The IoT is beginning to shape the future of numerous industries, by generating an unprecedented amount of data. As the market for IoT platforms matures, vendors will need to address not only a number of issues relating to platform capabilities and features, but also the competitive landscape to serve users better.
In order to provide IoT solutions, service providers increasingly need to offer flexibility and customization when setting up contractual relationships on a per customer basis. Vendors must consider unique product offerings, flexible pricing models, deal specific contract commitments and the myriad of system integration. Once these requirements have been met, the question remains, how do you accurately bill the customer?
Market pricing models remain fluid for IoT platforms, as many vendors view flexibility in pricing engagement as one way to reduce objections to purchasing. Key pricing methodologies in the market include perpetual and term license fees, subscription fees based on data, messages and other services, and bundled pricing for platform use extended on a per-device, per-month basis.
Pricing flexibility, and specifically deal based pricing, is of upmost importance. As, each target account has different goals and needs where pricing models need to wrap around how the end customer is using the product, whether that be subscription, usage, one-time fees or tiering. All of these pricing models have elements that tie to the number of assets, the volume of data, the length of the contract, the analytical output, the complexity of the environment and other criteria.
Service providers increasingly need to offer flexibility and customization when setting up contractual relationships on a per customer basis where multiple contracts can be set up on an account (overlapping contracts are processed independently)
Managed contract commitments allow for creating deal specific roll-out/ramp-up schedules with minimum commits. Whether that be the number of devices, volume of data or other evaluation criteria to provide pricing discounts.
Commitments in LogiSense Billing can be set up on contracts and defined based on commitments types such as:
Service – Commitment based on service volume
Usage Class – Commitment based on usage class
Package Service – Commitment based on a service within a specific package and package frequency
Package – Commitment based on package volume
Invoice Amount – commitment based on how much was billed on that invoice
Average Usage Charge – Average usage per service connection
Nevertheless, for each commitment, it is possible to setup a commitment period, the committed amount and commit frequency. Ramp up schedules can be set up on commitments, where ramp up schedules are based on product volumes, invoiced amounts or on usage.
Outcome Based Pricing
According to Gartner’s report “Magic Quadrant for Industrial IoT Platforms”, as the market for IoT platforms matures, vendors will need to address not only a number of issues relating to platform capabilities and features, but also the competitive landscape to serve users better. The adoption of managed IoT services will bend the traditional pricing approach to mandate pricing based on the quality of outcomes related to use cases, or other approaches to identify and avoid production delays. When outcome-based services are predicated on service guarantees, there will likely be lower costs to implement a solution and a higher likelihood of pricing contingency fees based on shared risk-reward expressed as percentage of saving/improved productivity or fee multipliers.
Importance of Integration
Most IoT vendors rely on partnerships with third-party technology companies and open-source resources to improve or expand the functionality of their platforms. Any deployments of an IoT platform requires configuration and integration with operational and back-end systems and various sources of data to meet the requirements of the specific and planned IoT-enabled outcomes. System integrators’ initial approach to the IoT market has been to act as a knowledgeable source of technical expertise that can align with a user’s desired business outcomes by integrating IoT technology within business processes.
The LogiSense billing platform has been designed from the ground up to be as flexible as possible. With LogiSense, our billing platform is designed to scale both horizontally and vertically. Integrating with your financial software package of choice, is a common deployment task and we’ve performed many financial integrations with packages such as SAP, NetSuite and Oracle to name a few. One of the most common integrations is to perform a batch export of financial data based on a timed interval, specific format and delivered to a desired location. Furthermore, if the financial system has the capability for direct API integration, and the business need requires it, LogiSense has provided various direct API integrations with financial systems.