Recurring Income Meaning: Complete Definition and Examples

If you’re deciding which type of revenue model is best suited for your business, you may want to consider a recurring revenue model. Recurring revenue is usually more predictable, allowing businesses to operate on smaller margins because they know their customers have higher lifetime value.

Understanding the benefits of recurring income versus non-recurring income and reviewing examples of recurring income can help you understand whether it can work well for your own business.

In this article, we discuss what recurring and non-recurring income are, the benefits of each and offer examples of recurring income.


1 What is recurring income?
2 Benefits of recurring income
2.1 Greater lifetime value
2.2 Predictability
2.3 More multiples
3 What is non-recurring income?
4 Benefits of non-recurring income
4.1 Faster growth
4.2 Big margin
4.3 More offers
5 Examples of recurring income
5.1 Rent
5.2 Long-term contracts
5.3 Subscription auto-renewal service
5.4 Product subscription
5.5 Content subscription
5.6 Contract vendor cooperation
5.7 Support contracts
5.8 Big brands with loyal customers

What is recurring income?

Recurring revenue is the portion of revenue that a company expects to continue on a predictable basis. Recurring income is income that is expected to occur periodically with a high degree of certainty. Reoccurring revenue is important for companies that want to maintain a consistent revenue stream.

Benefit from recurring income

There are a number of benefits for businesses interested in creating a business model with reoccurring revenue

Greater lifetime value

Lifetime value (LTV) is the total revenue that a business can reasonably expect from a single customer during its entire relationship with that customer.

When customers purchase using the recurring revenue model, they tend to have a higher lifespan than those who make a single purchase.


Recurring revenue models tend to have more predictable revenue streams because customers who pay for services are likely to continue to pay for them in the future.

More multiples

Stable revenue and metrics make it easy to calculate a business value in a variety of ways.

What is non-recurring income?

Non-recurring income consists of a single payment that may or may not occur again in the future. Some examples of non-recurring income are clothing stores, ticket sellers, and short-term housing providers.

In this case, it is difficult to assume that the customer will return and make another purchase in the future.

Benefit from non-recurring income

There are several benefits of a non-recurring revenue model:

Faster growth

Businesses that charge a one-time fee may charge more for their products and services, allowing them to invest money back into the business to drive growth.

Big margin

Because businesses with non-recurring revenue models charge higher prices, they can enjoy larger margins than other companies.

This generally means that these companies can sell fewer products or services to achieve the same profits that companies achieve with a repeat revenue model.

More offers

A non-recurring income business can easily offer a wide variety of products and services.

Example of recurring income

Here are some examples of reoccurring revenue you might want to consider:


Rental income is a common example of recurring income. The money is collected monthly on a recurring basis under contracts that can last from several months to several years.

Long term contract

It is common in many industries for companies to require their customers to commit to long-term contracts in exchange for service. Cell phone companies are a common example of this, as many require customers to commit to a contract for a term of two to five years with monthly payments.

Companies that follow this type of subscription model can record future revenue because they can be sure that the customer will make those monthly payments over the life of the contract.

These businesses often include a cancellation clause in their contracts. If the customer chooses to cancel the service before the end of the contract, the customer is usually required to pay a cancellation fee.

Subscription auto-renewing service

An auto-renewing subscription is a service that automatically renews until the customer cancels. Some examples of auto-renewal policies are word processing software, anti-virus registration, music streaming, video streaming, cloud services, print or digital publications, or internet domain registrations.

Companies calculate their recurring monthly income by multiplying the number of people who pay for the service by the amount of average revenue per user.

Product subscription

Product subscriptions are another common type of reoccurring revenue. Many e-commerce companies offer subscription services as a convenience for customers who regularly need goods delivered to their homes.

Some examples of subscription products are beauty supplies, razors, household products and even office supplies. Making these products available as subscriptions simplifies reordering for consumers and increases customer lifetime value for businesses.

Subscribe to content

Content subscription refers to services such as online newspapers, magazines, or blogs that require users to pay a recurring membership fee to access. This type of recurring income model is growing in popularity.

Contract vendor cooperation

Another example of a recurring revenue stream can occur when customers become dependent on your products and services and, for this reason, find it difficult to switch to any other company.

For example, cloud computing companies can make it easier for customers to cancel their services. However, doing so will require the business to set up new systems or processes to access that data, which will require valuable time and resources.

In many cases, companies may choose to stay with a vendor simply because they have grown dependent on the technology the vendor offers.

Support contract

Sometimes products, especially software, are sold for a one-time fee and include the option to purchase recurring support services. The most common scenario is software that consumers purchase at an upfront cost and then an additional annual support fee if they want additional support or license upgrades.

A big brand with loyal customers

This reoccurring revenue example is slightly different from the others in that there are no subscriptions and the customer is not required to purchase by contract. However, when a company has a large loyal customer base who tends to use this service on a regular basis, they can feel confident that they will receive a large percentage of reoccurring revenue.

Soft drink manufacturers are good examples of this, as many of their customers consume several drinks per day.

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