The concept of recurring monthly revenue (RMR)—the ability to just generate passive income every month from a service—is a concept many within the custom integration industry have been preaching for a while. That being said, while plenty have managed to work it into their businesses, it still has yet to fully take off among integrators. But why should integrators be interested in RMR? Is it just about making more money? According to SpecOp Secure, a provider of Network-as-a-Service (NaaS) and cybersecurity services for custom integrators, the benefits of recurring revenue go much deeper than that.

In a statement released ahead of the company’s debut at CEDIA Expo 2024, SpecOp asserts that by not offering RMR, integrators are exposing themselves to more than just fewer profits—though that is a big one.

“Recurring monthly revenue (RMR) can have a significant impact on an integrator’s bottom line,” notes Farr Shepherd, President of SpecOp Secure.

“It’s not just about one-time installations; it’s a steady stream of income that can help sustain and scale their business. Integrators can increase cash flow, reduce expenditures, and add value to their business.”

The Benefits of Developing Recurring Monthly Revenue (RMR) Streams

So, what are the benefits of RMR, and how can it factor in creating a healthier business model for integrators? Let’s look into it.

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1. Profitability

Getting the obvious one out of the way here first. It goes without saying that the most apparent benefit of recurring revenue for a business is you make more money. You make more money, you net more profit with the added benefit of having to rely less on high sales volumes to make that money.

2. Higher Margins

The margins associated with an recurring revenue service vastly outcompetes the averages for one-time sales. Translation: you get more money back for what you put in. A multi-year service contract, according to SpecOp, has a margin of around 50% while most one-time sales have margins that average 20%.

3. Revenue Stability

Another benefit of recurring revenue is that it is predictable. The income stream that it generates is guaranteed for the life of the contract, and that predictability helps enhance financial stability even during rough patches. Beginning every month, quarter, and year with predictable income streams improves the financial strength of the company and girds you against the worst in the event of a recession or something like the pandemic.

4. Business Valuation

A consequence to having solid financials through recurring revenue is that the intrinsic value of your business grows as a result. Your business gets seen as a safe investment by having consistent, reliable payments on the books, which can greatly help if you ever have plans to sell your business or ever need to take on a loan in order to fuel more growth.

What’s Stopping You from Pursuing RMR Services?

Historically, custom integration has largely operated as a product-driven business, and when it came to recurring revenue, integrators have largely hesitated to offer their products and services as part of this model due to fears of delayed, up-front payments, supplier costs, and long term commitments, according to SpecOp.

It’s no secret that in the security industry, an industry that has largely capitalized on recurring revenue for its primary revenue stream, products are generally sold either at cost or at a loss under the expectations that the money will be made back over time.

Over the years, however, those within the integration industry have largely begun to move away from the product-focused business model. More recently, a greater sales emphasis has been placed on the value of the services an integrator offers as lifestyle specialists, and within that focus of services, it may be a little easier to field recurring revenue as a potential business model.

SpecOp also points out that through strategic planning, and by partnering with the right businesses, integrators can better navigate the challenges and concerns start making the first steps towards a recurring revenue model.

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