The global software as a service (SaaS) market was worth $134.44 billion in 2018 and is expected to grow to more than $220 billion through 2022, a compound annual growth rate of more than 13%.

What’s more, look up “software as a service” in Google Trends and compare it to “software” and you’ll see that the two terms have had an opposite trajectory since 2004, with the number of search queries for SaaS steadily increasing and those for “software” have steadily decreasing.

What this means: now is the time to get into the as-a-service market.

There’s no question that the as-a-service business angle presents a huge opportunity—especially in the IoT arena. With 127 new IoT devices being connected to the web every SECOND, the chance to make money off data captured by those devices is one that simply cannot be missed.

But how do you do it?

Developing a SaaS revenue model can be very difficult if you’ve never done it before and especially if the market you are jumping into—in this case, IoT—is relatively new territory.

Here are some tips for creating recurring revenue from your IoT or smart home devices.

1. Start small

Do NOT try to monetize your entire IoT ecosystem at once. Start small—that is, with a certain product category or product line—before expanding into other products or categories. You do this to avoid making any large-scale mistakes that will then require you to go backwards and potentially face a mass customer exodus to someone who is doing it better. So… start small. See how other companies have done it successfully, and model your SaaS strategy after theirs. What’s worked before will work again. What hasn’t worked before will likely fail again. Once you successfully set up one SaaS model for one product line, you can use your experience to broaden to other products. Start small

2. Start where interest is highest

If you’ve already deployed a smart product or two then surely you have some data on how your smart products are being used and what new features your customers are seeking in future models. Look at where opportunities may be arising to monetize the products you are providing by adding a subscription-based service to them. For example, users of your smart cameras may be asking to be able to store camera footage in the cloud—this is an as-a-service opportunity that you could offer on a monthly subscription basis. Start where interest is highest

3. Look no further than your data

The biggest recurrent revenue opportunities from both smart home and industrial devices will come from the data they generate. For example, a manufacturer will want to know as much as possible about the various moving parts of its operation and where and how things go wrong. A huge solution to this issue is sensors, but it’s the collective data generated by these sensors over time that will provide the best possible intel for these manufacturers. An as-a-service IoT solution could bundle the hardware (ie, the sensors) with the software (ie, the analyzable data), doing the hardware as one-time payment that comes with a recurring payment for the data that hardware generates. As your customers’ data grows, so will the value of their as-a-service subscription. Look no further than your data

4. Think in terms of what grows

All IoT devices start with basic connectivity hardware that doesn’t change. What DOES change is the number of other devices they are connected to and also the number of hours they have been used. As both of the above grow, so too does the potential to monetize your smart device with subscription-based recurring revenue. For example, let’s say you have a smart humidifier on the market. You will want to ensure your humidifier can easily connect to other smart home devices from other brands and can also use other connectivity protocols besides just Wi-Fi (such as Bluetooh and Zigbee) so that you can then offer a subscription-based service that unlocks the data value from those other devices. Think in terms of what grows

This will come down to the IoT hardware and ecosystem you’re using, which leads us to number five.

5. Find the best possible IoT partner

Make sure you have found the right IoT ecosystem partner to support your product launches and subsequent smart product as-a-service recurring revenue initiatives. The best IoT partners are ones with vast global relationships across the IoT spectrum: manufacturers, brands, OEMs, and retailers. Partnering with this type of IoT player will allow you to most affordably and most efficiently set up your IoT as-a-service framework and will also allow you to grow it faster and easier. When your partners know how to approach the market and already have the relationships in place to make all the moves happen faster, you will be that much further ahead right from the beginning in your IoT as-a-service initiative. Find the best possible IoT partner