IoT hardware is currently monetized in more than 95% of all cases. However, adopting an IoT revenue model that is evolved towards usage-, time- and success-based monetization models will give you an advantage and spike your revenues. Now is the right time to drive your company’s recurring revenue streams with IoT products and services!
State of Things in the IoT Industry
As the monetization elements evolve from hardware and traditional services towards digital and data-driven ones, they will also need to include elements of mobile data in most IoT use cases. In order to keep pace with this evolution of IoT monetization, we require systems and specialized applications that aid businesses in creating, managing, charging, and invoicing subscription-based business models.
This article is about the key components of such a system, labeled by Freeeway as the IoT Monetization Hub.
What is the IoT Monetization Hub?
The IoT Monetization Hub is a platform that helps IoT solution providers and companies in the business to CONNECT, MANAGE and MONETIZE their offers and services. This will transform their revenue stream from a product-led business model towards a recurring revenue-generating machine.
CONNECTION is the stronger foundation in all digital businesses. To digitize your products and services, you need to gain access to data from your remote devices, locations, etc., to drive use-cases such as predictive maintenance, digital twins, real-time streams – you name it.
As your use cases span globally, you will need to MANAGE those connections at a global scale. This is usually the domain of connectivity management platforms or CMPs.
As IoT subscriptions are becoming more sophisticated, the MONETIZATION element is a main point of focus going forward.
Elements within these domains are broadly discussed down below and more in-depth in consecutive blog posts.
CONNECT – Global IoT Connectivity
Having access to connectivity at a global scale is important for many IoT use cases. This is the domain of sourcing cellular services based on various technologies, such as 2G/3G/4G – LTE, 5G, NB-IoT, and LTE-M.
MANAGE – Connectivity Price Management
You could treat the mobile data either as a cost or as a revenue stream. The IoT Monetization Hub enables businesses to monetize with data connectivity and stay flexible, leaving it up to them to define their own mobile data price models.
MONETIZE – Introduction to The Hub
This is the key component of the IoT Monetization Hub. It enables businesses to create, manage and invoice IoT subscriptions that span various value drives from Hardware, SaaS, Digital- & Traditional Services, as well as Connectivity.
Subscription plan management
Enables businesses to freely define IoT subscription business models. It combines the following meters into a single subscription, such as
- Fixed amount limits, e.g, number of devices included, a dedicated rental fee, etc.
- Mobile Data limit, the amount of mobile data included in the subscription, either per single device or shared between a group of devices
- Custom Usage limits, any value driver from a customer’s business models to enable usage-based subscriptions, should be fed to the IoT monetization hub based on real-time feeds
- Service limits, such as a particular SLA
Each limit should have a trigger so that when the limit is reached it triggers a consecutive action. A trigger may be that the max. a number of devices of a subscription (= fixed amount limit) is reached, and the next tier of your defined subscription model will be invoked.
Is the domain to automate each billing cycle. For B2B use cases invoice creation out of an automated bill run is a key requirement.
In IoT use cases, where the device is with the end-user, the subscriptions are usually settled via payment providers such as Pay-Pal, Visa, Stripe, Klarna, etc. Such use cases are the domain of devices such as trail cameras, pet-, kid- and dog trackers, and home alarm systems. Also, medical devices such as blood-pressure monitors, elderly trackers, etc.
The IoT Monetization Hub is, therefore open to be integrated with multiple payment providers.
As subscriptions enable a recurring revenue stream, the IoT Monetization Hub must support consecutive payment collections. This is usually done by implementing recurring payments based on the respective payment provider’s capabilities.
Multi-Currency & Taxation
In all global use cases, each subscription should be set up in multi-currencies to provide the capability to react on market-specific price elasticity and requirements for a global service. Hence, multi-currency support in setting up subscription is a key requirement that needs to be addressed by the IoT monetization Hub.
As this system enables businesses to establish a direct customer or end-user relationship, local tax implications in different markets must be taken into account. This is usually done by integrating tax providers to the platform to determine the local tax applicable for each transaction.
It is an essential yet under-valued element of IoT Monetization. In particular, when you start spanning your subscriptions over more extended periods- such as 6 months, annually or multiple years. If you or your company opts for usage-based revenue models, this is an important factor for sales recognition.
E.g., when you monetize mobile data based on subscriptions, the revenue will be recognized based on the amount of mobile data consumed per month during the subscription term. Freeeway’s IoT Monetization Hub supports usage-based revenue recognition also for mobile data subscriptions.
Data & Analytics
In order to stimulate demand by setting price promotions or evaluating your optimal subscription price, insights into your subscriptions are of key importance. Such a system has to consider insights like daily revenues, subscriptions sign-ups, daily average payments, geographical distribution of your users, etc. It’s best to have a system that gives you as much information as possible.
As connectivity plays an important role in IoT, data & analytics also have to consider the usual insights in the connectivity services you are sourcing or offering. Insights include where, when, and how often a device connects. If the device is currently on- or offline, how much data has been consumed in the actual bill cycle, with which device IMEI the connection is associated, what IP address is being used, and many more.
IoT Monetization Hub is a system that does a very specific task to enable your IoT subscription business. It usually integrates with CRM or ERP systems. IoT Monetization Hub supports open APIs and webhooks to integrate with customers’ environments.
We now know why efficiency and autonomy when setting up IoT subscription is a key concern for many IoT solution providers that wish to monetize their IoT use cases. From today’s 95% hardware monetization, we see a particularly strong push towards usage-based subscription models- those that combine multiple value drivers into one. As a system like this is very complex, businesses are now confronted with manual process steps during each and every billing cycle. This is inefficient and takes a lot of resources that could be used for more value-creating tasks.
Freeeway focuses on enabling IoT solutions providers to CONNECT, MANAGE and MONETIZE their smart connected products and services in the most efficient ways. This is why we created the IoT Monetization Hub. Our long-term vision helps businesses to benefit from recurring IoT revenue streams. Freeeway is committed to driving innovation in this field every day with full dedication.
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