Capturing the Value: How to Charge for Smart Services

The emergence of smart services across industry sectors has transformed the way service providers co-create value with their customers. While the development of a smart service requires substantial effort in itself, a critical step is oftentimes neglected in the process: defining a sustainable revenue model. Key decisions need to be made on setting a price and choosing a revenue mechanism that defines how customers are charged (e.g., subscription, pay per use). This chapter provides guidance to organizations on selecting a revenue mechanism that fits the needs of the smart service and the customer situation. Furthermore, this section sheds light on the reasons why customers hesitate to pay for smart services in the first place and what practices services providers can apply to overcome those hesitations.