Points of View

Service providers should maintain a cautious approach to deploying a non-linear pricing model in IoT engagements

In 2012, Rolls Royce celebrated the 50th anniversary of its “Power-by-the-Hour” service offerings. Power-by-the-Hour, a Rolls-Royce trademark, is a complete engine and accessory replacement service Rolls-Royce offers on a fixed-cost-per-flying-hour basis. It enables operators to remove risk related to unscheduled maintenance events, and it makes maintenance costs planned and predictable. There has been a recent surge in the “as-a-service” model, including shared mobility offerings from Uber and Lyft. With the advent of IoT, the performance, availability, and other factors of any connected “thing” can be recorded and assessed, fueling the deployment of the as-a-service model based on certain KPIs (Key Performance Indicator) instead of owning the assets. HFS recently published the HFS Top 10 IoT Service Providers report, in which we provided several exciting examples of the as-a-service model. This business model is challenging for service providers because enterprises are asking for non-linear-pricing-based service offerings. In this PoV, we analyze the present pricing landscape of IoT engagements and how service providers can prepare themselves for non-linear pricing models.


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