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  • Writer's pictureNikhil Kotcharlakota

Impact of IoT on pricing strategy

A while ago, I had written about how there are similarities between Subscription and traditional pricing, strictly from a pricing process perspective.

However there can be similarities from business models as well.

Consumer goods have been moving towards newer price models that are not just price per unit. There has been some evolution of subscription pricing in recent times like shaving supplies (Dollar Shave club), kids toys(Lovevery), etc.

Very similar to how Software products moved from perpetual licence to subscription models.

Now the SaaS industry is moving towards Usage-based pricing.

IoT can change the pricing model again for appliances to more of pay per use, or consumption based pricing.

For example dishwashers and laundry are great examples that can track how many cycles run and price based on per cycle.

This will make the entire consumer lifecycle very different for manufacturing companies.

The focus on the consumer will be even more important as their impact is not just one transaction but a continual one. As a consumer's family grows or their needs change, they can be encouraged to purchase a newer model from the same brand. More expensive models, delivering more value. This keeps the consumer with the brand throughout and the Lifetime value of the consumer increases tremendously.

There can also be similar KPIs as well such as CAC, LTV, and NDR.



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