefits of the recurring and the single revenue model. Diversifying your revenue system can help drive stability as it minimises the risk of financial loss, as a decline in one stream may be balanced out by the other. The one-time purchase allows for immediate cash flow, whilst the recurring stream creates customer loyalty and predictable forecasting.

‘Companies using hybrid sales see up to 50% higher revenue growth than those stuck with just one approach' (McKinsey)

How to implement recurring revenue 

Once you have decided which revenue stream is best for your business, you should decide how to implement it effectively. This requires identifying opportunities for ongoing value and consistent delivery 

Create a clear value proposition 

Once you have identified your target audience, your model must reflect their needs and wishes. Your value proposition summarises why your customers should choose your service by highlighting your unique selling points. If done effectively, it should attract new customers and set you apart from the competition.

Set pricing tiers 

Offer levelled access to your content to appeal to a wider range of audiences. Entry-level is usually set at an affordable price with basic access to tools. Mid-tier access can offer premium features such as live sessions, whilst the highest tier could offer exclusive benefits such as one-on-one coaching.

 Implementing recurring payment systems 

Choose a tool to support your business when handling subscriptions, billing, and automatic access automatically accessing, saving you the admin and seamlessly acquiring new customers. Consider online platforms such as LiveSkillsHub to host, market, and sell your online course, as well as supporting your billing system.

Retain your customers 

In a recurring revenue model, it is important to foster a connection with customers, either with consistent content access, certificate progress tracking, or other similar methods. Retention is important as it increases the chance of recurring profit when a subscription comes for renewal.

Apply metrics 

Refine your revenue model with key metrics such as measuring monthly recurring revenue, analysing churn rate, so how many customers leave each month. Calculate both customer lifetime value and cost of customer acquisition using the customer lifetime value formula:

 CLV = (Average Revenue per Customer x Purchase Frequency x Customer Lifespan)- Acquisition cost to see if marketing efforts are paying off 

Challenges and Solutions to Revenue Model Implementation 

 1. Gaps in Revenue 

Challenge: Revenue dips when shifting between models. If your business has been working on a single-time purchase model, then switching to a recurring revenue stream may seem slow.

Solution: Create a hybrid transition period where both models operate simultaneously. Develop a foundation to build revenue through annual subscriptions and offer existing customers special transition incentives. Rather than opting for an abrupt change, which may be disruptive, gradually implement a new revenue model alongside a realistic financial expectation.

 2. Value Articulation 

Challenge: Struggling to communicate your services/products' value proposition effectively. Your chosen revenue stream won't lead to a sustainable business model if customers do not understand the value of what you offer. 

Solution: Improve your communication by developing messaging frameworks relevant to the model. Additionally, creating a clear outcome-focused value description, which is customer-centric, when demonstrating and addressing objections proactively can increase transparency and trust.

 3. Operational Alignment 

Challenge: Business operations are misaligned with revenue model requirements. Your day-to-day processes and resource allocation do not effectively support your implemented revenue model.

Solution: Audit operational process for model compatibility, ensure your team structure supports revenue, as well as adapting your customer service approaches to reflect model requirements, consolidated through model-aligned metrics and reporting systems.

Conclusion: Find the revenue model that works for you 

A successful content business understands that revenue model selection isn’t about following industry trends or personal preferences; it is about being strategic with your unique content, audience, and business objectives when finding the most suitable revenue stream.

When considering your idea approach, remember these key principles:

• Revenue Alignment- choosing a revenue that aligns with your current structure is better than choosing a revenue based on preferences
• Gradual Implementation- steady changes support site structure and customer satisfaction over disruptive change
• Hybrid models  usually outperform set models 
• Consider Context - the same content can require different models in different contexts
• Achieving Objectives- Your revenue model should support broader purpose and goals.

 Why should you use the LiveSkillsHub platform to support your business?

Content creators, coaches, consultants, community leaders, and more will benefit from the comprehensive suite of tools provided by LiveSkillsHub for implementing any revenue model. Whether you want to introduce a reliable subscription management revenue or a sophisticated on-time purchase, we allow you to manage your business in our integrated platform. With LiveSkillsHub, creators can evolve their revenue approach over time without technical limitations or platform changes.

Your revenue model is not simply a business decision; it determines your relationship with your audience, financial forecasts, and is a direct reflection of your brand. Choosing the right model ensures alignment with value and how you receive compensation, generating sustainability for your business while maximising transformation to your customers.

Ready to take your business to the next level, but unsure how to? At LiveSkillsHub, we can support with almost all your business needs with our integrated online platform. Apply to our Beta programme today and be one of the first to transform your business with our platform.