Revenue: It’s Simple, Until It Isn’t

If a customer purchases an annual plan, they will hand over the 200 dollars in exchange for a guaranteed 12 months of service. However, as the content provider, we can only recognize the cash as revenue once we have already handed over the proverbial goods. That means even if you pay us all upfront in month 1, we still can’t recognize that payment as revenue until the completion of our agreements with you.

The lesson here is that while revenue increasingly goes towards subscriptions don’t be afraid to build a services component if it acts as a beachhead. When you are taking customers on a new and dangerous journey, you’ll have to be by their side most of the way. Why not get paid for it?