What pricing model do you use for your IoT solutions?

Sales Questions

What pricing model do you use for your IoT solutions?

Well, first let’s exclude IoT as a Service in this answer. It’s not a requirement in our solutions, and it is priced based on what you want us to do for you. If you’d like to understand IoT as a Service pricing, click here.

There are two different pricing models for our IoT solution projects:

  1. Managed Hosting. This is similar to a typical SaaS model, but it’s different in the sense that it not one-size-fits-all. We are hosting and managing your custom-built solution. In this model, there are two categories of costs:
        • Upfront Development (one-time). This is based on the requirements of your solution. Those requirements could include software, hardware, and/or third parties contributing different components to the solution. All of these will go toward the upfront development cost of your IoT solution.
        • Managed Hosting (ongoing). This is billed to you on a subscription basis, where the pricing is based on the size of your application (we have between one and six different metrics that determine what this price is, depending on the nature of the application). If it’s only one metric, this would probably be “by device.” So, for certain applications, that’s all we really care about – how many devices do you have? For other applications it might be based on the “class” of device (i.e., is this a simple temperature sensor or is it a camera delivering very high bandwidth 4K video? The price will differ between those because there is a massive difference in the load required to support them.) And other times – if the nature of the application is such that large numbers of users are logging in and spending a lot of time in the application – then the hosting fee is based on a per user basis. On the flipside, if the application is such that very few users log in (perhaps the interaction with users is lightweight) or maybe it’s something where there are hundreds of thousands of sensors (devices) but only two users, we would price it per device. So, it’s hard to pin it down without understanding what we’re building for you when answering this. Ultimately it all boils down to the scope and size of the application, and that’s what determines the subscription cost for us to host and manage the application. Essentially it is a “pay for what you eat” model. It’s just that the “food” your solution is “eating” is custom to your own solution. If your solution doesn’t eat much, you won’t be paying much for its food.


  2. Self-Hosted. This differs from the Managed Hosting model above because instead of ObjectSpectrum hosting and managing your solution, it would be you hosting and managing your solution – either on a cloud provider of your choice or in your own data center. The vast majority of our clients do not choose this route because they’re almost certainly looking at tens of thousands of dollars a month on day one for a self-hosted application just for the team they’ll (or you’ll) need to manage it. In this model, we are effectively operating within a traditional software licensing model. You’re responsible for the solution. You are hosting it and managing it wherever you want. But we’re licensing our software to you, just as if you had licensed Oracle or Microsoft Windows, for example. The reality is that companies are going to be much better off letting us host their solution (a la Option 1 above). This is true at least until they reach a scale that starts to justify them having the overhead and resources to manage it in-house. The only exception to this would be if you had a company that had such a strong need to have control of it on your premise – regardless of the cost.

As mentioned, the most common pricing model is that we host it and manage the solution we build with you (#1 above) because it’s the most economical, the easiest to get started, it doesn’t require any technical expertise on your part, doesn’t require any personnel on your part, and it’s a turn-key service that grows with you. You also never have to worry about back-ups, servers, security patches, and so much more.

A Note on Pricing Models in General: there will typically be ongoing software development (for updates, features, etc.) that continues after any solution is deployed. This is normally billed on an hourly basis where you are buying blocks of hours. There are two ways to structure the fees for ongoing development: 1) as a monthly budget, like a retainer, or 2) as a subsequent, clearly-defined project.

All FAQs