IoT Product Development: How to Make Money on IoT in 2024

Summary

For more than 15 years, the Internet of Things (IoT) has created cutting-edge business opportunities. Large firms, SMEs and startups are actively mastering developments in the field of IoT, multiplying its use cases. During this time, the world has not only recognized the unprecedented benefits of this concept but has got “hooked” on IoT. Having harnessed massive amounts of data, bringing transparency and making predictions, IoT-enabled products primarily give users confidence in decision-making that now is hard to give up.
 
Thus, IoT is expected to continue extensively gaining traction throughout 2024 facilitating the global digital transformation. To find your place in the rapidly growing IoT market, it's important to take a fresh look at traditional IoT business models, as well as strive to create new ones that promote both the core values and secondary benefits of IoT products. Let’s explore the most promising ways of handling IoT in 2024. By doing so, you can maximize the potential of these technologies for lucrative IoT product development.

Business modelling for IoT product development: Where to start

The Internet of Things adoption is primarily a business problem, rather than a technical one. By the time you start IoT product development, you should already have a structured and detailed plan for how to monetize it and when to expect a ROI. The more thoughtful your strategy is when developing an IoT product, the more you can consider and prioritize valuable details.
 
The basis of IoT product monetization and its custom value is built on the following characteristics:

• Accessibility: data can be collected from any location and any digital, analog, and physical assets
• Connectivity: the ability to provide an uninterrupted connection for 24/7 monitoring
• Redundancy: a large volume of various characteristics collected presents a fairly complete picture of the process

IoT has already paved the way for many successful practices and business models, making it a flexible approach that can be adapted to various businesses. Both startups with unique products and established companies introducing IoT into existing processes can benefit from it. The amount of profit indeed varies across different industries and is influenced by the business environment. However, the choice of a business model plays a crucial role in determining the baseline success.
 
When preparing to start IoT product development, it's crucial to view the idea from all sides. This helps to highlight both the primary and secondary benefits that can be derived from it. For example, a logistics company that owns a fleet of trucks can indeed leverage IoT technology to not only monitor the condition of vehicles but also capitalize on the opportunity to sell valuable statistical data. This data can include insights on faults, road issues, or even driver behavior that is of great interest to automotive companies.

From traditional to new: Business models of IoT product development

Sale of IoT devices and components
This conventional strategy has proven itself as an ideal model primarily for wearables and smart home appliances and has naturally spread to industrial applications. The device sales model is simple, understandable, easy to calculate, and therefore very popular. Despite the active filling of this segment of the market, you can still catch some good fish here. The sensitivity, performance and affordability of IoT devices are enhanced through global technological achievements, which means new opportunities are constantly opening up. For example, flexible PCBs at one time unlocked user-friendly wearables, such as fitness trackers.

The development of cybersecurity has increased user trust, allowing the creation of a wide network of IoT devices within a home or business premises. Many technologies are still awaiting mass adoption, such as quantum computing, which will open up completely new computing capabilities for IoT edge devices.
 
For those planning to develop Consumer IoT in 2024, we recommend focusing on ease of setup and interaction, intelligent UX, high speed, and seamless operation keeping the simplification of users’ lives as its main value. As for Industrial IoT product development, the main focus should be on addressing urgent challenges of the Industrial IoT networks, such as connectivity and compatibility. Thus, multifunctional IoT gateways, devices with 5G support, and the potential for 6G adoption keep the prime value here.
 
In general, when considering a device sales model, follow the global trends and innovations in electronics, connectivity, AI, sensing technologies, etc., to create a unique and highly profitable solution.

Razor blade model for IoT product development
IoT has made it possible to expand and close the holes related to consumer behavior of the classic razor blade model by offering IoT-enabled “self-replenishing” devices. Equipped with IoT sensors, such a device instantly signals the “depletion” of a part or consumable and makes an automatic order for its replenishment. Household examples include electric toothbrushes with nozzles, printers with cartridges, or coffee machines with coffee packages. In the industrial field, IoT-enabled equipment can assess, for example, the deterioration of cutting components and also make automatic orders. This way you can sell complex systems with a built-in inventory manager, including specialized software platforms.
 
Such a system eliminates situations when the user forgets to change a part and helps protect against service “piracy” and switching to cheap alternative components. By guaranteeing constant orders, the model becomes more calculated, predictable, and therefore profitable.

Asset-sharing services
This model is viable thanks to the ability of IoT solutions to monitor multiple parameters of equipment or vehicles in real-time. Car sharing or scooter sharing are simple and well-known examples of asset-sharing models. Manufacturing equipment is a less explored area for asset-sharing and should be approached differently. It might be challenging both for manufacturers and enterprises to make a profit from complex and specific production equipment. Such a risky undertaking opens the door to IoT-based asset-sharing. Multifunctional and flexible equipment can potentially be offered to a wide range of customers, which means the high utilization of the resource. It is the IoT support that can guarantee that the equipment is to be used as intended and that all the rules for its use are followed. Anyway, the area of production asset-sharing requires profound study.
 
This model is viable due to the use of excess resources of equipment or vehicles. This is obvious for cars or scooters, whose owners use them on average 1-2 hours a day, but with equipment things are different.

Everything-as-a-service
It seems that the “as-a-service” part is now trendy to add to everything, but this happened for a reason. This is IoT, which has made it possible to deliver any resource of the system as a service, maintaining full control over the operational equipment. For example, you can get state-of-the-art energy storage with energy management capabilities as a service without purchasing costly systems. One more example is a shipping container monitoring service. You can sell devices and software packages, or you can sell monitoring opportunities, guaranteeing 100% time device performance and its full cybersecurity. In these cases, you can also act as a service organization.
 
Every party benefits from such a model. Clients who want to pay for outcomes and who find it easier not to bother with maintenance and possible efficiency issues, and suppliers who make money by maximizing equipment utilization. Such opportunities sound attractive for users but from an operational point of view, owning and servicing a product is much harder than simply selling it. Thus, its business strategy must be extremely thought-out.

Everything by a subscription
In fact, subscription is a variation of the As-a-Service model, but its incredible popularity allows us to highlight it separately. As per research, companies that adopt subscription models demonstrate 5x faster revenue growth than the S&P 500. Everyone is familiar with the model when you pay to use the product in advance, which more often applies to software providers or cloud platforms.
 
For IoT devices, this means selling physical devices and requiring to renew the subscription to its software or offering to connect additional functions by selecting the appropriate subscription option. The examples are also very diverse. From home appliances, which can turn into smart or download updates by activation of a subscription; to ADAS systems, where different subscriptions offer different levels of driver assistance, access to the latest AI algorithms, or even self-driving opportunities. The choice, as they say, is up to the client.
 
This model is flexible since it allows you to develop different subscription options with different functional opportunities, and therefore potentially reach a larger audience and gain higher loyalty. To implement such a model, there must be a steady demand for the service.

IoT data monetization
The most significant and profound benefit from IoT is the insights provided by Big Data analytics. These insights or even raw data can also be done as a business. As a rule, this is a complementary model of IoT product development, which can create an additional revenue stream.
 
When searching for the optimal formula that can guarantee success for the product, companies need a large amount of data to obtain the most accurate analytical results. Small businesses and start-ups are simply not able to generate such volume. Fortunately for them, data can be bought, and you can make money on it. To do this, your IoT product, installed at many locations and purchased by many users, must collect usage data and automatically send it to your server. When preparing data for sale, you must ensure the accuracy, completeness, integrity, and relevance of the data, observe the confidentiality policy, and protect it against unlicensed uses. In addition, different types of data are of interest now, so it is worth ensuring flexibility in collection and recording to cover more potential clients.
 
Otherwise, the data can be bought and analyzed to sell the outcome as ready-made reports. For example, analysis can be focused on different industries or reveal the benefits of various IoT-related technologies. Choose the one you are already experienced in.

The value of IoT expertise
There are multiple technologies, industries and specializations united under the hood of IoT. The demand for highly specialized experience in certain areas becomes even greater when IoT enablement is involved. The priceless value comes with understanding the integrity of the IoT ecosystem, the interactions and interdependencies between all the IoT components, and the experience of comprehensive product development from architecture design through hardware to software design.
 
Only practical experience brings forth valuable IoT consultants. Such services as fractional CTO or IoT scalability can be useful for both startups and established firms. Since the IoT will only continue to gain momentum, competent leadership in IoT product development and digital transformation, which helps troubleshoot issues before they occur, will come in handy.

What knowledge will help you when monetizing an IoT product

As you have seen, there are multiple ways to incorporate IoT into your business model. The more creatively you approach this, the more tangible impacts you can count on. Take into account the following statements to get the most out of IoT monetization.

• IoT is flexible: IoT applications can be seamlessly incorporated with legacy equipment, creating connected ecosystems in the enterprise, and with the latest technologies such as AI, VR, 5G, etc. IoT combines all kinds of technological possibilities. The new value can be created simply through their custom combination.
• Make money = save money: IoT has “glorified” the concept of Predictive Maintenance (PdM), allowing businesses to save significant money on service. The world saw the benefits and real economies at a wide scale, so this concept will also continue to develop. Thus, keep an eye on PdM-related technologies–there is still room for development.
• Think out of the box: As we said, IoT has many secondary benefits. The combination of business models can help diversify your revenue streams. For example, the device sales model could be expanded to offer additional feature sets for devices or enhanced services available through a subscription.
• Follow the trends: Since IoT is flexible in addition to new technologies, cutting-edge developments in different areas can potentially greatly benefit IoT product development. The creation of a flexible product leaves room to adapt it to future trends.

 The main thing in choosing an IoT business model is to see the opportunities. You can be an IoT supplier, provider, or partner; utilize IoT for generating new revenue streams or deliver custom value to your clients. Create, combine and innovate–that’s what’s essential in 2024.