In this presentation, host Joe Polish introduces pricing strategist Erin B. Haig, who argues that recurring revenue is the single most powerful lever for creating predictable cash flow, higher client retention, and greater business valuation. Haig shares a personal case study from her 2013 Pilates studio in Palm Beach, illustrating how a seasonal, package‑based pricing model led to a cash‑flow spike followed by a deep financial hole. She then outlines three core benefits of recurring revenue: (1) cash‑flow stability that smooths seasonal peaks and enables better operational decisions; (2) improved client retention by shifting focus from constant lead generation to delivering ongoing results, which in turn raises lifetime client value and referrals; and (3) higher valuation multiples for businesses with a high percentage of recurring revenue, citing her own exits— a Pilates studio sold for a 40x multiple with 90% recurring revenue and a retreat company sold for a 20x multiple with 82% recurring revenue. Haig recommends aiming for 50‑70% of revenue to be recurring, ensuring that recurring income covers operating and payroll expenses each month. She concludes with three practical questions founders should ask to transition to recurring models: which part of the business can become recurring, what recurring offer to create (membership, retainer, subscription, etc.), and what monthly revenue target would provide true financial stability.
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Imagine waking up on the first day of every month knowing exactly how much money is coming in and knowing that all of your expenses are already covered. That is the power of recurring revenue. If your company lacks a recurring revenue stream, the next 10 minutes may completely change how you think about growth, scalability, and long-term value. Our speaker today is bestselling author Erin B. Haig, a pricing and profitability strategist who has built, scaled, and sold 2 successful businesses through her proprietary price methodology, she helps entrepreneurs increase revenue, strengthen profit margins, create predictable cash flow, and build more valuable companies through recurring revenue. Her talk is titled Recurring Revenue: The Lever That Makes Your Business Even More Predictable, Profitable, and Valuable. Please help me welcome Erin Haig.
Great, thanks. Thank you. Thank you.
I appreciate it. Thank you so much.
Okay, let's see. Here we go. Okay, so recurring revenue is the financial backbone between many of the world's most successful, healthiest, and most profitable companies. And this is true across industries, markets, organizational models, and also company sizes. So my mission today is to convince you to implement recurring revenue into your business if it does not already exist. So to do that, I am going to take you on a journey back in time to a period known as the Nightmare Before Christmas in July. It was the summer of 2013. I owned a Pilates studio in Palm Beach, Florida. That was my studio. I was young. I was ambitious. I was super skinny and I had really tight abs. And I was also just wildly unqualified to be making the decisions that I was making inside my business as a debutante business owner. I was naively doing what every other studio in my area was doing. I was selling packages of 10 and 20 sessions at a time. This is the actual pricing card from my studio in 2013, terrible. And being located in Palm Beach, Florida, my business was extremely seasonal. So 50% of my clients were snowbirds, which meant that every year around Passover, or for the Christians in the room, Easter, around April, they would all leave for their summer homes in the Hamptons, Cape Cod, Martha's Vineyard, Nantucket, probably places where many of you have a vacation property yourself. And my studio would turn into a ghost town. Just, it caused a major cash flow drought. During that time, things got very tight. Very, very tight. Like your shirt. Dr. Sherry, you know how tight I'm talking, right? Okay, right. So, During that extremely tight summer, I decided to run what I thought was an absolutely brilliant promotion, a Christmas in July sale, 10% off all packages. Now, I thought I was a genius. But a genius I was not, at least not yet, because here was the problem. There was no limit to how many packages my clients could buy. And so what did they do? They bought all of their sessions At a discounted rate for an entire year, including the snowbirds. But that month, my studio made the most money we had ever made. Wait for this number. $20,000. Now, I know, I know that doesn't seem like a lot of money to those of us in this room making $20,000 a minute, but that was mind-blowing to me. It was the most money I had ever made, and I just really thought that I was brilliant. But then the next month my business only generated, it gets worse, $3,000. $3,000. And it took an entire year to one, service all of the prepaid packages that people purchased at a discount, and to climb out of that very deep financial hole. Because what I had unknowingly done was, I borrowed future revenue to survive the present. I created temporary cash flow, but I destroyed all of my long-term financial stability. And none of it would have happened if my business had been built on recurring revenue. Wouldn't have happened.
Hey, I hope you're enjoying this video, and I want to let you know that I have a new book that's come out, and if you'd like to get it absolutely free, There's a link below in the description, or you can wait till the end of this video, or you can simply go to joesfreebook.com and you can get a copy there.
So there are 3 major reasons every business should prioritize recurring revenue. One is cash flow stability, 2 is improved client retention, and 3 is higher business valuation. So we're gonna start with cash flow stability. Recurring revenue creates financial predictability inside your business. When you know exactly how much money, a guaranteed amount of money is coming in every single month, it's a game changer. Changes everything inside your business, and especially for seasonal businesses like mine. So who has a seasonal business in here? It's rough. Instead of experiencing those peaks and valleys, Recurring revenue at least helps to level out the field, so you don't have so many highs and lows. It allows you to forecast more accurately. It allows you to make smarter operational decisions. It allows you to hire with more confidence. It allows you to invest from a place of stability instead of panic, and just most importantly, it prevents desperation-based decision-making, because desperate business owners make very expensive mistakes and decisions. And I know this because I ran a Christmas in July sale. Mm-hmm. When your business lacks that predictable cash flow, your hand gets forced, and you start making decisions simply to generate immediate cash flow, and those decisions are not supporting the long-term health of the company. Recurring revenue changes that dynamic completely. The second reason recurring revenue is so important is because of client retention, and this is where I think most people get recurring revenue wrong and the true power of it, so stay with me. Recurring revenue eliminates the need for lead generation, gets you out of the business of constant lead generation, and into the business of delivering real, true client results. Better results create longer client retention. Longer client retention increases lifetime client value. Higher lifetime client value creates more profitability without needing to funnel in more leads. And then something miraculous happens inside your business. Happy clients refer. And we all know, especially in service-based businesses, that client referral is the strongest form of lead generation. So recurring revenue doesn't completely eliminate lead generation. I know the marketers in the room are probably dying here. I'm not saying that, but it just improves the quality of it. So because now your marketing is being fueled by actual client transformation. And then the third reason recurring revenue matters is business valuation. I think this is going to be the most important for everyone here in this room. Businesses with strong recurring revenue models just sell for higher multiples. And I know this personally because I've now sold 2 companies in 8 years. My Pilates studio sold in 2018 for a 40x multiple, 90% recurring revenue, and a 56% profit margin. And just 3 months ago, I sold my retreat company, Luxury and Business Retreats. It sold for 20x, 82% recurring revenue, and a 31% profit margin. So now what I do is I'm in the business of helping founders restructure their pricing for profitability, So that they can position themselves for a better acquisition. Now, one of the first questions a buyer is going to ask— and this happens every time— is, what percentage of revenue is recurring? Now, why do they ask this? Because recurring revenue lowers their risk. A buyer is now stepping into predictable, steady cash flow. And that's extremely valuable to a buyer. The higher the percentage of recurring revenue, the more attractive your business becomes to buyers. Mm. Now, what percentage of revenue should you aim for? What percentage of recurring revenue should you aim for? I typically say 50 to 70%, and here's why. Because in any healthy business with healthy profit margins, somewhere between 30 and 50%, or higher, your recurring revenue should at minimum cover your operating expenses and your payroll expenses every single month, because these are the expenses that are needed to keep your business alive, and your recurring revenue should cover them without effort, without launches, without promotions, without scrambling. And once those expenses are automatically covered consistently, then everything else becomes growth, profit, and scalability. So if your current— if you currently do not have recurring revenue in your business, you want to ask yourself the following 3 questions. One is, what part of my business can transition to recurring revenue? 2 is, what recurring revenue offer can I create? And this is where I want you to think about a membership, a retainer, a maintenance contract, a continuity program, a subscription, some sort of recurring client experience, and then how much monthly recurring revenue— and think about an actual revenue number— would create true financial stability inside your business? Because recurring revenue does 3 incredibly important things. It stabilizes cash flow and increases financial predictability. It improves client retention and increases lifetime client value. And it also increases the valuation of your business if and when the time comes to sell. So recurring revenue originally became important to me because I was just trying to survive the summer slow season in my Pilates studio. But what I eventually realized is that recurring revenue is not just a survival strategy, It is the strongest foundation for long-term business growth, profitability, and wealth creation.
Okay, I hope you found that video awesome and useful. So if you wanna get a free copy of my book, I want you to click here. And if you wanna watch some more videos that'll be useful and awesome, click here. Go ahead, they're over here. Do it now. Come on. Thank you. Watch 'em.
