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Monthly Recurring Revenue versus 1x Payments1662

Forum
Founder
DanSmigrod private msg quote post Address this user
Which would you prefer?

1. Monthly Recurring Revenue (MRR)?
2. 1x Payments for your Matterport Space scans?

For example, an apartment community would like you to scan 10 spaces:

✓ 7 five model types
✓ 1 Club House
✓ 1 Fitness Center
✓ 1 Lobby

Now imagine, the apartment community has 10 sister communities in your coverage area.

Unlike a house-for-sale, the apartment community has an ongoing need for hosting.

Three thought-starts for discussion:

1. Charge what you normally charge for scanning plus x monthly?
2. Charge less than you normally charge for scanning, plus 2x monthly?
3. Free scanning, plus 4x monthly?

This is such a BIG opportunity for MMR that it frightens me when I read in the MUG Forum that Members want to have their clients set up a Matterport account and pay hosting directly to Matterport. Why would you give away your single biggest revenue opportunity?

Do want predictable monthly income?

As we discuss this, keep in mind that Matterport charges $1,499 for annual Cloud Hosting for up to 300 models. That’s $5 per model per year or less than $0.50 per model per month.

Imagine charging a client per model per month:

✓ $4.95 (You net $53 per model per year)
✓ $9.95 (You net $113 per model per year)
✓ $14.95 (You net $173 per model per year)
✓ $24.95 (You net $293 per model per year)
✓ $49.95 (You net $593 per model per year)

Now imagine times 10 for one apartment community …..

✓ $4.95 x 10 (You net $530 per model per year)
✓ $9.95 x 10 (You net $1,130 per model per year)
✓ $14.95 x 10 (You net $1,730 per model per year)
✓ $24.95 x 10 (You net $2,930 per model per year)
✓ $49.95 x 10 (You net $5,930 per model per year)

Now imagine times 10 communities ….

✓ $4.95 x 10 x 10 (You net $5,300 per model per year)
✓ $9.95 x 10 x 10 (You net $11,300 per model per year)
✓ $14.95 x 10 x 10 (You net $17,300 per model per year)
✓ $24.95 x 10 x 10 (You net $29,300 per model per year)
✓ $49.95 x 10 x 10 (You net $59,300 per model per year)

And, the above is before an upfront scanning fee. And, that’s just the first year of scanning revenue.

And, before you dismiss charging $24.95 or $49.95 monthly as too high, would you be willing to do the scanning for free to have this monthly recurring revenue? Some clients will prefer to pay monthly or annually so that they do not have a big upfront charge.

And, before you dismiss $4.95 monthly as too hard to invoice, please see this MUG Forum thread about how to do automatic billing. (Yes. You can always offer annual billing.)

You have a happy client for one apartment community. What about their sister properties? Too many sister apartment communities outside your coverage area?

Own the relationship. Offer one-order / many markets.

It’s super-easy and super-fast sourcing Matterport Pros using the We Get Around Referral Network Map.

Green, Blue and Purple Pins have public profiles on the Map. Reach out to other Pros directly. Have them publish their scans to your Matterport account. Need a Matterport Pro in a city with red (anonymous) pins or no pins, PM me to run a Matterport Pro Wanted notice.

Make the spread - the difference between what you charge your client and what you pay another Pro.

The Guide to Matterport Service Provider Pricing – curated by We Get Around – includes direct links to the pricing pages of 70 Matterport Pros. [PM me until Saturday, 30 April 2016, if you would like a free 30-day pass.]

A quick revenue of these pricing pages reveals that nearly every Pro is focused on houses-for-sale scanning and pricing includes hosting either for 3, 6 or 12 months or until the house sells or the option to pay to extend hosting.

And, most Pros seemed focused on discounting for volume and/or size.

It’s time to start thinking bigger than a race to the bottom scanning spaces for residential real estate space. It’s time to think about monthly recurring revenue for:

✓ apartment communities
✓ hotels
✓ event spaces
✓ restaurants
✓ retail stores
101 other uses for Matterport Spaces

What else?

What are your thoughts about Monthly Recurring Revenue (MRR) versus one time flat fee?

Dan

Video: This is one of the marketing videos available to Basic, Standard and Premium Members of the We Get Around Referral Network. This video is customized with your city being the starting point for the arrows, plus your contact info and company logo.
Post 1 • IP   flag post
Standard
Member
lisahinson private msg quote post Address this user
The vacation rental place here in Santa Fe was offered $5/month per property and they felt it was too much. This was on 50-100 homes with a seriously discounted price on scanning the properties.

That is why having them get an account sounded like a good option for this company.
Post 2 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
@lisahinson

"Too much" means I do not understand how this will help me:

1. get more vacation rentals rented
2. get more vacation rentals rented for more money
3. get more vacation rentals to rent

No amount of discounting will matter if the client does not see how they will make more money.

Focus the discussion on making money.

Begin with a test and learn with x number of vacation rentals.

Dan
Post 3 • IP   flag post
Standard
Member
lisahinson private msg quote post Address this user
Yes, I get your point. They had been previously taken advantage of by another company a few years ago over hosting fees. They know all of your points mentioned. They could come around.
Post 4 • IP   flag post
Basic
Member
htimsabbub23 private msg quote post Address this user
This post is so valuable. I have always thought in life that having a residual income is so import. Not worrying about overhead no matter how good or bad the month has been. I recently was contacted. By a build firm who is showcasing their homes. I offered them $59.00 a scan upfront (covers my matterport fee plus lunch) and $10.00 per scan per month. They were over the top excited and wanted 20 cards to hand out to friends in the industry. Word of mouth and good customer relations is the absolute best thing for building business.

Thanks for the great post Dan
Post 5 • IP   flag post
Standard
Member
lisahinson private msg quote post Address this user
I do appreciate the post also as I am continually learning so much from this forum.
Post 6 • IP   flag post
Jmoore private msg quote post Address this user
Please Htimsabbub - I'm unclear on your pricing when you day $59 per scan and $10 per scan there after?

Thanks.

PS- this and all these posts such valuable information. Thanks to you all for sharing.
Post 7 • IP   flag post
Basic
Member
htimsabbub23 private msg quote post Address this user
@Jmoore sorry if that was vague. We agreed on an upfront payment of $59.00 to have the scans done and posted and then a residual of $10.00 per month per model for hosting fees. This allows them to have little commitment upfront but as they grow we grow as well.
Post 8 • IP   flag post
JoeMontaleone private msg quote post Address this user
@DanSmigrod

"As we discuss this, keep in mind that Matterport charges $1,499 for annual Cloud Hosting for up to 300 models. That’s $5 per model per year or less than $0.50 per model per month.

Imagine charging a client per model per month:

✓ $4.95 (You net $53 per model per year)
✓ $9.95 (You net $113 per model per year)
✓ $14.95 (You net $173 per model per year)
✓ $24.95 (You net $293 per model per year)
✓ $49.95 (You net $593 per model per year)"

I'm sorry, I think I'm missing something. Could you breakdown how you net $53/model/yr?
Post 9 • IP   flag post
3rd Party
Service
JonJ private msg quote post Address this user
$4.95per month × 12 months = $59.40 per model per year
$59.40 - $5 hosting fee per year = $54.40 net profit per model per year
Hosting cost will vary based on your plan
Post 10 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
@JoeMontaleone like @JonJ says
Post 11 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
@htimsabbub23 Thank you for sharing your innovative thinking ($59 per scan and $10 per month).

While this model does not work for scanning houses-for-sale, it absolutely works for clients that have a need for ongoing hosting.

While $179 in year one - [$59 + ($10 x 12)] may not work for everyone or even $299 by the end of year two, what upfront amount and monthly recurring revenue makes sense for you (all)

I am not expecting an answer to that question. It's meant to get you thinking that every scan does not have to be x with a discount for size and a discount for quantity.

Anyone disagree? Still want your clients to have their own account with Matterport?

Thanks,

Dan
Post 12 • IP   flag post
danmorell private msg quote post Address this user
Hi @DanSmigrod,

Love the model you've put above. I feel MRR is key to a stable running business preventing the ups and downs in revenue.

Though, the loss of MRR is the flip side. Granted, it comes with business in general but a thought to keep in mind.

The question would be, how long should I contractually obligate the client to maintain the service with no out clause?

If I did an apartment community and the client calls asking to cancel 2 months in, I would just think of all the time invested scanning lost if I didn't charge an upfront per scan fee.

This problem reduces each month and I think around 10+ months it's not a big deal. If it's 2 though, ouch. I think an upfront fee like @htimsabbub23 mentions above is a good call.

A potential fix could be the client can have the option to cancel anytime but there's an $X amount per scan fee at that point. If they don't want any upfront scan fees, they're contractually obligated to host with you for a year for example.

Thoughts?
Post 13 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
@danmorell

Great question. I will plan to answer on Monday. Let's get some others to weigh-in on your question ...

Dan
Post 14 • IP   flag post
leeverdon private msg quote post Address this user
I like the MRR option and it makes business financial sense. @danmorell stated putting a minimum term agreement in place i.e. 12 months which should cover any incurred costs OR 'get out of agreement' clause subject to a per scan charge.

However, if a client isn't playing ball and a legal action is required against them then the legal costs to your business could get out of control. Let's not forget about the time and admin it would take to monitor all your clients MMR payments ensuring you're actually receiving payment each month.

Each project has its own unique opportunities and challenges alike. Do what works for you.
Post 15 • IP   flag post
Basic
Member
kenangiguere private msg quote post Address this user
These posts are great. I have been trying to figure out subscription based plan for the vacation rental market in my area. We have mostly non exclusive properties in our market, so the listings are duplicated on many broker websites. I was figuring that if I scanned them all and created some type of rental network that brokers could subscribe to and access for a reasonable fee, they may want to use Matterport for vacation rentals. This would help keep their costs down and give me monthly income. I was happy to see others were talking similarly too!

I think this is such a valuable tool for vacation rentals, but every broker I have talked too says it's too expensive. Time for some creative thinking like these ideas posted here.
Post 16 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
Quote:
Originally Posted by @danmorell
Hi @DanSmigrod,

Love the model you've put above. I feel MRR is key to a stable running business preventing the ups and downs in revenue.

Though, the loss of MRR is the flip side. Granted, it comes with business in general but a thought to keep in mind.

The question would be, how long should I contractually obligate the client to maintain the service with no out clause?

If I did an apartment community and the client calls asking to cancel 2 months in, I would just think of all the time invested scanning lost if I didn't charge an upfront per scan fee.

This problem reduces each month and I think around 10+ months it's not a big deal. If it's 2 though, ouch. I think an upfront fee like @htimsabbub23 mentions above is a good call.

A potential fix could be the client can have the option to cancel anytime but there's an $X amount per scan fee at that point. If they don't want any upfront scan fees, they're contractually obligated to host with you for a year for example.

Thoughts?


Monthly Recurring Revenue (MRR) Pricing is not a one size fits all.

As @leeverdon states. "Each project has its own unique opportunities and challenges alike. do what works for you."

You may even give a client an option of three choices:

1. High Upfront - Low Monthly
2. Medium Upfront - Medium Monthly
3. Low Upfront - High Monthly

I would add to this free re-fresh at anytime. That will help guide you in what you are willing to charge if the client cancels after one month or asks for a re-fresh after one month.

Or, it might be a free refresh after 12 months.

I recommend making it as easy as possible to do business with you. That' means no minimum number of months and cancel at anytime.

The intent of the above is to get MUG Forum Members thinking about pricing in, perhaps, an unexpected way. This will be particularly important as Pros seek new business outside of residential real estate.

@kenangiguere Thank you for your kind note and great idea about rental network. I look forward to hearing more about how that would work.

Best,

Dan
Post 17 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
Hi All,

Other thoughts?

Dan
Post 18 • IP   flag post
3rd Party
Service
JonJ private msg quote post Address this user
I think this is a great way to generate passive income, but my concern would be the high level of risk associated with relying, entierly, on a third party to provide this service, which could last indefinitely.
Post 19 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
@JonJ "last indefinitely" is actually the best possible outcome

Not sure what you mean by "third party" ... Matterport? Bill payment solution?

Tip: How to do automatic monthly billing

(This is the (easy, fast and affordable) solution we use for the We Get Around Referral Network Monthly Basic, Standard and Premium Membership.)

Dan
Post 20 • IP   flag post
3rd Party
Service
JonJ private msg quote post Address this user
In this situation, I am referring to Matterport as the third party. In this scenario, the contract I have is between myself and my client, but I am completely relient on Matterport for the actual service with no alternatives.
Post 21 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
@JonJ

Matterport has raised $56 million. That's good enough for me.

Why not simply go month-to-month? Your client would probably prefer that anyway.

Dan
Post 22 • IP   flag post
Forum
Founder
DanSmigrod private msg quote post Address this user
All,

Additional thoughts about:

1. Monthly Recurring Revenue (MRR)?
2. pricing other than by sf?

Dan
Post 23 • IP   flag post
Basic
Member
htimsabbub23 private msg quote post Address this user
The way I see it is, real estate buying and selling will always be part of our society. Build yourself a network of realtors and be trustworthy, honest with your clients and yourself. save money for the "next big thing" because we all know even the biggest companies come and go. But for now these mountains are filled with pretty gold flakes!
Post 24 • IP   flag post
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