In nearly every conversation we have with agency founders who are thinking about selling or simply building for the long term, some version of this question comes up: “Should we move to a recurring revenue model?” It’s a smart question. But there is an even better one:

“Does our revenue behave in a recurring way?” 

Structure isn’t the same as stickiness. And buyers know the difference. 

The Allure (and Illusion) of Recurring Revenue

The agency world is increasingly drawn to SaaS-like metrics: monthly recurring revenue, customer lifetime value, churn rate. We’ve borrowed the language. Some have borrowed the models. But many are still missing the logic.

Recurring revenue became a gold standard in tech because it allowed for efficient scaling and better forecasting. Investors love it because it’s predictable. Operators love it because it smooths out the highs and lows. So naturally, agencies began asking: How can we replicate this?

And many tried:

• Fixed monthly retainers

• “Unlimited” creative services

• Bundled service packages on annual cycles
  
  

But here’s the catch: a recurring revenue model is not the same as recurring revenue behavior. You can charge someone monthly and still be building a leaky, fragile business.

When Recurring Is Just a Payment Plan

Let’s look at the real-world examples:

• A design agency offering a $10K/month “unlimited creative” package churns 80% of its clients within four months. On paper, it looks like MRR. In reality, it’s a revolving door of short-term projects disguised as a subscription.

• An ad agency wins a set of annual contracts but relies on two enterprise clients for 65% of its revenue. One change in leadership, and the foundation shakes.

• A development agency sells a six-month retainer with weekly calls and deliverables but spends most of its time reacting to vague client asks. When the term ends, so does the relationship because the value wasn’t clear, and the outcomes weren’t owned.

  
  

This is what we call fragile recurring. It looks great in a deck. But it doesn’t hold under due diligence.

What Buyers (and Sophisticated Operators) Actually Look For

At Barrel Holdings, we evaluate agencies with the same criteria any strategic buyer would. We want to see not just revenue, we want to see behavioral patterns behind the revenue.

Two key signals drive the conversation:

1. Revenue Retention
   Are your clients coming back year after year, or are you constantly reselling your services?

2. Client Concentration
   Are you dependent on a few big accounts, or have you built a resilient, diversified portfolio?

   
   

The best-performing agencies we see are in the 80–90% client revenue retention range over two to three years, with no single client making up more than 20–25% of topline.

This isn’t luck. It’s the result of building real relationships and earning repeated trust.

Enter: Re-Occurring Revenue

Here’s a nuance many overlook: recurring doesn’t have to mean retainer. Some of the most durable agencies we’ve worked with never use subscriptions or formal retainers at all. There is no neatly packaged MRR or locked-in 12-month contracts. Instead, they’ve built a rhythm of re-occurring revenue, the kind that comes back not because of paperwork, but because of partnership.

Think:

• A creative production team that handles every major product launch for a CPG client, year after year.

• A digital agency that runs an annual campaign tied to their client’s industry calendar.

• A branding firm called in every time a real estate client develops a new property.

This work may be scoped per project, but the cadence is predictable, the trust is established, and the revenue is sticky. In other words, the first project gets you in, but the relationship keeps you in.

Retention Is a Culture, Not a Contract

Here’s the shift we see in agency leaders who get it:

They stop asking, “How do we lock clients in?”
And start asking, “How do we build something clients want to return to?”

It’s not about subscription mechanics. It’s about relationship dynamics. Recurring revenue, whether formal or informal, isn’t built on clever packaging. It’s built on:

• Consistently strong delivery

• Proactive account management

• Understanding the client’s evolving business

• Making it easier for them to say yes again

Admittedly, you won’t impress VCs with your “recurring design package.” But this kind of revenue roots itself in your business. And like any healthy root system, it’s invisible but critical. It stabilizes everything above ground. It takes longer to build. But once it’s in place, it’s the difference between a stressful pipeline meeting and a steady drumbeat of repeat work.

The Takeaway: Build for Behavior, Not Optics

If you're in the agency game for the long haul, or if you want to position for a future sale, chasing a revenue model without deeply considering the revenue behavior underneath is a strategic misstep.

You can structure your offers any way you like:

• Monthly

• Quarterly

• Milestone-based

• Calendar-triggered

But if clients don’t come back, it doesn’t matter.

Buyers (and frankly, employees and partners too) aren’t looking for gimmicks. They’re looking for evidence that you’ve built a company clients trust enough to return to.

That’s what creates stability.
That’s what earns premiums.
And that’s what scales.

Reflection: What’s Really Driving Your Revenue?

Ask yourself:

• Which clients returned this year without a resell conversation?

• What percentage of our revenue is from returning clients?

• If our top two clients left, what would our plan be?

This is where your real valuation lives, not in the MRR number on your pitch deck, but in the patterns behind it.