2 Types of Revenue Models

14 Feb 2024 · 1 min

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This content was created by Feras Alhlou. This content was uploaded by Feras Alhlou. This is a YouTube video titled "2 Types of Revenue Models" (created 2024-02-14). It is an instructional/presentation segment that explains two revenue models for service and consulting businesses: project-based (one-off engagements, e.g., interior designers or architects) and recurring revenue (ongoing services, e.g., cybersecurity firms selling annual audits or bookkeepers). The excerpt highlights the practical implications for client acquisition and retention—project-based businesses must continually find new clients, while recurring-revenue businesses expect most clients to roll over.

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Service and consulting businesses fall under 2 revenue models. The first is project-based. This is where you get paid for delivering a specifically outlined service one time. Clients don't renew once a project is completed because the need is met. For example, interior designers and architects provide project-based services unless you know someone who redesigns their living room every month. The second model is recurring revenue businesses. In this model, services are delivered multiple times. The service is ongoing because the need is continuous, unlike project-based services, which typically don't renew. For example, a cybersecurity firm that sells annual security audits or a bookkeeper expects most of their clients to come back to them next year. In the first model, businesses need to find new clients constantly. In the second model, businesses expect most of their clients to roll over.