With modern technology and sophisticated billing solutions, industrial manufacturers can now participate in the global subscription economy and deploy disruptive business models with ease. It’s an exciting time to be in the space, technological advancements have transformed subscription revenue models.
But these changes go beyond pure subscriptions – industrial businesses are embracing multiple recurring revenue models (subscription, usage, hybrid and others). Surprisingly, recurring billing has been around for a long time.
The History of Recurring Billing
For hundreds of years, publishing companies have relied on the pricing strategy to support newspapers and periodical distribution. In the late 1800s, AT&T charged consumers monthly fees to access local telephone services. Digital home security systems in the 1990s exploded onto the scene, enabled by recurring fees paid by homeowners.
More recently, companies like Amazon, Spotify, and Netflix have helped bring recurring billing into the mainstream-offering various packages to subscribers rather than asking for large, one-time purchases. In a world where consumers have more choices and information than ever before, subscription billing helps businesses establish strong and loyal customer bases. The pricing tactic also creates revenue stability and enables enterprises to forecast earnings more accurately.
Today, recurring billing, often referred to as subscription, dominates many sectors from online retail to software. However, there is one segment in particular that has been slow to embrace the subscription economy.
The industrial sector.
Industrial Recurring Billing On The Rise
Until now, industrial equipment manufacturers have held fast to traditional business models – selling goods or services for fixed prices without offering much flexibility. Thanks to advances in cloud computing and Internet of Things (IoT) technology, it is much easier for companies in the industrial space to monetize their assets in new ways.
For example, manufacturers can now embed remote monitoring capabilities into their machinery and track equipment performance in real-time. By doing so, they can offer useful aftermarket services and continually create value for customers beyond initial sales.
One company that leverages real-time remote monitoring today is Rolls-Royce, which has launched a robust portfolio of IoT enabled engines, power generation systems, and turbines. The company’s next-generation industrial products (Industry 4.0) produce rich data streams that help customers proactively identify maintenance issues and optimize operations. These are valuable ancillary services that customers are willing to pay for on a monthly or quarterly basis.
Another advantage of IoT for industrial manufacturers is that they have access to more data on how customers use their products. With this information, design teams can develop higher-quality offerings that are worthy of premium pricing. The same feedback loops that have made recurring billing so beneficial in other spaces now exist for industrial applications. Manufacturers can also share this information directly with consumers and encourage behaviors that would result in cost savings or service upgrades.
For example, John Deere now has a line of precision agriculture technology that helps farmers maximize the use of their land. The company’s machines, including tractors, tillers, and combines, can send information from the field directly to John Deere operational centers where data is analyzed for insights. John Deere will send these insights back to farmers, helping them improve crop yields, seed placements, and harvesting activity. Customers are happy to pay recurring fees for this ongoing analysis because they see tangible benefits.
As with any industry, effective recurring billing requires dynamic billing systems that can adapt to any business need, no matter the complexity. Without the right set of capabilities and features, industrial manufacturers can’t efficiently monetize IoT-enabled applications.
This is where BillingPlatform comes in.
Deploy Recurring Pricing For Any Industrial Application With BillingPlatform
For industrial enterprises that want to launch recurring strategies, BillingPlatform is a highly configurable solution capable of monetizing any business model.
With BillingPlatform, finance teams can quickly launch innovative pricing strategies built on the IoT. Our solution comes with a powerful mediation capability that allows manufacturers to convert various data inputs from equipment in the field into values that pricing engines can easily translate. Manufacturers can also automate invoicing and revenue collection for aftermarket services without any manual processes.
The subscription economy is no longer inaccessible to companies in the industrial sector–and shouldn’t be limited to flat-rate subscriptions. Recurring billing with consumption-based metrics and packaging delivers more value to customers. With IoT technology, cloud computing, and the right billing systems, it’s possible to monetize new business models for industrial applications and diversify revenues beyond initial sales.
Interested in learning more about BillingPlatform’s next-gen mediation capabilities? To help SaaS companies interested in implementing usage-based pricing models, we offer the Enterprise Guide to Billing for SaaS.