IoT Monetization Models Explained

For fast-growing companies, recurring billing and subscription management strategies accelerate growth and generate recurring revenue. The Internet of Things (IoT) is revolutionizing business by creating new revenue streams and products. Companies quick to adopt this technology can capture significant value.

IoT and connectivity lay the foundation for self-sustainable, networked, and profitable businesses, transforming business models across industries. These smart devices, thanks to connectivity, can now be monetized through recurring billing, automating processes, eliminating tasks, and enhancing customer experiences to boost loyalty.

Several billing strategies for IoT platforms include usage-based billing, which tracks and invoices transactions. This method is particularly useful for offering variable connectivity levels, allowing for flexible pricing plans based on customer usage, unlike flat-rate billing systems.

Monetizing The IoT

The Internet of Things (IoT) is rapidly growing, with an estimated economic impact of $3.9 trillion to $11.1 trillion per year by 2025. As more devices connect to the internet, monetizing the generated data becomes essential. Charging users for access or data usage is one approach, but some IoT products may not justify recurring payments due to infrequent use. In such cases, upfront pricing strategies can help monetize the hardware and its connectivity.

Monetizing IoT is challenging due to the high volume of data and unpredictable charges. However, it offers opportunities for customized billing based on customer device data, enabling businesses to create flexible and effective revenue models.

IoT Monetization Models

A solid understanding of your business model is crucial for success in the dynamic IoT marketplace. Companies are finding new revenue opportunities by leveraging the unique characteristics of their devices and enhancing the customer experience with innovative solutions. This approach not only generates revenue but also solves problems in unique and unexpected ways, setting businesses apart in the competitive IoT landscape.

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 access a product on an ongoing basis, including updates and support, for a fixed fee, rather than purchasing a one-time license. This model is ideal for IoT, as consumers expect their devices to be constantly upgraded and refreshed, and they are willing to pay for access to new features.

This model is popular among enterprises offering the full IoT stack as a service and device manufacturers providing service-based add-ons.

Benefits:

• Recurring revenue stream with no initial capital investment
• Fosters active customer relationships
• Supports various monetization strategies, including freemium and premium models
• Creates steady, predictable income streams across industries

2. Usage Model

A usage-based billing model charges users based on the resources they consume rather than a flat rate. IoT devices provide valuable data insights, helping businesses understand customer usage patterns, improve products, and create innovative business models.

IoT usage data reveals connections between devices, infrastructure, and environments, enabling businesses to meet customer needs, deliver better experiences, and develop profitable models.

Benefits:

• Charges based on actual usage, avoiding large upfront investments
• Identifies product usage patterns to cater to customer needs
• Fair and transparent, charging based on data use
• Offers flexibility in product usage

3. Outcome-Based Model

IT innovations have shifted the focus from costs to outcomes. An outcome-based IoT business model emphasizes the benefits customers receive from using a product or service rather than its cost. This model allows flexibility, such as leasing IoT devices with an outcome charge.

Benefits:

• Enables efficient rate structures for revenue goals
• Prioritizes value over cost, avoiding high capital investments
• Offers dynamic revenue streams combining hardware, software, cloud storage, and more, ideal for full IoT stack solutions.

4. Service Model

The Internet of Things allows tracking multiple data points, creating new revenue streams. Combining a service business with other models, companies can sell products, monetize data, and offer value-added services. For example, vehicle data can provide road condition insights to a mapping service, helping drivers avoid potholes.

Benefits:

• Enables multiple revenue streams from product sales, data monetization, and services
• Provides valuable insights based on tracked data
• Enhances customer experience with real-time information and services

5. Asset-Sharing Model

Who owns your assets? What if you could share your assets with others who pay you for access? This is the idea behind the asset-sharing economy.

This model facilitates selling excess capacity of your Internet-connected product back into the market, maximizing utilization across multiple customers. This leads to faster market penetration and reduced costs for each customer, and contributes to environmental sustainability by reducing device waste.

When customers need industrial equipment, asset sharing provides an optimal solution. For example, apple-picking machinery can move from farm to farm based on harvest schedules.

Benefits:

• Allows multiple customers to use the service based on their needs
• Lowers prices and barriers to purchase, enabling quicker market penetration
• Optimizes revenue streams by capturing the full potential of the IoT ecosystem
• Addresses customer pain points and modernizes business processes

Unlock Your IoT Monetization Potential

IoT is rapidly transforming how we collect and analyze real-time data. With new devices, connectivity options, and advanced chip technology, IoT offers immense potential for businesses to harness and monetize data.

IoT is a major technology trend, generating vast amounts of data, and creating revenue opportunities. As devices become more interconnected, organizations can efficiently collect, analyze, and act on sensor data.

LogiSense's cloud billing platform can help you unlock IoT monetization potential, letting you focus on your core business. Contact us now to discover how our responsive IoT platform can benefit your company with expert billing strategy and implementation.