Strong recurring revenue is something a lot of service-based business owners struggle to nail down, particularly if your industry has traditionally billed per hour or per deliverable — or if your industry is highly seasonal.
This is exactly what Christy Bowie, the founder of a full-service accounting firm, had to get to creative about. She wanted to avoid something most accounting firms view as inevitable:
Windfalls (and HEAVY workloads) around tax season… and then barely any revenue the rest of the year.
I interviewed her to find out how she did it using a subscription services model. Subscriptions now make up nearly 100% of her revenue. And it’s ALL recurring, every month, all year long.
Your situation likely isn’t going to be EXACTLY like Christy’s, but this interview is a must-read if you’ve ever struggled to make recurring revenue work for your industry.
Here’s our conversation, edited and condensed for clarity — link at the end to listen to the full, raw interview that’s more like a podcast!
I specifically want to talk to you today about the subscription business model that you’ve developed for yourself that is unlike what most financial advisors, consultants, CFOs do. Can you describe how that works for your business?
I’ve observed many professional fields, like therapists, chiropractors, and personal trainers, follow a traditional model. For instance, as a CPA, the common practice was an hourly pricing model. Over the past few years, the online business industry has gravitated towards a flat fee model. However, I took it a step further and created a subscription model. This means recurring revenue for me and consistent expenses for my clients. By consolidating all the services a client might need throughout the year, from bookkeeping to taxes and even consulting, they pay a flat fee each month.
I have a question about other terms (like retainers and payment plans) that get thrown around when we’re talking about recurring revenue for service-based businesses. How is the subscription model different?
A payment plan typically involves charging for a one-time service over a period. In contrast, my subscription model offers ongoing value, deepening our work every month.
Retainers might be for specific deliverables each month, but my idea of a subscription is an almost indefinite relationship without a set stop date. It’s like signing up for Netflix – you plan on staying unless it no longer suits you. In contrast, retainers might be more problem-specific and might end once that issue is resolved.
Memberships are typically a 1:many low-touch offer, while my subscription model is a high-touch 1:1 premium offer.
I would love to chat about the benefits that have been experienced in different areas of your business. What are those benefits?
First, the model attracts clients who see my services as an integral part of their business. It filters out those looking for one-time solutions and brings in those who value continuous partnership.
Second, the model allows for more predictable business planning. I know what revenue to expect, making tasks like hiring and forecasting more straightforward.
Finally, the subscription model ensures a consistent paycheck, preventing the “feast or famine” mindset. This stability allows business owners, like me, to be more strategic and efficient.
What other professions in the service world have you seen this work really well for, especially those that might be a bit surprising?
One example is medical practices that offer in-house insurance programs. This essentially operates similarly to a subscription. Individuals pay the office monthly, which provides them with a steady recurring revenue. It gives a level of predictability for some portion of their business. It counters the usual idea that you only pay when you go to the doctor.
Another example is my vet. I pay monthly, and my dog gets annual shots, heartworm treatments, and other necessary services. As a client, I feel the value because I can access services without worrying about individual costs piling up. I’m also more likely to take my dog into the vet for important treatments, because I’m already paying for it, so I think I get better outcomes as a client.
So in terms of implementing a subscription model, how essential is the strategic advisory aspect? Could it just be deliverables each month or should there be a strategic component?
While you can have basic deliverables, there should ideally be a consulting or strategic layer. This helps the client understand the value and the rationale behind the deliverables. It’s about more than just handing over a final product; it’s about sharing the reasoning, strategy, and benefits behind it.
From a sales perspective, how do you pitch this to clients who are accustomed to a different payment model?
It’s crucial to demonstrate the benefits over time. For me, it’s about showing clients the financial advantages and potential savings. But more generally, it’s about shifting the focus from the immediate deliverable to the long-term strategy and benefits. The idea is to highlight that consistent collaboration and strategy can lead to better results over time.
It sounds like one of the selling points could be that this will be cheaper for them in the long run than hiring someone new for every one-off task, correct?
Yes, when clients keep switching service providers or go for the cheapest option, they risk getting inconsistent or subpar results. Working with someone who knows your business well tends to yield better outcomes. While it’s hard to quantify, there’s likely a cost savings for a client to maintain an ongoing relationship with a provider rather than doing a complete overhaul with someone new.
You mentioned earlier that the subscription model doesn’t have to be your end-all-be-all. You work ONLY through a subscription with clients, but, for example, the medical practice has subscriptions AND also takes one-off patients. From your experience with the financial backends of different service-based businesses, what percentage or range feels like a good target when adding or pivoting to a subscription model?
I would say you’re going to feel much better if your subscription income covers the base amount you need to take home from your business to provide for yourself. This amount varies from person to person. Having this predictable income changes how you show up as a business owner; it removes the anxiety of not being able to cover essential expenses. It also gives you flexibility in deciding how much you want to work in a particular month.
Is there anything you’d like to add that I haven’t asked you about?
What’s crucial is to understand that there’s no one-size-fits-all answer. Finances can be an emotional topic, and just because this works for many doesn’t mean it’s right for everyone. I always encourage people to think outside the box and evaluate whether they’re following a path because it’s what they’ve been told or because it genuinely works for them.
I think that’s a significant point. We often think of innovation in terms of marketing or branding but not as much in pricing or business models.
Exactly. I just want everybody to take some time to think, am I doing this because this is what the world told me I should be doing? Or am I doing this because this is what works best for me and my business?
🎧 Listen to the full, unedited 25-minute interview with Christy, like an exclusive podcast ➡️ Click here to listen.
About Christy: Christy is a CPA & Financial Consultant who empowers service-based entrepreneurs to grow their business by taking away the stress of finances & creating strategic plans to scale.
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