How to build recurring revenue that buyers pay a premium for
- Evo-Valuations
- Sep 7
- 2 min read
How to build recurring revenue that buyers will pay a premium for
When it comes to selling your business, not all revenue is created equal. Buyers pay more, often much more, for predictable, recurring income over one-off sales.
That’s because recurring revenue reduces risk, increases valuation multiples, and makes your business look like a stable investment rather than a rollercoaster ride.
Why Recurring Revenue Boosts Valuation
Predictability: Buyers can forecast future income more accurately.
Lower Risk: Reduces reliance on constant new sales.
Higher Multiple: Recurring revenue often increases your valuation multiple by 1–2x.
Buyer Appeal: More investors and buyers will be interested in a stable, low-risk business.
Recurring income is one of the key 8 Levers That Drive Business Value: see the full breakdown here
Types of Recurring Revenue
1. Subscriptions
Fixed monthly or annual fees for ongoing products or services.
Examples: SaaS platforms, membership programs, maintenance services.
2. Service Retainers
Clients pay a set monthly amount for guaranteed service hours or deliverables.
Examples: Marketing retainers, legal services, IT support.
3. Contracts and Licences
Multi-month or multi-year agreements that lock in clients or partners.
Examples: Distribution contracts, licensing deals, franchising agreements.
4. Consumable Products
Regular purchases by customers on a set schedule.
Examples: Coffee subscriptions, office supplies, medical products.
How to Add Recurring Revenue to Your Business
Step 1: Audit Your Offerings
Look at your current products or services — which ones can be turned into ongoing solutions?
Step 2: Create an Irresistible Offer
Bundle value so customers want to commit longer-term. Offer discounts, perks, or priority access for contracts/subscriptions.
Step 3: Lock in Contracts
Formalise verbal agreements into written contracts with renewal clauses.
Step 4: Automate Billing
Make payments frictionless with auto-renewals and recurring invoicing.
Step 5: Track Retention
Measure churn rates and actively work on retention strategies. Recurring revenue is only valuable if it sticks.
For more retention-building tips, see Packaging Your Business for Buyers
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Your Next Step
The Exit Smart. Retire Rich. 3-Year Exit Plan guide and Exit-Ready App show you exactly how to:
Identify the right recurring revenue model for your business
Build and price your offer for maximum retention
Track your recurring revenue growth over time
See exactly how recurring revenue increases your valuation multiple
Your business is likely your biggest asset. Don’t leave its future, or your financial freedom, to chance. Start your 3-Year Exit Plan today and take control of your legacy.
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