Recurring revenue
Recurring revenue is income a business can reasonably expect to receive again from existing customers, without needing to win a brand-new sale each time — subscriptions, maintenance contracts, retainers, or repeat service agreements are common examples. Buyers generally value recurring revenue more highly than one-off sales because it’s more predictable.
Not all revenue carries the same weight in a valuation. A dollar earned from a signed multi-year contract is generally worth more to a buyer than a dollar earned from a single walk-in sale, because the first is far more likely to show up again next year without extra sales effort.
What counts as genuinely recurring
- Subscriptions or memberships billed on a set schedule
- Multi-year service or maintenance contracts
- Retainer arrangements with a defined renewal term
- Repeat-purchase patterns backed by a contract or a long, documented customer history — not just hope
Why buyers scrutinize the label
Businesses sometimes describe revenue as recurring when it’s really just repeat business with no contractual commitment behind it. Buyers typically ask for contract terms, renewal rates, and churn history before accepting a recurring-revenue claim, since the difference between a signed contract and an informal habit matters a great deal to risk and price.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryGetting a Business Valuation Before You List
- 02Treadstone LawLegal commentaryAre Your Contracts Assignable?
Deavo is an advertising and listings platform, not a brokerage, law firm or valuation firm. This page is general information, not legal, tax, accounting or valuation advice, and rules differ by province. Confirm anything you rely on with a qualified professional before you act on it.