Whether it is traditional service providers looking to create new offerings, or new companies launching their innovative products to market, being able to package and price offerings in any way is key to capturing market share quickly and ensure top-line revenue growth. The shifting of our global economy to digital business is driving change across every industry to adopt innovative revenue and pay models.

Digital Disruption Brings New Business Models

Forrester analyst, Dr. James McQuivey, defines digital disruption as being created by three major factors. First, the availability of digital tools and services means offerings are launching to market quicker. Second, the sudden rise of easy-to-use digital platforms increases competition in the market significantly. Finally, there is a rapidly growing number of consumers eager to consume new product and services. The combination of these factors, along with the willingness of technology companies to partner with traditional business to help them change customer experiences, allows for the delivery of products and services in new ways, with different types of packaging and pricing.

Pay Models

Far from only a business-to-consumer (B2C) or retail-based phenomenon, the new pricing models being generated from the “industrial internet” represent an enormous opportunity for revenue model transformation. Disruptive technologies, such as machine-to-machine (M2M), telematics, over-the-top (OTT) and Internet of Things (IoT) will transform industries, crushing companies who cannot stay ahead of the evolving technology. Many of these disruptors will require new ways of approaching your customers, whether B2B or B2C. Already, many new business models have emerged.

Next Generation of Pay Models: Usage and Subscription

Business leaders are getting creative about how they go to market in terms of how they price and package offerings. While traditional pay models focused on one-time payments, savvy businesses are quickly learning to leverage recurring pay models, including subscriptions and usage-based models in various combinations. As products evolve, even more pay models will emerge!

“Firms are shifting from one-time perpetual sales or fixed monthly subscriptions to consumption models that blend one-time, subscription, and usage-based billing,” according to The Forrester Wave™: Subscription Billing Platforms, Q4 2015. To drive more revenue in this burgeoning Consumption Economy™, businesses are using data intelligently to maximize customer lifetime values with more effective cross-sell, up-sell, renewals, and net-new revenue. The ability to create billing and pay models for anything a business can measure, at scale and accurately, is today’s new advantage.

Leading analysts are documenting these new trends across a wide variety of businesses. "We see increasing demand for agile billing from companies marketing a complex mix of physical and digital products, subscription and usage-based services and accelerating deployment of as-a-service, pay-for-outcome pricing models for traditional capital-intensive products such as heavy equipment, transportation and machinery,” says MGI Research in their latest MGI 360 Ratings - Agile Billing Market Rating Report. “The early adopters of agile billing were mostly online, digital business model and “as a service” software firms. Today, businesses of all types, even traditional industrial companies, are packaging their product and support offerings into easily consumable services with an ever-expanding range of ways customers can acquire and pay for these packaged services."

Real Examples of Driving Revenue with New Pay Models

ServiceMax is one example of a company creating new outcome-based service offering opportunities by leveraging IoT business models. Instead of waiting for customers to report outages and field technicians to arrive onsite to determine the cause of equipment failures, ServiceMax is connecting field service management to sensors within the devices directly via mobile devices. Now service providers can automatically dispatch the right technician with the right parts to affect repairs immediately. By leveraging industrial IoT (IIoT) sensor technology, ServiceMax is creating a new pay model for service offerings based on outcomes, and improving customer satisfaction and profitability.

Another excellent example of a company that is leveraging unique pricing and package models to change the game in their industry is International Asset Systems, or IAS. IAS is pioneering a unified, neutral cloud monetization platform for chassis and logistical management that is scalable around the globe. By recognizing the shifting dynamics of their market, IAS created a unique monetization platform upon which service providers, shipping lines and equipment operators can drive new revenue using existing assets. This would not have been possible without being able to agilely iterate packaging, pricing, and reporting throughout the initial 15-month implementation. By addressing accuracy and getting in front of disputes, IAS is a great example of how implementing new business models leads top-line revenue growth.

Revenue doesn’t have to driven by launching new products. New pay models and business models are driving top-line growth across a variety of industries by simply packaging offerings in the way markets want to consume them. Many industry behemoths, such as IBM and Google, are also finding ways to use the data being generated by IoT and IIoT devices to monetize existing offerings. By packaging and pricing offerings into new go-to-market plays, both consumer and industrial enterprises are leveraging new business models to drive top-line revenue growth.