New Revenue Models emerging with IoT utilizing Existing Infrastructure

IoT and revenue models

Internet of Things (IoT) has the potential to make a multi-million dollar impact on the global economy. Gartner has projected 26 billion IoT installed units by 2020, excluding PCs, smartphones and tablets. But monetizing IoT isn’t always straightforward.

IoT monetization challenges range from security and privacy concerns that may hinder customer adoption, to lack of standards that may limit revenue generation potential. A successful monetization strategy requires significant investment to acquire new capabilities, often without clear ROI.

Discovering new revenue models from your existing infrastructure with IoT presents challenges of its own. Monetization options depend on variables such as industry, market, product and technology. But the real challenge is creating value for customers and enhancing their experience by developing services that cater to their needs. Low entry barrier is the key to effectively monetize IoT with a one-time purchase. Even a subscription model that is less expensive can facilitate easy upgrade transition and add value for the customer.

IoT Monetization Models can be broken down in four:

  1. Hardware Premium model where organizations leverage existing products to charge a premium price for additional features.
  2. Service Revenue model where a traditional product can be converted to introduce specific features on recurring charges.
  3. Data Revenue model where organizations leverage data gathered by sensor and offer as a package.
  4. Ecosystem Building model where organizations create platforms that service end users as well as offer products from other vendors.

Companies can either apply a single model or innovatively package different models and build a healthy IoT monetization ecosystem.

Here are a few interesting ways that companies leveraged their existing products, services and processes to unlock new revenue models:


Philips Hue system works through a bridge that connects bulbs with smart phone or tablets and can be controlled with an app. The bridge is linked to Wi-Fi via router and can also be operated via internet for control out-of-home functionality. The bridge and the Hue bulbs are sold as a package or can be bought separately. This monetization model works on one-time purchase and free app.


Audi has turned its cars into wireless hotspots with Audi Connect.  With 4G Wi-Fi connectivity and navigation features by Google Earth, you can keep track of real-time traffic, parking availability, fuel prices and much more. MMI connect app supports remote connectivity and also integrates with smart watch and tablets. This monetization model offers 6 month or 30 month subscription facility.


Nest  was an early entrant into the IoT segment with its Nest Learning Thermostat that learns owner’s habits and lifestyle to automatically adjust home temperature. It can be controlled through mobile devices.

Nest Protect is a smoke detector that sends alerts to your phone. It even has a friendly human voice that gives you early warning and tells you where the danger is.

Nest also works with an army of compatible home devices and appliances that can be connected to give you a fully IoT functional home experience.

The cost of Nest devices is a one-time purchase, with free apps and optional camera subscriptions.


Nexia takes Nest a step further by integrating multiple home intelligence devices and systems that can be controlled remotely with an all-in-one app.

Nexia Home Intelligence takes care of your home security, tracks children’s activities, takes care of house maintenance such as detecting water leaks and turning off water valves, controls the climate control of your home, locks front door and garage, and so on.

Nexia Home Intelligence welcomes you home by allowing you to program your night time arrivals and making your entry convenient and secure by turning on your lights, opening the garage door, and unlocking the front door.

Nexia monetization model is a one-time starter kit, plus monthly subscription.


Jawbone is a perfect example of Hardware Premium IoT monetization model. Starting out with Bluetooth headsets, Jawbone monetized IoT by developing the UP fitness trackers and UP app that allows personalization of activities tracked throughout the day with sensors monitoring your every move and diet.

The UP app helps you make healthy choices and keep your weight under control. The app also allows inviting friends to join as accountability partners, adding a fun aspect to your fitness routine.

The data collected through UP fitness tracker sensors is transferred through Bluetooth to UP app as well as other compatible fitness activity tracking apps. This monetization model is one-time UP fitness tracker purchase, with free app.

IoT monetization has huge potential with ever emerging technological advancements. Let us know how IoT has impacted your lives. Write to us at with your experience, or to know how we can help you with IoT monetization.

Author : Poonam Sambargikar Date : 06 Sep 2017