As the number of IoT deployments rise, one of the biggest challenges businesses face is making connectivity decisions. Both the finance department and product managers have key stakes in the process. The problem: Many IoT pricing plans require long-term commitments and a static rate for each device connected. That no longer fits with the IoT market as it rapidly matures. Project managers need to iterate, and the end product they create may have markedly different connectivity requirements than when they began development. The finance department just wants cost predictability that supports accurate monthly and annual budgets.
When it comes to pricing plans for IoT deployments, cost and flexibility are key. Companies that keep those factors front and center when planning their IoT initiatives can avoid the missteps many companies make - and any big surprises when the bills arrive.
Fortunately, 2021 is bringing the industry closer to alignment with real customer needs, and several key trends are emerging in cellular IoT connectivity pricing:
- Commitment-free billing. As IoT projects kick off, many businesses may look to lock in the lowest possible rate - even if it means a long-term commitment (in certain cases, up to 10 years). But IoT projects can change in scope, and a year or two later, many businesses are looking for ways out of these longer-term contracts. Technical innovators need a pricing plan that aligns better with their speed of innovation. Minimum monthly data rates for individual SIMs don’t make sense, and long-term commitments can impact projects during prototyping and testing. Commitment-free billing can ease these pain points, and some connectivity providers are starting to align their plans to be more flexible.
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Built-in volume discounts. Some businesses are becoming increasingly sophisticated with their IoT implementations. As they get deeper into a project, they might need to connect more devices than what was originally forecasted. Built-in volume discounts let IoT initiatives scale freely without revisiting the negotiating table every few months. Some businesses know to ask their connectivity provider about built-in volume discounts, but others need a simplified approach in the form of per-account billing instead of per device pricing.
In addition, IoT deployments may incorporate different devices with different connectivity requirements. As part of built-in volume discounts, data pooling is an emerging trend that eliminates the static data rate for each device and instead allows businesses to work with devices that require different data usage, incorporating the total cost across devices. In a simple scenario, if one device is using 10 MB of data per month and another 30 MB per month, the user would pay for 40 MB in total instead of treating all devices the same (30 MB). Data pooling can drastically reduce cost, increase flexibility and help businesses to ensure predictable monthly connectivity bills. - Regional pricing plans. As mentioned above, the IoT development process is one of iteration. Although companies may have a clear picture of their IoT project at the start, many things can change as the product evolves. For example, the IoT plan may include global distribution, but the market could shift during the development process so that global connectivity is no longer needed and a more regional connectivity option is a better fit. Some IoT connectivity providers are beginning to roll out regional pricing plans to accommodate products that will be developed, tested and deployed in one geographic region. This gives businesses pricing options for both their main markets as well as an extended global pricing plan.
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Multicarrier service. Many industries - including real estate, construction, agriculture and transportation - can benefit from multicarrier coverage. It ensures that businesses have maximum connectivity in remote areas for their IoT deployments. There are two main reasons access to connectivity from multiple carriers is attractive:
- Carrier redundancy. Emerging cellular technologies are rolling out on different timelines, making it valuable to perform any upgrades on the network rather than on the SIM side. Multi-carrier service creates an extra layer of redundancy and is critical when new generations of technology, e.g., 5G, emerge.
- Geographic manufacturing. IoT development doesn’t happen in a bubble - or in a static geography. Access to multicarrier service means devices can be manufactured and tested in one location and then shipped to their destination using the same SIM cards. Therefore, IoT projects may need connectivity in the location where they are being developed and tested as well as where they will be deployed.
- Predictability. IoT economics can be thrown into a tailspin if connectivity pricing changes from day to day or month to month. Predictability is the finance department’s best friend, but pay-as-you-go pricing can conflict with the product team’s needs and timeline. Product teams are simply looking at getting a PoC ready and may find themselves locked into a long-term contract, while the financial team wants more of a fixed rate price for IoT connectivity so they have a known cost. The best-case scenario is working with a provider that offers both flat rate and pay-as-you-go pricing with automated alerting and management capabilities. This can help IoT project owners better ensure they are always within budget, while offering a level of predictability that keeps the finance department happy.
It’s clear that connectivity pricing flexibility will be a critical factor in successful IoT deployments going forward. It’s important to dig deeper into your relationship with your connectivity provider and determine whether they have an inflexible pricing policy or if there’s flexibility for them to work with you to offer the pricing you need to accelerate the product or solution without worrying about the cost of scaling.
IoT pricing will undergo some significant changes in 2021, and will play an increasingly important role as businesses see their IoT projects scale. A simplified and flexible approach to pricing will ensure that more IoT projects make their way to market successfully.
