Turning One-Off Projects into Monthly Revenue: Retainers, Care Plans and Subscription Contracts

Companies that build websites, do design, install systems or take on maintenance work often meet the same cycle: close one project, then hunt for the next. In the months when work comes in, income is good; in the months when it dries up, there is not enough to pay salaries. Owners want steadier income, so they offer a monthly care package, a standing advisory fee or a continuing subscription.

The problem is that recurring revenue does not come from renaming a quotation. The customer must see value every month, the provider must know what it has to deliver in each period, and the contract must answer what happens when the customer stops paying, wants out or wants more work midway. This guide covers moving from one-off work to recurring revenue, and where the law, contracts and tax affect the decision.

The core answer

Sustainable monthly revenue needs three things together: a service the customer genuinely uses repeatedly, a clear monthly scope of work, and a contract that sets renewal, termination and changes in advance. Without any one of these, the customer sees a cost that can be cut at once, or the provider is pulled into doing extra work for no pay.

The rule (Thai law). Most monthly service contracts are contracts for work or for services with no specific statutory provisions, so they rest on what the parties agree, within general limits. If the contract is a standard form drafted in advance by one side, section 4 of the Unfair Contract Terms Act B.E. 2540 makes a term that gives the drafting party unreasonable advantage effective only to the extent it is fair, and if the customer is a consumer the Consumer Protection Act B.E. 2522 is added. On tax, section 78/1 of the Revenue Code provides that for services, liability to value added tax arises when payment for the service is received.

Our practical view. Do not start by writing the contract. Start by writing, as a short list, "exactly what the customer gets each month", and then write the contract from that list. Whenever the customer asks for more than the list, there should be an agreed option: charge extra, or queue it for next month, not quietly take it on. For the detail of monthly service contracts, see MSA and SLA for monthly service contracts. This guide focuses on changing the model rather than the detail of the clauses.

1. Work out which jobs should be monthly

Not every job suits a monthly model. Jobs that do usually look like this.

• Work that has to be repeated on a cycle, such as bookkeeping, website care, advertising management, machinery checks, cleaning or regular deliveries of materials.
• Work where the customer needs availability, such as a system where someone must be able to fix problems when they arise. The customer pays to have someone ready to pick up the phone.
• Work where accumulated knowledge adds value. A provider that knows the customer's business better each month has a reason for the customer to stay.
• Work where changing provider would cost the customer, such as data and processes living in the provider's system. (Be careful here; see the section on data below.)

Jobs that do not suit are projects that end on delivery and have no real ongoing work. If you set up a monthly service for such work, the customer will cancel within a few months or dispute that they received anything.

2. Recurring-revenue forms and what the contract must answer

Choose the form that matches what the provider can control. Do not promise results that depend on the market or on what the customer does itself, such as higher sales, unless the liability for that is clearly set.

3. Monthly scope: where profit quietly disappears

The most common problem with monthly services is scope creep. The customer pays the same amount but asks for more each month; the provider, wanting to be accommodating, agrees; in the end the cost of the customer is higher than the revenue.

How to write it

• List what is in scope as numbered items, and state plainly what is out of scope.
• State the channel and hours for requests and the response time, not the time to fix, unless you can control it.
• State how to request additional work, for example that the provider proposes it in writing first and starts when the customer approves.
• State whether work not used in one month rolls over. If you do not say, there will be a dispute when the customer says they lost their entitlement.

Sample wording (for understanding only; adapt it to the business before use)

The Service Provider will provide the services listed in Attachment 1
in each calendar month. For work outside the list, the Service Provider will
propose the scope and fee in writing and will start only when the Client
approves in writing. Services not used in a given month do not carry over
to the following month.

4. Billing and payment cycle

• Bill in advance or at month end. Billing in advance helps cash flow and reduces the risk of the customer falling behind, but if the service has not yet been performed, customers usually expect a right to a refund when they end the contract, so write the refund terms clearly.
• Due date. State an exact date, not one tied to the customer's approval.
• Effect of late payment. State the right to suspend the service on non-payment, and require notice before suspending, so you are not accused of breach by stopping the service.
• Fee adjustments. If you want to adjust at renewal, write how advance notice is given and give the customer the right not to renew.
• Customers who have paid for work you have not yet done. This is a debt: you must deliver the service or return the money. Do not spend prepayments and forget this obligation.

For amounts already overdue, see unpaid invoices from business customers.

5. VAT and withholding tax: the effect on cash flow

When you move to monthly, the pattern of receipts changes, and the timing of tax changes with it.

• Value added tax. For a VAT-registered operator, liability on services arises when payment for the service is received (Revenue Code, section 78/1). When you collect in advance, understand that you must issue a tax invoice and file and pay in the month you receive the money, even though the service is performed in later months, and the contract should say clearly whether the agreed fee includes or excludes tax.
• Withholding tax. Corporate customers usually withhold tax at the rate set by law when they pay the fee. The provider must obtain the withholding tax certificate and keep it as evidence. The contract should say which side bears the burden and require the customer to deliver the certificate within a set period.
• Overseas customers. Services supplied to overseas customers may in some cases be zero-rated for VAT, subject to conditions. See serving overseas customers: when zero-rated VAT applies.

For revenue recognition in the accounts and corporate income tax on amounts received in advance, consult the company's accountant or auditor, because it depends on the standards the company uses and the facts.

6. Auto-renewal and termination

A good monthly contract must answer two questions: "when does it end" and "who can end it, and how".

Term options

• A binding minimum term, for example a commitment for the agreed period, after which it runs month to month and can be terminated. The provider gets certainty at the start, which is legitimate where there are set-up costs such as building a system.
• Auto-renewal, renewing for the same period unless a party gives advance notice. This steadies revenue, but customers and consumers often dispute it if they did not intend to renew.
• No fixed term, but terminable by advance written notice. The most flexible.

What to have when using auto-renewal

1. Write the auto-renewal clause in clearly legible type and do not hide it on the last page of the contract.
2. Send the customer a reminder before the renewal date in good time, and keep proof of sending.
3. Provide a cancellation route that works in practice, such as email or a form, not only registered mail to head office.
4. State the effect of cancelling mid-cycle, for example no refund of the fee for the part of the cycle already used, or a pro-rata refund.

Because these contracts are usually standard forms, section 4 of the Unfair Contract Terms Act B.E. 2540 is a risk for the drafter. A renewal clause that is hidden or unreasonably hard to cancel may be interpreted in the customer's favour, and for a consumer contract you should also check the latest notification of the Contract Committee for that type of business, because some businesses are designated as contract-controlled businesses under the Consumer Protection Act.

7. Online acceptance and keeping evidence

Monthly services are often sold through a website or app, where the customer ticks to accept terms or signs electronically. The Electronic Transactions Act B.E. 2544 recognises that a message will not be denied legal effect merely because it is in the form of electronic data, but the provider must still be able to prove which version of the terms the customer accepted and when.

• Keep a record of which customer accepted which version of the terms, with date and time.
• When you change the terms, give advance notice and have the customer accept again; do not change the web page and treat customers as bound at once.
• For important contracts of high value or long duration, use a signing method that leaves clear evidence. See signing company contracts online: what evidence you need.

8. Customer data, rights in the work and handover on exit

Monthly services usually involve data and work that is created continuously. Agree in advance

• Who owns the data. Data the customer provides and data generated by performing the service.
• Who owns the work created during the contract, such as content, design files and scripts. If you do not write it, there may be a dispute when the contract ends.
• Handover on termination. What the provider hands over, within how many days and in what format, and when it must delete the customer's data.
• PDPA. If the provider processes personal data on behalf of the customer, it will usually be a data processor and needs an agreement under section 40 of the Personal Data Protection Act B.E. 2562. See the PDPA compliance checklist for businesses.

Refusing to hand over data to keep a customer is not a safe strategy. Large customers often check this before signing, and it can lead to disputes.

9. One customer with several services, and the effect on the existing contract

If an existing customer already has a project contract, do not layer a new contract on top without checking how they relate. Set out

• When the monthly service starts after project delivery and when the project's warranty period ends, so they do not overlap.
• If the project contract and the monthly contract conflict, which prevails.
• If the project is extended, whether it falls under the project contract or is an add-on to the monthly contract.

If many monthly customers depend on the same team, assess whether the team can really handle the work before selling more, because missing the SLA response times may be a breach of contract.

10. Checklist before moving to monthly

• Write what the customer gets each month as a list, both what is and is not included
• Set how additional work is taken on and how it is approved in writing
• Choose the term form (minimum commitment, auto-renewal or advance-notice termination) and write both sides' termination rights
• If using auto-renewal, set up a reminder before the renewal date and a cancellation route that works in practice
• State the payment due date, the effect of non-payment and the right to suspend the service
• Consult your accountant about tax invoices on advance receipts and withholding tax
• Agree on data, rights in the work created, and handover on termination
• If you process personal data for the customer, prepare a data processing agreement
• Keep evidence of acceptance of the terms and of which version applied
• Try with a small group of customers before rolling out fully (see piloting a business model change)

Further reading

• MSA and SLA for monthly service contracts — detail of monthly service clauses and service levels
• Pricing a service business: fixed, hourly or monthly — choose the pricing method before writing the contract
• SaaS pricing models and subscription contracts — when the monthly service is software
• Business models and their legal effects — how the choice of model changes contracts, tax and labour
• Unpaid invoices from business customers — when a monthly customer starts paying late
• Serving overseas customers: when zero-rated VAT applies — for overseas customers

Monthly revenue starts with writing down clearly what the customer gets each month, then making the contract, tax and billing consistent with that, not with renaming the quotation.

We help draft and review monthly service contracts and subscription contracts to match your business model. For an initial consultation, call +66 92 254 2045 or send us the details. See also contracts and documents and monthly legal retainer.

This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.