SaaS (Software as a Service) is often referred to as “the holy grail” of online products, mainly for one reason:
In the software subscription model, as long as you’re adding more paying users than you’re losing, and they remain subscribed for a long time, the business sustains and grows predictably over time.
Like software, recurring revenue is also very attractive for freelancers and consultants. When you secure a number of client retainers, you avoid the “feast and famine” cycle that so many consultancies fall victim to. Plus, if/when it comes time to sell your consultancy, one made up of retainers is much more valuable than one made up of lots of one-off projects.
The Challenges of Recurring Revenue
But here’s the thing. Recurring revenue isn’t all roses and sunshine. It has very real challenges, which I’m guessing you’ve run into (I certainly have).
In software, simply “getting to launch” is an enormously heavy lift. But even if you can sustain yourself to make it through that journey, marketing your first SaaS is an even tougher hurdle to overcome. If only selling a $49/month software product were as easy as selling a $4,900 website project!
In consulting, recurring revenue through retainer relationships is great… But it often means a hefty number of work hours that you or your team are committed to each month. That can often feel more like a job than a thriving business. Before you know it, that software product you’ve been wanting to launch “on the side” gets pushed until next year (a.k.a. never).
Software as a Service… Plus
This is why I’ve been such a strong proponent of “Software as a Service Plus”. A hybrid approach that combines both software and a productized service. Lately, it has also gone by the name of software with a service (SWaS).
If the challenge in launching a software product is marketing it, then offering a done-for-you service to go with it is often a viable way to get it into the hands of paying customers quickly.
If the challenge in consulting retainers is the time it requires of you, then incorporating software into your retainer can be a way to streamline and cut down the hours required, while still delivering the same (or even more) value.
Models You Can Try
Here are 3 ways you put Software as a Service Plus to work in your business:
MODEL 1: Convert your software to a productized service
So you’ve built a piece of software. It scratches your own itch and works beautifully. But customers aren’t buying.
What’s standing in the way between your product and their credit card may not be a deficiency in the product itself, but rather a disconnect between how those customers see the problem that it solves.
Don’t worry. The problem is real and your potential customers would benefit from having it solved. But the way you solve it for yourself (you using your software) just isn’t the way your customers need their version of the problem solved.
What they need is you to solve the problem for them. Luckily, you’ve already built the best tool for the job. That means it will take you half the time to do the job than it would as a typical consulting project. But you can still charge the same, or perhaps more since you’re able to deliver more efficiency and value using your tool.
Think about this: If you were to shut down the purchase button for your software, rewrite your landing page to offer the same thing as a productized service, could that be just the change you need to gain traction?
MODEL 2: Build a productized service on top of existing software
So you don’t have your own software. And you’re not about to spend 6-12 months building something. You’ve got bills to pay and don’t have the time for side project experiments.
But you still want to transition from project-based income to recurring revenue. Instead of just offering more of your billable hours in neat monthly packages, think about how you might incorporate existing software to power your retainer work.
The benefits of a productized service built on existing software are two-fold:
- Using the software to do things you’d normally do manually significantly cuts down your time, while adding more value for the client.
- Marketing your productized service on the back of a popular software tool (that many customers are too busy / not savvy enough to use themselves) can be a very effective way to reach your target customer and offer them the solution they’re already looking for.
Think about this: Is there a well-known software tool that A) clients like yours could greatly benefit from implementing in their business and B) you can structure a value-added done-for-you service around? I’d bet there is.
MODEL 3: Offer a productized service option along with your software
So you’ve built and launched a software product and you’ve got some paying customers. But it’s not quite enough to make this product your full-time thing.
Although your paying customers have validated the product by this point, the fact that it isn’t growing faster could be due to some objections that a certain segment of customers have.
It’s possible that one of those objections has gone unspoken: The customer knows they have the problem, and they know your software will solve it, but they’re too busy to sink time into implementing it and then actively getting value from it themselves.
For these customers, a done-for-you option could be just the proposition they need to buy now instead of “I’ll get to it later” (a.k.a. “I’ll forget about this by tomorrow”).
Think about this: Experiment with adding one additional tier to your pricing structure, which includes you installing, optimizing, or even an personalized monthly check-in. That might be worth a few hundred dollars more for both your customer and your bottom line.
My Productize Crash Course shows you how to productize your service so you can 10x your value without 10x'ing your time.