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How to Build Recurring Revenue Streams With Digital Products

Do you want to create recurring revenue streams for your online business?

Unlike the unpredictable rollercoaster of one-off sales, recurring revenue provides stability and predictability.

By allowing you to focus on serving your customers and creating fantastic products, recurring revenue translates to steady income, improved customer satisfaction and loyalty, and higher retention rates.

For WordPress users, Easy Digital Downloads (EDD) is the ultimate solution for selling digital products at recurring prices.

🔎 In this article, I’ll cover:

What Is Recurring Revenue?

Recurring revenue is income received at regular intervals. Instead of one-time purchases, customers pay, often monthly or annually, for ongoing access to a product or service.

This could be anything from subscription boxes for physical products such as dog toys to eCommerce digital products like software, online courses, and memberships.

Subscription-based pricing and recurring revenue models ensure consistent cash flow, improving customer loyalty, and increasing lifetime value.

Benefits of Recurring Revenue Streams

Building a business on recurring and subscription-based pricing offers a wealth of advantages over traditional one-time sales. Below are some reasons to incorporate recurring billing into your online business strategy.

Predictability and Stability
Recurring revenue provides a clear picture of your future income. It allows you to budget effectively, confidently manage your cash flow, and plan for future investments with peace of mind.

Customer Retention and Lifetime Value
Recurring revenue incentivizes and facilitates strong customer relationships. Your focus shifts from constant new customer acquisition to keeping existing customers happy and engaged. This fosters loyalty and increases the customer lifetime value (CLV) – the total revenue a customer brings your business over time.

This underscores the findings of an IBM research report that says nearly 65% of consumers feel more connected to companies they have a subscription with compared to ones that only involve one-off purchases.

Scalability and Growth
Recurring revenue models are highly scalable. As your customer base grows, your stream of income automatically grows without requiring a proportional increase in effort. This lets you focus on scaling your product offerings and reaching new markets.

There are multiple strategies for selling digital products at a recurring price. The best pricing model depends on a few factors, such as what you’re selling, who your target audience is, and whether you have a startup or corporation-level budget.

Below is a breakdown of popular recurring revenue business model examples to give you a better understanding of your options.

Type 💰Summary 🔎Best For/Use Cases 🏆
Subscriptions Customers pay a recurring fee for ongoing access to digital products or services.Software-as-a-Service (SaaS),
Content subscriptions (e.g., tutorials, courses)
MembershipsCustomers pay to join and gain access to exclusive content, forums, events, and networking.Learning platforms,
online communities
Digital ProductsSell downloadable digital products with recurring billing for access or updates.Templates, themes, plugins, stock photos, media assets, etc.
Recurring ServicesOffer ongoing support and expertise for a recurring fee.Website maintenance and hosting, SEO and marketing services

Subscription Services

Subscription services offer customers ongoing access to digital products or services, typically for an annual or monthly fee. Subscription models are often used to sell digital products and software licensing for Software-as-a-Service (SaaS) solutions, such as Adobe Creative Cloud.

Subscription & software licensing pricing for recurring revenue

Content subscriptions involve businesses and publishers offering exclusive content and valuable resources for recurring subscription fees. This includes online magazines and premium blog content, such as The New York Times or Medium.

It’s also used by streaming services like Spotify and Netflix and eBook and audiobook digital content delivery services like Amazon’s Audible.

Membership Sites & Online Communities

Similar to subscription services, membership sites create thriving online communities where members pay to join and gain access to exclusive content, discussion forums, events, and networking opportunities.

Membership sites come in various forms and are usually built around specific interests. For instance, when podcasters put early access or bonus episodes on Patreon.

Some social media platforms employ this pricing strategy. For example, LinkedIn Premium is geared toward business owners, entrepreneurs, and professionals seeking deeper levels of engagement and interaction.

The LinkedIn Premium website landing page.

Memberships are also common among learning platforms offering educational content and resources like in-depth tutorials, downloadable materials, webinars, and interactive courses.

Digital Products & Resources

The world of digital eCommerce offers many opportunities to collect recurring payments and generate steady, passive income.

There are so many different types of digital products and resources you can sell—whether it be from your own online store or through a third-party marketplace.

Developers, for example, often offer premium WordPress plugins that come with tiered pricing plans and recurring fees for updates and support. Businesses can also sell WordPress themes, website templates, and graphic design elements.

Selling website themes for recurring revenue streams.

Customers pay a recurring fee for access to a library of downloadable resources, assets, and updates.

This also works for selling high-quality media assets, such as stock photos and audio and video files that customers can purchase and use for their creative projects.

Recurring Service Packages

Service packages create steady income by offering ongoing support. A popular example is website hosting and maintenance service companies like SiteGround:

The SiteGround EDD Managed WordPress Hosting website.

Similarly, agencies such as HubSpot offer ongoing services and software that provide users with a suite of digital marketing solutions, including tools and functionality for Search Engine Optimization (SEO), email marketing, content marketing, etc.

Creating Recurring Revenue Streams With EDD

Now that we’ve explored various recurring revenue models, let’s dive into how Easy Digital Downloads (EDD) is the ideal eCommerce solution for building recurring revenue:

The Easy Digital Downlaods WordPress plugin website.

This powerful WordPress plugin is designed specifically for selling digital products, including subscriptions and software licenses.

Software Licensing and Recurring Payments Logos

It offers a user-friendly interface and robust features to manage all aspects of your recurring revenue business. You can easily configure the recurring payment and pricing details directly from your product pages:

Recurring payment options in Easy Digital Downloads

You can also use it to create and offer recurring renewal discounts.

Using EDD for Recurring Payments

I won’t go too in-depth on the step-by-step tutorial, as it varies depending on what you’re selling. However, the general process looks like this:

  1. Install Easy Digital Downloads Pro on your WordPress site
  2. Add the Recurring Payments (& Software Licensing if applicable) extension
  3. Configure your payment gateway
  4. Add your new product(s)
  5. Set the pricing details and recurring billing options
  6. Publish & promote your digital products/services via email list, affiliate marketing program, etc.
  7. Track recurring revenue streams & adjust your business model and marketing strategy as needed

Feel free to refer to these guides for more in-depth assistance and instruction:

Tips for Growing Recurring Revenue Streams

Building a thriving recurring revenue business model requires ongoing effort and strategic planning. Common challenges you may encounter include:

  • Churn management: Keeping customers engaged and preventing subscription cancellations is crucial.
  • Scalability issues: As your customer base grows, ensuring smooth operation and high-quality service delivery can become a challenge.

Below are some best practices for addressing and preventing these challenges and enhancing the success of your recurring revenue strategy.

1. Leverage Customization & Personalization

Tailoring your offerings to individual customer needs fosters loyalty and satisfaction. Consider tiered subscription plans with varying features and price points. Offer customers the ability to customize their subscriptions or add on specific features as needed.

2. Offer Value-Added Services

Enhance your subscription by providing additional services that complement your core product. This could include SEO, graphic design services, printable resources, or consulting sessions related to your area of expertise. These value-added services increase customer satisfaction and justify recurring subscription fees.

3. Track Key Analytics & Metrics

Keeping a close eye on key performance indicators (KPIs) is essential for optimizing your recurring revenue strategy and driving conversions. Track key metrics such as Monthly Recurring Revenue (MRR), churn rate, and customer lifetime value. These metrics provide insights into your revenue performance and customer retention.

Easy Digital Downloads offers comprehensive built-in reports that provide insights into your sales performance, customer subscriptions, and revenue trends:

EDD Reports showing recurring revenue streams breakdown

I also recommend integrating EDD with MonsterInsights. This provides you with Google Analytics to get even more detailed customer behavior data and actionable insights.

4. Collect Customer Feedback

Your customers are your most valuable asset. Regularly collect feedback through surveys, email campaigns, or live chat interactions. Use this feedback to identify areas for improvement, address customer pain points, and adapt your product or service offerings to better meet their needs.

EDD integrates with other powerful WordPress plugins that can help you boost your customer feedback efforts, such as WPForms and UserFeedback:

The UserFeedback plugin website.

Easy Digital Downloads supports a wide range of email service providers that make it easy to send targeted emails to users requesting feedback and offering special promotions as incentives.

5. Improve Customer Retention

Customer churn is inevitable, but implementing certain strategies can minimize its impact. First, provide excellent customer support to address issues promptly and efficiently.

It’s also smart to create a loyalty program. Reward long-term subscribers with exclusive discounts, bonus features, or early access to new products.

Also, don’t give up on lost customers! Consider targeted email campaigns or special offers to entice them to return.

FAQs on Digital Recurring Revenue Streams

Let’s wrap up with some frequently asked questions about creating and managing recurring revenue streams.

What’s recurring revenue vs. one-time revenue?

The main difference between recurring and one-time revenue is how you get the money. Recurring revenue is like a steady paycheck: you get it in regular intervals (every month or year) because people keep paying for your products or services, like subscriptions or memberships.

On the other hand, one-time revenue is like getting paid for a one-off job, such as selling an eBook or designing a website. It’s not as predictable, and you have to keep finding new customers to keep the money flowing.

How can I implement a subscription-based model?

Use plugins like Easy Digital Downloads for WordPress to set up and manage subscriptions and accept recurring payments. Offer continuous value through regular updates, support, and exclusive content.

Easy Digital Downloads allows you to create products with recurring payment options. You can define pricing, billing cycles, and even offer tiered subscription plans with varying features. EDD also integrates seamlessly with other WordPress plugins for specific types of subscription-related sites, including MemberPress, LearnDash, etc.

How do I reduce customer churn for subscriptions?

To reduce customer churn, focus on improving customer service, offer value-added services, and seek regular feedback to understand and address customer needs. Implement loyalty programs and personalized experiences to enhance retention.

Use EDD to Build Recurring Revenue Streams

So there you have it! With Easy Digital Downloads, you’re equipped to build and manage sustainable recurring revenue streams for your digital products.

All you need now are quality digital products and offerings that your target audience is willing to pay for.

If you don’t have EDD Pro yet, you can grab your pass and get started within minutes:

Not sure what to sell to jump-start your recurring revenue streams? Check out Amazing Most Popular Digital Products to Sell and How to Choose an eCommerce Niche.

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