Traditional business models may need to rethink their strategies if they want to make their way into the IoT landscape. Businesses are in need to develop new action plans and revenue streams to successfully monetize IoT products and services.
This represents a barrier for organizations that are change-resistant, or who lack agility in adaptation.
→ Learn about: How should you get started with IoT Monetization?
As IoT continues getting closer to the consumer and gaining insights on how IoT products and services are being used, the transformative power of IoT for businesses becomes more and more clear. For instance, IoT helps evolve customer relationships by continuously learning more about their consumers, which leads to a 100% customer-oriented product design, with better support and, in some cases, even preventive care.
At the end of the day, the main goal of a business is to make a profit… So, how can digitalization, and IoT in particular, help evaluate existing businesses’ revenue models and maximize their profits?
IoT Revenue Models
We should start by taking a look at the elements that have the biggest impact when choosing the ideal IoT revenue model for your use case.
The object of Monetization: The actual element that you want to monetize. This can be anything from the physical product and traditional services to a digital service, connectivity, or data.
Revenue Stream: This could be time-based, as is the case of time-limited contracts, based on the actual usage of a product or service, or, for example, it can be a success or outcome-based model. Which revenue stream would fit better to your business case?
Customer relationship: Is it a direct or rather an indirect approach through a network of re-sellers?
Based on these IoT revenue models elements, businesses can define how they are going to price their digital products and services when shifting towards a recurring, XaaS (anything as a service) based model.
→ Learn more about IoT Monetization Hub
5 Key factors to consider before introducing an IoT business model
Moving towards recurring, Xaas-based revenue models imposes a stretch on many organizations. There is a whole set of capabilities needed to succeed:
- Products need to become connected to obtain usage, environmental, or other related data from the products in the field.
- Quantifying and processing those data in real-time
- Rating those events to evaluate a price point
- Closing a bill cycle in regular intervals – usually monthly – to issue invoices
- Record payments and feed upstream ERP systems
→ Read more: Why should you incorporate IoT Monetization to your business?
Conclusion
IoT business models implementation requires intense development. Products need to become connected, capabilities need to be built to usage meter certain parameters from the field to determine a price point, and ERP systems need to be capable of managing recurring revenue streams.
But, what does that even mean and how can you handle all that hassle?
Well, that’s what we do best!
At Freeeway we help companies to CONNECT their products, providing the systems to MONETIZE usage of IoT products and services based on different value drivers in real-time. Just fill up the form below and one of our experts will contact you at IoT light speed!
