IoT Business Model: Can You Identify Yours?
by Exosite, on July 21, 2015
An unrefined IoT business model posses a significant risk to the success of any IoT product deployment. It is important to carefully consider the applicable business models to identify one that best suits the product, organization, and target market. Three business models most common to the IoT space are based on revenue generation, expense reduction, and free services.
The value-added features of connected products lend themselves well to a revenue-generating IoT business model. As a part of this model, it is necessary to consider whether the costs associated with connectivity will be:
Charged to the customer on a recurring basis.
Built in to the cost of the hardware.
Free for the first N months and then charged to the customer there after.
Subsidized by network carriers or insurance companies.
If the costs of connectivity will be passed on to the customer, organizations must ensure the necessary infrastructure is in place to bill customers for these services if they have never done so before.
Organizations seeking to take advantage of the predictive and proactive nature of connected products may benefit from the expense-reducing business model. Under this model, an organization must have a realistic and proven plan to ensure the expense reductions associated with the connected product will offset the costs associated with its development and deployment.
A business model in which connectivity is offered free of charge is well suited for enterprises seeking to use the collected data for internal purposes. This model allows an organization to leverage its IoT solution to enhance differentiation from competitors, streamline customer service processes, or gain insight into customer usage and product performance.