Your business offers real value. Your customers see the value you offer and desparately want to take advantage of it.
Rent versus Buy.
Have you ever lived in rented accomodation? I have, several times. We know when we rent, it's like "throwing away money", but we do it because it offers us flexibility to use our cash in different ways. We might have an excellent job, but we don't yet have the ability to put down a house deposit. Renting gives us flexibility.
Before this recession hit, I would offer to build websites for small to medium sized businesses. I'd usually get 20% or a third up front, and the rest of it upon delivery of the website. Prices ranged from $5,000 to $50,000, depending on the complexity of the requirement, and business was brisk.
Then the Recession came.
Businesses still desparately wanted what I had to offer -- perhaps even more so -- a website that drew prospects to my customer's business, but they simply did not have the cash. They were slashing costs everywhere in order to stay afloat. The cash just wasn't coming in like it used to, so capital expenditure was scaled right back.
If I didn't come up with a new business model, my leads would stop turning into customers.
And then it dawned on me. I would rent the website instead of sell it to my customer.
This solved the problem. The customer could afford the solution, because the cost was spread out way into the future. In a recession like this one, people are thinking quarter by quarter survival, not ten years into the future, so a website "rental" model was very attractive.
Advantages for the customer:
They get to spread the cost of the website across years.
They get to see the value of the website before they've paid much.
They have the option to walk away if it doesn't deliver results.
They see that the provider (me) has a lot of skin in the game, long after the website work is done.
Advantages for the supplier: (me)
The upfront cost barrier-to-a-customer-signing-up is removed, so closing a new customer deal is easier and more likely.
You have the opportunity to guarantee to your customer your solution will be satisfactory.
For as long as you keep your customer, you get a rental payments.
As you gather and secure more customers, your monthly rental income becomes more predictable.
So, how much can a website be "rented" for?
The deal I now offer my customers is very straighforward: 10% + 10% at the beginning and 2% per month for as long as they want the website.
So, if it is a $10,000 website, they pay $2k up front ($1k to get project started, $1k when we make the website public), then $200/month for as long as they see value coming from their website.
I ask for the 20% at the beginning because it is good for everyone to have at least some "skin in the game", and it helps me get by and at least pay some bills.
Still, it's not as lucrative in the short term as it was two years ago, but it is a real recession buster for both me and my customer. And if I believe what I tell my customer -- that their new website will deliver value for years to come -- then I am very clearly putting my money where my mouth is.
This model -- rent verus buy -- is more workable for smaller web solution providers, because we can be more flexible than larger companies.
If it is a choice between getting website rental income versus not getting a customer at all, the choice is obvious. From the supplier's point of view, Renting versus Selling wil cause a drop in income in the short term, yes, but it will keep you busy delivering customer value, it will help you stay in business. You will recoop your cost over time - perhaps even exceed the original list price for the website when the website continues to deliver value to the customer beyond 3 or 4 years.
I wish you the best of luck no matter what.
Author, Web Traffic Magnet and Web Search Magnet, available on Amazon.com