SaaS & IoT: All About This New Business Model

Dayana Mayfield


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Who doesn’t love a new business model? They’re exciting and offer countless opportunities for businesses that can benefit from it. However, some of them aren’t worth the hype. They can leave you feeling like you have shiny object syndrome.

But that’s not what the SaaS and IoT business model does. This business model focuses on turning a one-and-done hardware solution into a software solution powered by the hardware. Need an example?

Scout is a home security system that offers consumers 24/7 monitoring, police and fire dispatch, unlimited notifications, and much more a month (software) with one of their home security products (hardware).  

If you’re interested in learning more then in this post, we’ll discuss the potential of a SaaS and IoT business model, drawbacks, and more examples.  

What does a SaaS and IoT business model look like?

Nathan Latka mentioned how the combination of customers that’ll pay for both hardware and software would have a net retention rate of at least 160%. On the grand scale of things (compared to publicly traded SaaS companies), it’s pretty world-class. 

So below, we’ll dig into the potential that comes with this business model and factors you’ll need to consider to see retention rates like those potentially.  

The opportunity with SaaS and IoT

When you implement the SaaS IoT business model, you can create recurring revenue. The monthly recurring revenue you’ll generate can allow you to continue making money from your solution after the initial sale.

And with this model, even after the initial sale, you can find different avenues to expand your offering and increase your sales. For example, if you decide to implement more features (or even less) to your solution, you can give your customers the option to up-sell (or down-sell) and get more from your product. 

Also, unlike traditional IoT business models, subscription-based ones allow you to build a relationship with your customers that you wouldn’t have been able to with a one-off purchase. 

Additionally, because your customers will have a subscription, you can analyze, over time, how your customers are using your solution. And how you can provide more value to them based on the data you collected.  

The caveat

The SaaS IoT business model does offer substantial opportunity, but a downside associated with it is your hardware profit margins. The money you’ll receive from your hardware won’t be anywhere near your previously comfortable range. And that’s to be expected when you transition from one business model to another. 

When shifting to the subscription-based model, you’ll need to consider paying for part of the hardware cost yourself so you can offer it at a lower price for your customers. And instead of focusing on hardware profit margins, you’ll need to prioritize generating long-term recurring revenue from your new business model. 

While this might not seem ideal initially, one of the most significant advantages of a subscription-based model is the recurring revenue you can generate, which wasn’t possible before. 

Also, as mentioned previously, by focusing on building relationships with your customers, they’re more likely to stick around. Doing so helps increase your retention rates, which can also help you generate more recurring income. 

Besides hardware, another change you’ll have to make is how you operate your business. Like your policies and procedures and how you market your product, some things will need to change. 

And you’ll also need to consider if you’d want to offer your existing customers a (reasonable) discount on your subscriptions because they paid full-price for your hardware. Whether you do or not is solely dependent on your business and what feels right to you. 

17 example SaaS and IoT companies

Now that we’ve discussed opportunities you can look forward to and ones to be mindful of, let’s check out some IoT companies that are already using a SaaS IoT business model. 



SensaNetworks is a web-based platform that provides waste management fleets with sensors to measure a dumpster’s fullness. It also offers remote diagnostics and insightful reporting that helps its customers ensure their assets are working efficiently and providing the data for their sustainability reporting.  



Billions of pounds of food are wasted after consumers take them home. But, what about the food that’s wasted before it even makes it to the stores? 

Each year, 30% of crops are wasted after they are harvested. And that’s the market TeleSense focuses on. The SaaS IoT solution focuses on improving grain storage conditions and minimizing spoilage. Their custom sensors, which are placed in the middle of grain storage units, provide farmers with data around their temperature, moisture, and location. Then TeleSense’s app will remotely notify them if any issues arise. 



Water leaks are a problem, especially when homeowners aren’t aware that there’s a problem, to begin with. But Flumewater attaches to their water meter and tracks water usage 24/7 and notifies homeowners of leaks and excessive water usage in their home, lawn, or garden through their app. 

Flumewater also lets its customers set water goals and alerts and manage their water usage in real-time.



MyHippo is a home insurance company that offers its new customers a smart home sensor when they sign up for an insurance policy. The sensor helps homeowners prevent incidents in their homes that can cause expensive damage. Their sensor also allows them to offer their customers cheaper premiums by assisting them with incidents before they happen. 



Defendry is a security solution that automatically identifies, deters, and reports active shooters based on guns, masks, intruders, and individuals banned from the premises. 

It offers 24/7 verification, mass emergency notification, and locks doors automatically or after the threat is verified. is a SaaS IoT solution that helps businesses decide the best size and fit for consumers. It takes data collected from millions of previously scanned bodies to help companies create better fitting products and help consumers find the right fit. 



If you’ve ever had to hold a meeting in a public place, then you know the challenges that come with it. While it’s inexpensive (or free), the distractions and noise can cause your meeting to end early or for vital information to be missed. But Zenspace helps solve that problem. 

It provides remote workers with a professional, quiet space to hold meetings in noisy environments. It’s sound-proof, has consistent airflow, comes with the necessary equipment to host meetings, soundproof, comfortable, customizable, and relatively inexpensive. 

And it allows public areas to monetize space they possibly weren’t previously using, which is a win for everyone. 



PopCom is an automated retail technology that allows brick-and-mortar businesses to access data that previously was only available to online retailers, via vending machines and Kiosks. It also provides its customers with real-time, storefront reporting, crowd metrics, demographics & sentiment, lead generation tools, and biometric identification (if needed). is a connected car IoT solution that helps cars from as early as 1996 get information on mechanical issues, vehicle location, fuel economy, etc. 

For consumers, it gives them more insight into their vehicle that only newer models had access to. For companies, it provides them with data that can help them increase customer loyalty and provide their customers with a better product, made just for them. 



TrillBit offers a sound-based authentication solution that can convert a speaker into a data transmitter, and devices with microphones become data receivers. It doesn’t require additional hardware but utilizes existing ones to provide value to their customers with sound. 



Supply chains can monitor the condition of their perishable food goods in real-time while in transit with non-Lithium temperature and location trackers provided by Tive. The SaaS IoT solution also provides these companies with insightful analytics that can help them improve their bottom line.



SimpliSafe is a whole home protection solution that protects homeowners from intruders, natural disasters, medical emergencies, and more with 24/7 monitoring. Its subscription allows local authorities to respond to emergencies with video footage as evidence quickly. 



AlertMedia is a mass notification software that allows organizations to seamlessly communicate to their employees during an emergency while notifying the local authorities. It also offers action plans that companies can use to keep their employees in the loop with relevant information.  



Inspire provides consumers with 100% renewable energy from sources such as solar and wind. 



For consumers who have children, senior citizens, or pets they need to keep safe, knowing their real-time location is essential. And Jiobit can help them do it. It’s a location tracking IoT solution that provides families with data that’s protected by government-level encryption.   

Click & Grow


Consumers can grow their plants inside their home, in the perfect environment with Smart Soil. While the product itself is a one-time purchase, for gardeners to continue using their Smart Garden after the first year, they have to purchase Plant pods. 



Wink lets homeowners monitor and manage their lights, power, and security from one app. Consumers can set their lights to turn on when they get home or even their AC, use sensors on their doors and windows to protect their home, and more. This IoT solution makes it easy for homeowners to get the smart home they want, without the price. 

There are always new SaaS business models that are rising. And ultimately, you have to decide what model fits your business and helps you generate the revenue befitting your solution. 


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