I would like to be able to sell a monthly/yearly subscription to a service. This service can come with one or more physical products, but these products are only purchased once. I am doing this programmatically through my webstore, so I would like to utilize the Quotations Template Feature as a base, if possible.

I'm exploring different methods of doing this and would like opinions on the best strategy:

Contracts can be managed for the service, but I can't figure out how to put a contract on an invoice like I would if I were adding a product that was defined as a service.  There's a place where it says "No order to invoice, create Sales Orders" next to the invoicing table, but I am unclear how these are handled. Creating an invoice requires adding the physical item manually, rather than using the template. 

Recurring invoices - I can create a Product that is the amount of the monthly service, but If I make the whole invoice recurring, then the associated physical product is also repeated.

I suppose I could do two invoices, one one-time only for the physical product, the other recurring for the subscription... But would the recurring one have a service or a contract?

In all, this is a fairly confusing scenario, so any help would be appreciated.