IoT Billing

The way we deal today with various devices or live around physical things is going through a transformation phase. Every device is getting smarter with the latest technology because of the development of the Internet of Things, which is happening at a tremendously fast pace. An IoT is a collective group or a combination of diverse things like physical devices with embedded sensors, software, and communication technologies to connect and exchange data with other devices and backend computer systems over the internet.

For example, anything used as a smart device in our homes or industries produces large amounts of data. Further, the generated data from such devices does not have a fixed pattern; instead, it’s more dynamic or variable. Considering today’s scenarios, traditional billing systems are not enough to cope with such usage data patterns, leading to many challenges in billing functions – this is where a reliable IoT Billing can help businesses bill for a connected device and their ever-evolving usage patterns accurately. IoT billing systems handle multiple devices and their dynamic ratings for customers.

The exponential growth of IoT devices:

We are witnessing that the Internet of Things (IoT) sector is undergoing exponential growth due to advanced development in technologies, internet-connected devices, sensor technology and overall ease of doing things. The prediction is that billions of devices will be online within the next few years and might overtake conventional computers and smartphones.

The growth is driven by affordability and finding innovative ways & means of integration into everyday objects for transforming human life and country infrastructure into interconnected ecosystems.

IoT Billing

The Traditional Billing systems challenges with IoT:

One of the biggest challenges with old billing systems is the flexibility and scalability, irrespective of any sector. Given the IoT landscape, traditional billing systems deal with complexities concerning the lack of adaptability to upcoming trends, custom requirements, and handling of large volumes of data with patterns generated by millions of devices.

Another aspect is that the old billing system does not support or might provide limited support to usage-based pricing models to reflect the actual service charges, causing real-time billing capabilities. As a result, these shortcomings often become the reason behind various other issues like incorrect charges, revenue leakage, and a bit of poor experience for companies and their customers.

The concept of IoT Billing:

The IoT billing addresses the unique demands of the IoT ecosystem and overcomes the challenges stated above. Today’s billing solution offers various ready-to-use flexible pricing models, and not only that, they can adapt to diverse usage patterns, from flat subscriptions to complex pay-per-use models.

Moreover, IoT Billing provide better integration capability with device ecosystems to collect and process real-time data for usage tracking and accurate billing. It also helps businesses improve revenue management, reduce operating costs, and the ability to offer innovative, usage-based services to their customers. Eventually, the solution empowers companies to unlock the full potential of their connected device with scalability.

Most Common IoT Pricing Models and Its Use Cases:

Let us understand the most commonly used pricing models in the IoT Billing Solution with their use cases and examples. Learn more about the other EarnBill pricing models.

1) Subscription Model

    • Flat-rate Subscription:

This pricing model allows us to pay service charges regularly (like monthly or annually) for accessing a product or service. For example – a music streaming service where you pay a fixed charge every month for a limited set of features. It is called a Flat-rate subscription model that mainly offers the lowest possible cost and selected features but is not limited to only basic subscriptions; instead, it provides different variations as described below.

    • Tiered Subscription:

It offers different plans with additional features at varying/higher price points. In other words, it is more of a feature-driven pricing model and creates different tiers based on the number of features than the basic plan with limited features. Nowadays, most software-as-a-service (SaaS) companies prefer to use tiered pricing.

The plans like professional and enterprise plans depend on the number of features, access from multiple devices, or storage spaces on the cloud. The best example is a cable TV package, where you choose a bundle with the channels you want to watch and then pay accordingly.

Benefits for Businesses

It Provides Predictability In The Monthly Revenue Stream, Allows Easy Entry For More Customers And Improves Customer Lifetime Value.

Benefits for Customers

It Offers The Convenience Of Making Regular Payments At An Affordable Cost, Which Often Comes With Bundled Features.

2) Per-User Subscription

This is a usage-based pricing strategy, where you pay based on how many users access the service. For example, any subscription model by default comes with one user access, but let us suppose you need access for five users, and tomorrow you may need for ten users; in that case, you would need a user-based subscription that will be affordable and more suitable for you, and if the total number of users count goes down then you will have to pay less than earlier.

Benefits for Businesses

It Provides Predictability In The Revenue, Reduces Churn Rate (Customers Leaving), And Boosts Customer Loyalty.

Benefits for Customers

It Offers Convenient Options & Predictable Costs With Bundled Features.

3) Pay-Per-Use Model

It is a consumption-based pricing model, which means you for what you consume. The best example that you can think of is buying grocery items – where you only pay for what you consume. In this, customers are charged based on their actual usage. It works well & offers flexibility for those customers whose usages are fluctuating. At the same time, it is potentially less predictable concerning revenue for businesses. Other examples are pay based on storage space and CPU power consumed.

Benefits for Businesses

It Reduces The Risk Of Customers Leaving And Not Utilizing The Services Enough. Also, It Could Generate More Increased Revenue From High-Consumption Customers.

Benefits for Customers

It Provides Flexibility, Only Pays For What You Need And Is Worth It For Occasional Users.

The first step is to understand the pricing models described above while considering other aspects like your brand image, customers, competitors and customer feedback, and see what aligns best with your business use cases and overall company objective. At the end of this, you can evaluate the pricing model potential and make out value.

Last but not least, you should also think about future requirements concerning modification that you might need in your pricing model or anywhere in the pricing calculations as per your USP instead of just sticking with the most common one in the competitive world and finding out which service provider offers not only the best pricing model as OOTB but also adaptability to grow your business.

Choose an appropriate Pricing Model and right partner for growth