Reinventing Your Business | Usage Based Business Model

Volume 3

Companies will need to reinvent their business model to survive beyond COVID-19. In Volume 1, we covered the Asset Utilization. In Volume 2, Cost Optimization Strategies were highlighted. In this volume 3, Usage Based Model is highlighted.  

The Usage Based Business Model will make products available on demand in smaller increments, and without a large up-front investment. High-speed connectivity, cloud computing and use of low-cost sensors make it possible to economically allocate, track, and charge for smaller units of products and services. More potential users will be willing and able to try them. Some of the examples are below:

  1. Convert Restaurant to Shared Commercial Kitchen:

A mail-order food entrepreneur might look out to purchase membership and by use a shared commercial kitchen

2. Medical Equipment:

High end medical equipment being billed to the hospital based on the number of surgeries done by the doctors using them.

3. Farming Equipment:

Expensive farming equipment being made available based on number of tons of processed crop rather than lease or fixed cost to the farmers.

4. Insurance:

Allow consumers to pay for car insurance on a per-mile basis. This will make it economical for low-frequency drivers to be fully insured without subsidizing customers who drive more.

Usage Based Business Model is beyond the subscription or lease revenue model. The Usage Based Model allows companies to price, packages and sell in a variety of options. Some of those are highlighted below:

To implement the above business model, you might think about options further to the model that you may opt.

The traditional CRM and ERP software platforms are not created to handle this. The businesses will have to implement IoT Based Platform where assets are involved. The platform will need to handle intelligent billing based on:

  1. Handle incoming events
  2. Identify the correct customers
  3. Current allowances and price plans
  4. Correctly calculate their charge
  5. Apply the charges to the customer accounts.

The Value Based Access Model will offer the companies the flexibility, cash flow, affordability, or to pay a large up-front price. The capital equipment that is now in their balance sheet will show up as operating expense. Markets such as automotive manufacturing, insurance, and high-end fashion may see the emergence of Value Based Business Model soon.

About Baljit Singh

Baljit Singh has been fortunate to be part of teams that have brought innovation and game changer product & services to the market. He has experience in building successful product and services companies. He is currently an advisor to companies for developing their innovative journey. He is a motivational speaker and gives talks on how to cultivate habits and change lifestyle to drive innovation. Baljit is currently driving cross border partnerships.

About the Book- My Experiments with Innovation

The Book – My Experiments with Innovation is a practical guide to inculcate Habits and Lifestyles to drive innovation! Click below to order your copy of My Experiments with Innovation.

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1. Finding Imagination-Purpose-Relevance
2. What is Innovation pH Balance?
3. Finding Your Purpose
4. How to Solve Challenges
5. Finding Your Niche
6. Finding Inner Peace
7. Roar like a Tiger
8. A personality for customer centricity
9. Pay It Forward
10. Summary

For any further information, please contact Baljit Singh at [email protected]

1 thought on “Reinventing Your Business | Usage Based Business Model”

  1. I think that’s a great concept. I also contemplated over such. It could apply also to tangible goods that could be produced by 3D printers.
    I also suggested such a billing model for Cable TV services and communication. Pay Per Actual Demand.

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