How to grow revenue with Internet of Things products: IoT monetisation strategies

When was the last time you considered how many IoT devices are part of your daily operations? From smartwatches and connected coffee machines to industrial sensors monitoring production lines, the Internet of Things is everywhere, quietly revolutionising our world. And yet, while we’re all enjoying the convenience of these connected products, many businesses are missing a crucial opportunity: monetisation.

In a world where consumers and businesses alike are comfortable paying for services – whether it’s Netflix or cloud-based software solutions—there’s an untapped potential for turning your IoT products into a steady stream of revenue. The shift to monetising IoT isn’t just about generating profit; it’s about enhancing the customer experience. When done right, a clear monetisation strategy can create a win-win: customers get more from your products, and your business benefits from recurring revenue and deeper insights into user behaviour.

McKinsey predicts that IoT could enable up to $12.6 trillion in value globally. With the IoT market poised to generate trillions in value, the question isn’t why you should monetise your IoT solution but how soon you can start.

What is an IoT product?

An IoT product is essentially a physical device embedded with sensors and software that allows it to connect to the internet and exchange data with other systems or devices – for example, a smartwatch, home appliances, heating systems, or complex machinery of Industry 4.0. IoT products can be remotely controlled or monitored through mobile or web applications, offering convenience and enhancing functionality.

The question of why you should monetise IoT products boils down to the added value they bring to end-users. Monetising IoT products allows generation of new revenue streams by creating additional services beyond the physical product itself. For example, a company might offer a subscription-based service where users pay for features such as remote diagnostics, telemetry data, or automated notifications.

The potential for IoT is vast, and its applications span numerous industries – from smart homes and healthcare to manufacturing and agriculture. Businesses that successfully monetise their IoT offerings tap into a wealth of benefits, including deeper customer insights, enhanced operational efficiency, and increased customer loyalty. In fact, 94% of businesses have reported returns on their IoT investments, making it clear that monetising IoT products is feasible and beneficial across industries.

IoT monetisation strategies

Regular updates, new features, and fresh content are vital for maintaining customer engagement. By consistently adding value through updates, businesses can justify subscription fees and ensure customers remain satisfied with their investments. While basic services such as firmware updates and remote controls are expected to be free, advanced features and improvements provide opportunities for additional revenue.

Paid access to content base

One of the strategies to monetise IoT solutions is giving users the option to buy access to a content base with quality, valuable pieces. Here are some examples of how to apply this strategy:

• If you manufacture kitchen appliances, your content might include recipes.
• If you’re developing environmental monitoring products, paid content can be air quality indices, weather data, pollution levels, and environmental impact assessments accessed through subscription-based applications or by charging for API access for third-party developers.
• An enhancement to smart building functions can be a platform with energy consumption reports and sustainability data like real-time monitoring of energy usage in the property, with detailed reports showing peak usage times, energy-saving recommendations, and cost-saving opportunities.

GenAI solutions

Generative AI can significantly enhance IoT solutions and provide monetisation opportunities. You can, for example, leverage the Natural Language Processing (NLP) interface and voice recognition solutions to provide more convenient and user-friendly control of IoT devices. Another use of GenAI that can be monetised is virtual training that encompasses realistic simulations, training programs, or guides for training purposes to teach operators how to install, use, and maintain complex systems.

Premium features

The notification system is one of the most lucrative functionalities, especially in business IoT products. Real-time data access and instant notifications can work in many industries, for example:

• Water management systems: Immediate alerts when a leak is detected in the water supply system, including the location and severity of the leak.
• Health monitoring alerts: Real-time notifications for abnormal health readings such as high blood pressure, irregular heart rate, or low oxygen levels.
• Fleet management: Real-time alerts for vehicle malfunctions, unauthorised usage, or deviations from planned routes.
• Smart agriculture: Alerts for soil moisture levels, pest detection, or plant disease that could affect crop health.

Choosing the right billing model

Once you’ve identified the value of your IoT solution to customers, the next step is selecting a suitable billing model. This decision largely depends on the type of customer you serve.

Content to attract individual customers

Let’s begin with individual customers. A content-based monetisation model is highly effective here, generating revenue by charging users for access to valuable content. This could be subscription services, where customers pay a recurring fee for unlimited access, tiered models offering specific content at different price points, or a freemium approach, where basic content is free, but premium features require payment.

Even if your IoT solution isn’t content-driven, a subscription model for premium features can still work well. For instance, in smart home systems, premium offerings might include advanced security alerts or direct notifications to law enforcement, adding significant value to the user experience.

Small and medium-sized enterprises

For small and medium-sized companies, where the size of the user base is key, freemium and premium models often work well. In a freemium model, basic features are offered for free, which helps to attract a wide user base with minimal barriers to entry. Users can then opt to pay for extra premium or advanced features. This approach allows companies to initially attract a large user base and generate revenue through subscription sales or micropayments based on the size of the user base.

Strategy for companies in the B2B sector

A subscription model is typically the go-to for increasing revenue for business clients. This can be done by offering tiered service plans that provide access to premium features and ensure ongoing customer support and engagement.

However, pricing in subscription models can become overly complex, leading to confusion. To avoid this, it’s essential to keep it simple and focus on the billing model that best fits your business. Some effective approaches include:

• Number of connected devices: Tailor plans to accommodate installations of varying sizes, meeting specific customer needs.
• Functionality: Offer packages with different levels of access to IoT platform features, from basic monitoring to advanced options like data analytics and system integrations.
• Data usage: Provide plans based on data needs, offering real-time, scheduled, or on-demand data transmission.

Get in touch to plan and implement an IoT monetisation strategy

In today’s digital landscape, having a solid monetisation strategy is essential for any business. It’s not just about generating revenue – it’s about delivering real value to your customers so they’re willing to invest in more. A well-executed strategy strengthens your customer relationships, enhances their experience, and boosts your profits.

At Spyrosoft, we often start with discovery workshops for clients seeking guidance. We dive into user needs, provide expert consultancy, and, if necessary, research industry-specific examples. From there, we help compare various monetisation strategies and recommend the most effective one.

Developing the right approach requires careful thought and planning. When it comes to monetisation, it’s always wise to consult with an expert before launching anything. If you’re looking for advice or guidance, feel free to reach out to us via the contact form below or learn more about our custom IoT services here.