We have some new folks in the group (Welcome!) so I wanted to give an update on the state of Artillery’s (the web design shop I run) Monthly Recurring Revenue.
Why? Because you may not know it yet, but later on, Recurring Revenue is going to be the biggest reason you’re grateful for getting into web design.
Yes, being your own boss rocks. Yes, working in a creative field is a lot of fun and beats the 8-5 cubicle life. But above all, recurring revenue is king. 👑
First, I believe the possibility of Monthly Recurring Revenue (MRR for short) is very unique to the web design industry. Yes, other industries have MRR, but the ease of MRR through Website Hosting & Maintenance has to be one of the EASIEST forms of recurring revenue out there.
Why? Because it’s like car insurance. Yes, a car analogy.
Beloved car analogy 🚘
During the pandemic you may have cancelled your gym membership for a few months … but you didn’t cancel your car insurance. Why? Because you need it to drive.
Same for website hosting. Clients may cancel a social media content creation monthly deal, but they won’t cancel their website hosting. Why? Because they need website hosting for their site to be online.
Just like car insurance, if you’re providing a solid service to your clients, at a reasonable price, they’re not going to spend the time and effort searching for a new provider … especially if choosing a new provider means they lose you too!
The easiest way to build Monthly Recurring Revenue
Website Hosting & Maintenance
I track “points” each year for recurring revenue. For the last few years we’ve (Artillery) required all new clients to host and maintain their new site(s) with us. We charge them a build fee and they also pay a monthly hosting/maintenance fee:
- Each site launched on our lowest Silver plan ($49 per month) equals 1 point
- If they choose our Gold Plan ($99 per month) 2 points
- If they choose our Platinum ($299 per month) 6 points
- Sometimes a client upgrades from Silver to Gold which is 1 point
Basically, each 1 point represents $49 per month.
Every year our goal has been 50 points. Most of the time we end up around 60 points. Last year we did 80. Last year was definitely a “hotter” year than normal. We’re now raising the yearly goal to 75 points for 2021 and beyond.
The financials 💵
Jake and I run the hosting/maintenance part of Artillery together. We’re 50/50 with this part of the business. Our cost is about $9 per month per site. That $9 includes hosting the site, maintenance program cost for that site, and we set aside a few dollars for an edits budget we pay someone to handle for us.
We’re left with $40 per site. We split that 50/50. I make $20 per month per site.
Usually each year I add around $1,000-$1,200 per month to my Monthly Recurring Revenue ($20 per month x 50-60 points). Last year I added $1,600 ($20 per month x 80 points).
The last 3 years I’ve added $4,000+ per month in recurring revenue through Hosting & Maintenance.
“But what about people leaving the plan?” 🤷🏻♂️
Yes, great question. We lose under 2-4 clients off the plan per year … a company goes out of business … or they’ve grown and need a website beyond our capabilities so they move on.
Companies will pay $49 per month (or more) all day long to know their website is going to be taken care of.
Especially now with COVID, everyone realizes how important their website is.
How YOU can do this better than we did
… and yes, you can do this. It’ll take time to build Monthly Recurring Revenue, but it’s so worth it!
In fact, we have a current student who is about to retire his wife from her job all thanks to recurring revenue! 🎉
How you can do this better than I (and Kelly) did:
- First, you can build Monthly Recurring Revenue from the start of your career … and not wait years like Kelly and I did. I would easily have at least $15k+ per month in Recurring Revenue if I would have started right away. No, you probably won’t have 50 “points” your first year … maybe not even your second year … but it’ll add up over time.
- When it comes to performing all the hosting/maintenance tasks … you have a few options: you can do it all, you can hire a subcontractor (there’s one on the Resources page in the course) to do some of it for you, or …
- You can let us (Break Into Web) do the work for you and still make at least $20 per month per site.
- There are some aspects of hosting, DNS, etc … that I still don’t understand 100%. I went through some tough hours/days figuring how DNS and hosting work … and some client sites paid the price for my “on the job” training. This is the hard way.
The easy way … if I were starting out, I’d utilize Break Into Web’s hosting – https://breakintoweb.com/hosting/
For $24 per month we’ll:
- setup a test site for you to build your client’s new site
- launch the site for you when the time comes (headache saver)
- host the site for you long-term
- maintain the site (keep WordPress / Plugins / Divi up to date)
- daily backups of the site for 30 days
- have advanced security on the site
- handle any hosting issues long-term
I would offer clients the same plans as Artillery does here – https://artillerymedia.com/hosting-plans/
Client pays $49, your costs to BIW $24, profit: $25 per month
Client pays $99, your costs to BIW $39, profit: $60 per month
Client pays $299, your costs to BIW $39, profit: $260 per month
Those profit margins are BETTER than what I get now at Artillery.
$10k and beyond
My goal for 2020 was to break $10k per month in recurring revenue between all sources (Artillery hosting/maintenance, Superfly monthly payout, and a monthly ongoing retainer I have with 1 client).
Fortunately, I met the goal! 🥳
The Monthly Recurring Revenue from web design is the majority of that $10k.
If you would have told me at the beginning of my career that someday I’d be making over $10k each month in just recurring revenue … I would have thought “I wish.”
You may be thinking that now … or you may be thinking it’s not possible.
What if you could sell 1 website a week?
If you did, and used BIW’s service (we handle hosting/maintenance for you), you’d be making $1,250 per month in Recurring Revenue at the end of 1 year.
After 5 years of doing that, you’d be making over $7k per month in Recurring Revenue alone. Plus, that’s not counting site build fees.
That’s a sweeter deal than I have right now. 🍩
Let’s get to work.