In this era of cloud computing, mobile devices, and the Internet of Things (IoT), firms are testing new product offerings that combine elements of content, software, services, and hardware together. Like the innovative products themselves, the rulebook on monetizing them is evolving. Firms are shifting from one-time perpetual sales or fixed monthly subscriptions to consumption models that blend onetime, subscription, and usage-based billing (see Figure 1). CEOs recognize this shift toward business models that reflect the value of the relationship with the customer.
The move to subscription and consumption business models is pervasive in almost every industry. From retailers selling subscription box sets to industrial equipment manufacturers charging based on consumption, the increase in experimentation of alternative business models is extraordinary (see Figure 2). While B2C disrupters like Netflix and Zipcar have gotten more media attention, the growth of subscription billing platforms has been heavily driven by B2B use cases (or B2C expanding into B2B — e.g., a real estate listing site selling services to realtors).