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Blog/ Apr 26, 2022

IoT Monetization Models Explained

For fast-growing companies, recurring billing and subscription management strategies help accelerate growth while generating recurring revenue. The Internet of Things (IoT) is revolutionizing the way we do business. The interconnectedness of IoT devices can create incredible new revenue streams and products, offering the potential to add value and generate income that only those who are quick to adopt new technology will be able to capture. 

The Internet of Things (IoT) and connectivity over networks are the foundation of more self-sustainable, networked, and profitable businesses. IoT is changing the business models for many industries and businesses. Thanks to connectivity, these smart devices can now be monetized with recurring billing. The goal of the Internet of Things is to automate processes, eliminate tasks, and streamline customers' experiences to improve loyalty.

There are several ways to structure a billing strategy for an IoT platform. One option is to use usage-based billing, which can help track and invoice for transactions. It's particularly useful when you offer variable connectivity levels since you can use different pricing plans based on the connectivity level customers choose. Pricing based on how much you use certain services is far more flexible than flat-rate billing systems.

Monetizing The IoT

The Internet of Things (IoT) is growing rapidly. It is estimated that the economic impact of IoT applications could be from $3.9 trillion to $11.1 trillion per year in 2025. As more devices are connected to the internet, there is an increasing need to find ways to monetize the data these devices generate. One way to do this is to charge users for access or data usage. However, some IoT products are inexpensive and may not be used frequently enough to justify a recurring payment. In these situations, plan pricing upfront so that you can monetize the value of your hardware product and its connectivity.

Monetizing the Internet of Things (IoT) can be challenging, as high volumes of data generated by devices make it difficult to build a business model around, and it is hard to predict the number of charges which will be created. Because of this, the Internet of Things offers opportunities for companies looking to customize billing based on customer device data.

IoT Monetization Models

A well-thought-out and firm understanding of your business model is essential to succeeding in the dynamic marketplace of IoT. Companies are exploring new ways to generate revenue opportunities tied to the unique characteristics of their devices while also striving to enhance the customer experience with product offerings that solve problems in unique and unexpected ways.

Let’s explore the IoT monetization models that leverage the power of IoT in creative new ways:


1. Subscription Model

The subscription model allows customers to purchase the right to use a product on an ongoing basis, including updates and support, for a fixed fee, rather than buying a one-time license for the software product.

The subscription model makes sense in IoT because consumers want their devices to be constantly upgraded and refreshed over time, and they are willing to pay a small fee for access to new features.

This model is in high demand among enterprises that provide the full IoT stack as a service. This also makes them attractive to device manufacturers offering service-based add-ons.


  • A recurring revenue stream removes barriers to entry because there is no initial capital investment required
  • It empowers your company to foster an active relationship with the customer
  • It allows you to explore a variety of monetization strategies, including freemium and premium models
  • The model appeals to businesses across industries because it creates steady, predictable income streams

2. Usage Model

A usage-based billing model is a monetization model in which a user is charged for the resources they consume from the service, rather than paying a flat rate.

IoT devices provide access to internal data that helps companies understand their customer usage patterns.  These insights could help businesses improve future products and create innovative business models where customers are charged based on their usage and its value to the business.

IoT usage data can help you examine the myriad connections between devices, infrastructure, and environments to find new ways to meet customer needs, deliver more satisfying experiences and develop more profitable business models.


  • Customers are charged only for the amount of usage, eliminating the need to make large upfront investments
  • You can identify the products your customers use and the frequency of usage, allowing you to better cater to their needs
  • Customers find this model fair and transparent as they are charged based on how much data they use
  • It gives your customers greater flexibility in how they use your product

3. Outcome-Based Model

IT innovations have encouraged a focus on outcomes versus things. An outcome-based IoT business model is an innovative approach, enabled by IoT products, that focuses on the benefit a customer will receive by using your product or service instead of its cost.

In this way, customers do not focus on the high cost of capital investment, but rather on the value they are receiving for using the product. An outcome model allows for flexibility, such as the opportunity to lease IoT devices with an outcome charge.

The outcome-based monetization model is the most appropriate approach for companies offering a full IoT stack to address business challenges, rather than individual IoT components. An example of an outcome-based pricing model is a "high temperature exceeded" message that warns of an extreme case.


  • An outcome model allows an organization to choose the most efficient rate structure for meeting revenue goals
  • Customers prioritize the value they receive as a result of using the product over the cost of buying it, so they do not view the transaction as a high cost for a depreciating asset
  • It is an innovative monetization model with dynamic revenue streams that combine hardware, software, cloud storage, and many other solutions

4. Service Model

The Internet of Things allows you to track multiple details in data that your business has gathered. This allows you to create new revenue streams for your product or service. 

A service business can also be combined with other business models, in which the company can sell a product, monetize the data, and offer a value-added service based on its insights. A good example would be one in which data collected from a vehicle could be used to provide information about road conditions—including potholes to a mapping service that might help a driver avoid potholes on city streets.

5. Asset-Sharing Model

Who Owns Your Assets? What if you could share your assets with others, who would then pay you for access to them? This is the idea behind what's called an asset-sharing economy.

This model facilitates the sale of excess capacity of your Internet-connected product back into the market. The goal is to maximize the utilization of your Internet-connected product across multiple customers. By optimizing asset utilization in this manner you are able to get faster market penetration and reduce the overall cost for each customer. Through hardware sharing, not only does one save on costs but also contributes to a positive environmental impact by cutting down on the number of devices that end up in landfills.

When customers are in the market for industrial equipment, they must evaluate whether they can utilize it to its full capacity. In many cases, asset sharing can provide the optimal solution. A single piece of industrial equipment can be used by multiple vendors who share it by moving it from one location to another as needed; for example, a piece of apple-picking machinery that moves from farm to farm based on when the harvest is required.


  • This service benefits multiple customers who use the service based on their current needs
  • Lower prices and reduced barriers to purchase enable quicker market penetration

By putting the right business model in place, you can optimize your revenue streams—capturing the full potential of your IoT ecosystem, focusing on the unique characteristics of each business model to address the pain points that are important to your customers, and delivering a value proposition that lets your customers easily connect their existing behaviors and modernize their business processes.

In Conclusion 

The Internet of Things is the next frontier in connected devices that enable us to collect and analyze data in real-time. It is advancing on multiple fronts: new devices are being introduced at an astonishing rate, new connectivity options are becoming available, chip technology is being pushed to the limit, and new use cases are emerging everywhere we look.

The Internet of Things (IoT) is one of the most talked-about future technology trends. With the increasing number of IoT devices, there has been an exponential growth in the amount of data produced. This has caught the attention of businesses and organizations, who are keen on taking advantage of the potential revenue generation opportunities available. As more and more such devices become interconnected, it’s getting easier for organizations to collect data from these sensors, analyze it, and act upon it in a timely manner.

An elegant and scalable solution can unlock the potential of IoT monetization for your company. The LogiSense cloud billing platform enables you to focus on your core business instead of being distracted by customer support issues.  Reach out to us today to learn about the potential benefits of a responsive IoT platform for your business. Our team of industry experts is ready to assist with your billing strategy and implementation across IoT.



About the Author

Tim Neil /

As Sr. Director of Marketing at LogiSense, Tim is responsible for corporate brand messaging and digital assets ensuring that future customers understand the immense benefits that LogiSense Billing brings. Tim has over 20 years of Product Management and Marketing experience in the technology industry.


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