What is Better Than Passive Income? Continuous Passive Income.
When something is truly great, you naturally want it to happen more often. Continuous Passive Income contributes genuine financial freedom.
Anyone with some financial knowledge is likely familiar with the term “Passive Income.” Let me illustrate this concept with a few quick examples.
Passive Income:
This refers to money that flows in without requiring your active effort. It’s generated by something you’ve already created or invested in, which continues to provide returns over time.
Examples: Book royalties, YouTube ad revenue, newsletter subscriptions (like this one), app income, etc.
Active Income:
This is income earned through direct effort or active participation in a job or business.
Examples: Salary, bonuses, freelance or contract work, one-time commissions, side gigs like Uber driving, etc.
It's important to note that side hustles are not always synonymous with passive income.
I have written two articles reflecting my journey in pursuing passive income (for 15+ years).
Passive Income is Great, But there is one even better.
If something is really nice, you will like it to happen more often, right? In this context: Continuous Passive Income. MRR (Monthly Recurring Revenue) is a term often used to measure passive income.
Let me start with a story that deepened my understanding of continuous passive income. Years ago, I bought a brand-new car from a dealership. On the day I picked it up, the salesman tried to upsell me two additional items:
Tinting
Insurance
Having had tinting done before, I knew the market price. The dealer’s price was almost double, about $300 more than the average. On the other hand, the insurance policy he offered was reasonably priced, from a well-known national provider, and closely matched the quotes my wife had already researched.
I turned down both offers. What surprised me, though, was the salesman’s reaction. He didn’t push hard for the car tinting, even though it offered an easy $300 margin. Instead, he was relentlessly pushing to sell me the insurance.
On the way home, I kept wondering, “Why?”
Later, I figured out the reason: people don’t usually change their car insurance providers. This means the salesman, acting as a proxy, would earn ongoing commissions, even small, for as long as the policy stayed active. They are playing for the long game.
In the software and media industries, subscriptions have become the standard model
People in their 50s might remember when we used to buy software in a box (with a CD inside). Today, most software is subscription-based. For instance, an Adobe Photoshop license once cost around A$1000, but now it’s available for A$32.99 per month. Spotify, PlayStation Store, Amazon Prime, Netflix, … all do the same.
There is a good reason behind it. Those big firms aim for long-term continuous income by offering a low subscription price to use their products and services.
Personal Experience
My Trial of Subscription Mode to Standalone Desktop App
My first product was TestWise, which is a standalone desktop app (available only for Windows before version 7). It was first offered with a perpetual license, priced at around US$500 for a personal license (which, by the way, was significantly cheaper than similar products at the time). However, when large companies purchased enterprise software tools like this, they often requested a guarantee for support, such as a three-year support package, which typically cost A$5,000 or more.
Following the trend, I switched to a subscription model and reduced the price too. In the subscription mode, the support is included. The current price of the TestWise license is only US$30/month.
However, there is a problem. As TestWise is a standalone Desktop app, customers don’t supply credit cards, and therefore no auto-renewals. I did provide a support site so customers can easily renew there. However, the renewal rates were not optimal.
Three Subscription Renewal Modes in my Web Apps
I have several web apps with commercial customers: ClinicWise, SiteWise CMS and WhenWise.
ClinicWise’s primary customer base consists of dental clinics in China. While the renewal rate was high (I’ll explain this later), there was no automatic payment system in place. As a result, a large percentage of customers failed to renew online, even after receiving three system-generated reminders. They would only reach out to us after the account was auto-suspended (and year by year). It created a rather poor experience for both.
I introduced auto-payment to SiteWise CMS (website hosting), which allowed renewals to be handled automatically, creating a much smoother experience. However, the nature of the business made it difficult to retain customers after a few years (I’ll explain this later).
For WhenWise (service booking app), I made the customer’s monthly fee transparent and usage-based, starting at $0. The system auto-charges the customer’s supplied credit card on 1st day of the month.
In this sense, it is more than ongoing rather than renewals. I like this model better.
Advice for New Start-ups: Prefer a high-renewal rate business product
TestWise IDE is not a high-renewal product unless the software industry genuinely embraces real end-to-end (E2E) test automation as a core part of Agile and DevOps practices. Unfortunately, the reality is that many so-called "agile teams" doing fakely.
Moreover, the prevalence of fake automated testers and bad test automation frameworks (e.g., Cypress) has tarnished the reputation of both test automation and test automation engineers
Oh well, let’s hope one day that will change.
SiteWise (a web hosting app) has a moderate renewal rate. Why? The market is saturated with similar platforms, and many business owners—with little IT knowledge—are easily swayed to switch providers based on flashy promises or misleading offers.
ClinicWise and WhenWise are high-rate renewal apps. Why? It is related to the customers’ core business, in other words, they make money with it. For examples:
A piano teacher uses WhenWise to receive and manage bookings from students.
Tennis court hire via WhenWise
Yoga teacher can view lesson bookings on their mobile phone using WhenWise.
…
WhenWise helps customers generate income by bringing them clients, all for a starting cost of just A$5 per month. Naturally, they’re unlikely to switch unless they have a compelling reason.
This is the best continuous passive income mode I can think of.
Summary
Software developers looking to take action on building continuous passive income should read the article, Strategies for Achieving Financial Freedom as a Software Professional. Option 2: Solopreneur, Micro-ISV or Start-up Founder.
For non-software developers with marketing skills, there are still opportunities to earn continuous passive income by partnering with Solopreneurs or Micro-ISVs. As many of my long-time readers know, I haven’t actively marketed my software products—something I realize I should have done. I’ll soon publish an article exclusively for paid subscribers, introducing a marketing partner program. This program will enable individuals with marketing expertise to earn potentially significant, ongoing passive income. If you’re eager to get started, feel free to contact me via Substack Chat!
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