Data transfer in IoT devices is growing substantially. The power to determine whether this will infer an increase in costs or in revenue for your business lies in your hands.
In this article, you will learn how to spike success and value in your IoT business status quo through one addition only.
IoT is Growing Data Rich
It is predicted that IoT devices such as machines and sensors will be generating 79.4 Zettabytes of data in 2025.
As the information that IoT applications carry is substantially growing, it is no surprise that they become increasingly more and more data-rich. During early days, IoT would operate on use cases such as product tracking or helping figure out the state of a coca-cola vending machine remotely. Nowadays, use cases and industries can go as far as predictive maintenance, digital twins, waste management, smart driving, or precision architecture. That puts us in a moment in history where not only the data increase but more importantly, the cost to transfer those data over mobile networks -in particular in mobile use cases, where roaming plays a crucial role-.
This can no longer be neglected by companies.
According to a thorough research on the state of the art by the Statista Research Department, a German company specialized in market and consumer data, 42.62 Zettabytes of data are generated by Internet of Things devices -such as machines and sensors- in 2022. This number is expected to grow close to 80 Zb by 2025.
Nowadays, most of the companies that commercialize with IoT products are focusing on a one-time sales business model in which they are able to monetize solely with the hardware they sell. Even in those cases in which businesses see the opportunity to move progressively into subscription and usage-based models with their products, they lack intelligible platforms -if at all- to help them build or optimize the processes to manage those recurring revenues. This translates as them having to do it fully manually, which just doesn’t make it seem worth it anymore. It takes away time, effort, and work. Moreover, many companies that identify this opportunity are not even considering implementing it because of delays and detriments.
Some disadvantages of treating IoT monetization manually include:
- Associating costs for mobile data to a specific device and/or customer,
- Building mobile data price bundles as distinct part of product prices and check the costs associated to it
- Checking if a product service bundle is a fair usage within the mobile data consumption that is included in order to control excess costs…
Monetizing IoT Connectivity
Mobile data are recurring for any IoT business, and its monetization is the first step to access to mobile recurring revenues (MRR). The average SaaS company is said to spend only 6 hours in total determining their price strategy. Investing time in monetization strategies should not be taken so lightly. This time invested is something that will pay off to your business, literally.
The way we are treating IoT connectivity and how customers are being invoiced today is very much based on manual processes. Given the size density of the data being managed, this has shown itself to be a hurdle and will only become worse due to the increasing size of data being consumed.
Mobile data can be treated in different ways:
- It can be a cost for the business- and who would want it to stay that way?
- It can become a Monthly Recurring Revenue (MRR) – the company sells MB packages as a distinctive price item in the overall pricing concept.
- The company can decide to simply include mobile data in the overall IoT product/service MRR.
Subscription and Usage Management (SUM) platforms help you automate the above manual processes to increase adoption, speed and efficiency in pricing of IoT uses cases with high MRR potential.
These software platforms make it possible to monetize recurring business and pricing models that allows money to be collected over time by a company in exchange for its products or services. This pricing model can be one-time, subscription, consumption outcome, or a combination of all of them.
Revenue stream can be therefore stable and predictable, allowing companies to plan for future growth and expansion based on their current customers’ needs. It also allows for long-term profitability with minimal investment required on behalf of the company.
You can adopt a pay per use model, which charges for real data usage on a monthly basis, or a data subscription model which includes a personalized amount of data offered on a monthly or yearly basis with or without auto-renew, for example.
The monetization and connectivity possibilities are endless. But what is clear is that a recurring revenue model will help you build customer engagement and therefore, loyalty.
IoT Data Monetization Takeaways
Today, the biggest fraction of IoT monetization use cases are still associated to one-time fees, which are in most cases related to their hardware. This is favorably changing, as more and more businesses are looking for a recurring revenue opportunity in order to increase their reach of action in their industries and generate trust with their users through a recurrent customer relationship. In doing so, they are setting themselves up to success by spiking up their revenues. With this sole implementation, they know they are not only adding predictability but company value as well.
Monetizing mobile data as a part of an IoT pricing strategy opens a new recurring revenue opportunity for businesses.
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