The IoT industry isn’t new. After all, we’ve been using connected devices for quite some time now to capture information and monitor statuses. But, despite forecasts from Bain Capital of annual revenues of $470 billion by 2020, many organizations who have invested in an IoT project have yet to capture any significant revenue from their solution. So how can you go about monetizing IoT? We’re glad you asked!
The current market for Internet of Things (IoT) reflects a growing focus on driving results using sensor-based data with the ultimate goal of solving complex logistics, manufacturing, services, and supply chain challenges. However, organizations will fail to see results if they continue without a clear strategy to generate revenue from their devices, services or data.
Here are our 4 plans for IoT monetization and IoT billing management:
Companies such as Nest have become household names for monitoring home security, managing energy consumption, and replacing “dumb” devices (think doorbell and smoke alarms) with “smart” ones.
Selling these home security devices at a premium, one-time charge and supplying the consumer with a better, app-enabled mouse-trap has made houses more secure, more sustainable, and safer. What’s even better, the end-user can adjust settings and monitor devices from anywhere.
The IoT monetization model here is a software-as-a-service model paired with physical products. The benefit to offering this type of IoT monetization strategy is the scalability and one-time customer acquisition cost. That being said, a recurring revenue or subscription-based business is more predictable and profitable than flat-rate billing.
Subscription and flat-rate pricing models have become more popular among both B2B SaaS companies and consumer products. Subscription billing is common for consumers, easy to manage for providers, and allows companies to better predict revenue. However, flat-rate billing doesn’t take into account the fluctuation in end-customer usage.
Most businesses offer a few one-size-fits-all plans and rely on the customer to mold themselves into their desired choice. Whereas, a pay-as-you-go plan gives customers what they want – potentially increasing sales and decreasing revenue leakage.
That being said, connecting billions of devices and managing usage-rating, taxation, and inventory can be a lofty task. Fortunately, adopting a technology like Rev.io can alleviate these IoT monetization problems, automate usage-based billing, and collect payments.
Billing for a usage-based offering is not an easily achievable task but there are several companies disrupting the market and fully embracing consumption-based pricing. A recent study found that Generations Y and Z are more financially conservative than the Baby Boomers – these younger generations have developed spending habits that reflect those of the Great Depression (or the Silent Generation).
The fiscally conscious generations will not pay for what they don’t need and many will discontinue a service if they aren’t being billed fairly. Service providers must take note – the time is now to adopt a usage-based billing model and the infrastructure to support it.
The service providers that offer pay-as-you-go services will have a significant competitive advantage in the market. In the coming years, usage-based revenue models will overcome the Communications, cable, music subscriptions, GPS trackers, energy providers, and eventually transportation.
If this is your first time monetizing IoT or offering a new pricing model, prepare yourself for the change with our 4 Considerations of Consumption-Based Pricing blog post.
Another way IoT companies can monetize their offering is through their data. Measuring and analyzing customer or device data will become a staple for IoT monetization offerings.
We’re predicting insurance companies, healthcare facilities, and car manufacturers to be big buyers for scenarios like tracking good drivers versus bad drivers, monitoring patients after a physical therapy session or checkup, and evaluating future opportunities for automobile design and manufacturing.
In order to capture and share data with key stakeholders, companies also need to track the amount of money they’re spending on data usage. This will help your organization’s IoT monetization strategy in developing a profitable price point and generate revenue from your data.
The good news? Rev.io does the heavy lifting on usage-rating and IoT billing operations, so you can spend time scaling your business. With existing integrations in place to seamlessly manage new orders, service usage, tax calculation, and support, Rev.io alleviates IoT billing and customer management pain. The proof is in the usage-based billing platform – Rev.io clients grow by more than double the industry average. Contact Rev.io to get in touch with our team of experts today to see what our subscription billing platform and back office solutions can do for you.
Take the necessary steps to grow your business at scale. Request a demo of Rev.io’s billing software today.