4 Top IoT Billing Challenges and Solutions

Frank Greer
Oct 18, 2022 4:05:42 PM

Billing for IoT solutions can be challenging for a variety of reasons. Data consumption thresholds, monetization models, and even something as simple as billing periods are highly dependent on the specifics of the IoT use case. Ideally, IoT solutions companies and OEMs should focus on billing tools and strategies that align business requirements such as revenue objectives and operational efficiency with their use cases and technology stack. In this post, we’ll explore four common IoT billing challenges and how to overcome them.

4 Challenges of IoT Billing

Every company’s success depends on its ability to profitably charge for its products and services. In the case of billing for IoT products and services, companies making decisions around financial models need to also factor in the unique and recurring costs of maintaining infrastructure, namely cloud platforms and connectivity services. With that being said, here are some of the top challenges we see related to IoT billing today and how we’ve found they can be addressed.

1. IoT Pricing & Billing Agility Demands 

Challenge

Standard billing systems designed for non-connected businesses and even those that support smartphone app businesses, can’t keep up with the flexibility needs of OEMs (original equipment manufacturers) and other companies deploying IoT solutions into the field. This is largely because proper IoT billing functions require the ability to create subscription plans based on unique variables: billing frequency that can vary from deployment to deployment, different cellular data plan sizes, multiple currencies, etc. That agility often does not need to exist in non-connected or app-only businesses that stick to common month-to-month models or don’t have a cellular connectivity component built into the offering. 

Solution

Use a specialized billing system that supports flexible billing models like fixed-recurring subscriptions, usage-based billing, hybrid models, etc., and that enables billing in ways that make sense to IoT solution businesses. For example, if a device is only intended to be used seasonally with an active cellular connection, the business may want to charge customers on a seasonal basis, rather than month-to-month all year long. On the other hand, a different business may need to charge customers based on each customer’s cellular data usage, if those customers have their devices active year-round. 

This billing system should not only be able to offer pricing agility, but it should also be able to act as a gatekeeper to turn on and off Internet access based on payment status or as a device is about to exceed its data limit for the billing period. Most IoT solution providers would agree that having the ability to notify end customers that they’re approaching their data limit so they can top-up and keep devices working through the billing cycle, is important. These actions require control of billing and SIM operations, not only at the software application level, but also on the cellular carrier side — something traditional billing platforms just can’t do.

2. Traditional Gaps in Customer Onboarding and IoT Service Delivery Due to Industry Fragmentation

Challenge

For brands, solution integrators and other providers, there are many IoT go-to-market paths, including traditional retail channels, reseller channels, and direct sales. In addition to these varied go-to-market paths, there are clear gaps in back-office solutions that are forcing IoT solution providers and their customers - either end consumers or businesses - to go through a complicated set of steps to get IoT devices activated on cellular networks and to facilitate the purchase/subscription to ongoing, value-added services - a key value proposition of IoT solutions generally. .

Solution

Consider an IoT billing platform that was designed to support simple or complex buyer/seller hierarchies, in order to make the subscriber onboarding experience seamless.  In Zipit’s case, we’ve had experience working with consumer-focused brands like Bushnell and Samsung,  as well as established B2B firms like BrightSign and companies that serve both, like Hunter Industries. That has given us deep insights into the channel challenges and service delivery hurdles that brands face when delivering IoT solutions to the market and offering/charging for recurring services. Additionally, after more than a decade of working closely with the top-tier cellular providers in the world, we’ve seen how complicated it can be for companies to fully operationalize cellular connectivity on a global scale, and we’ve incorporated those learnings into our platform to help customers overcome these challenges, quickly.  

3. Lack of Integration with Existing Systems 

Challenge

Integrating standard billing platforms with other applications and systems can result in technical failures and inefficiency. 

Solution

Even with a robust IT department, most companies are better served by working with a partner that can support the integrations required by an OEM to create a unified product. The partner can often address the complexities of the integration of billing and activation activities with other business systems, including single sign-on (SSO), provide the essential APIs and data exports for integration with a customer relationship management tool (CRM), enterprise resource planning (ERP), and more. IoT solutions companies also need to integrate billing with their internal systems and processes in a way that supports business planning, customer service, and reporting, while being effective and seamless for the customer.  

4. Managing Multiple Currencies and Collecting Appropriate Taxes Across Different Geographies

Challenge

Many OEMs operate in multiple countries around the world, and tax requirements vary widely. 

Solution

There are actually two important aspects of addressing the challenge. The first is to use a billing platform that’s able to accommodate the currencies of the countries you operate in and handle the appropriate taxes for these regions, such as sales taxes and VAT. The platform should also cover all digital services taxes and internet services taxes in the regions where you operate.

The second, and equally just as important, is a partner that provides the services to handle the collection of the subscription revenue, applicable taxes and the filing of the taxes like Zipit does.  Zipit acting as the merchant of record for this function eliminates the need for the OEMs to have to figure out the connectivity, subscription and taxation challenges in going global.

Learn more: Global IoT Connectivity: Understanding the Fundamentals

Billing for IoT: How Zipit Serves IoT Solutions Companies

There isn’t a one-size-fits-all answer when it comes to IoT billing, as there are many ways to monetize products, connectivity, and cloud services. Above all, billing models and tools need to allow for flexibility to harness unique monetization opportunities in a rapidly changing industry. Here are some of the ways Zipit is helping OEMs, brands and IoT solution integrators monetize more components of their IoT offerings:

  • Quickly launching online checkout/billing portals that match the seller’s brand identity
  • Serving as a cellular enablement platform for companies that are new to cellular - or as the single pane of glass management tool for companies that need to scale their existing cellular operations globally
  • Offering trial periods to attract new customers and build loyalty
  • Creating flexible subscription plans that fit the unique billing cycles of IoT providers across numerous vertical markets
  • Automatically notifying the end subscribers of upcoming renewals and helping companies offer subscriptions/add-ons that make for a more seamless purchase/subscription renewal experience
  • Enabling changing plans and billing cycles on demand
  • Handling the calculation, collection and filing of relevant Sales and VAT taxes

Using the right subscription management and billing platform enables OEMs to launch new offerings faster than ever. Activation is fast for new customers and those making billing changes, so there’s no more waiting until the end of the month to make a change.

And since Zipit’s platform is deeply integrated with carrier systems, companies also have the flexibility to change, suspend or cancel cellular subscription plans as needed based on payment status, a customer reaching their data limit, or other business needs. Customers also get powerful IoT connectivity and subscription insights that can help them run their IoT business better. With reporting on popular plans, subscription churn, gross margin, and cellular data consumption, customers can leverage these actionable insights to make their businesses more agile and best position themselves for growth now and into the future.

Reach out to us to learn more about Zipit’s IoT billing platform and how we may be able to help you solve your own billing and subscription challenges.

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