Aeris Blog

How Do You Know if Pay-Per-Use is Right for You?

April 18, 2014

4140082When looking at machine-to-machine (M2M) services, it often makes more sense to go with a pay-per-use plan than with a per-device or fixed-data plan.

M2M uses cellular technology for machine communications only, and the traditional carriers that provide the cellular service began as providers for consumer networks. Since their services, technologies and processes are adapted from those original consumer-focused methods, using these providers for M2M often is a costly option.

In fact, M2M is a secondary revenue stream for these carriers over consumer devices, so tailoring plans for business is not a primary concern. But traditional carriers love to sell M2M fixed-data plans because the inflexibility of these plans means a lot of revenue for them. If you buy a 5MB plan and go over that amount, the carrier makes a considerable income from your overage. Conversely, if you buy a 5MB plan and only use 3MB of data, the carrier keeps the extra 2MB. Either way, buying data on a per-MB plan is a win-win for the carrier.

Many M2M applications use significantly less data per month than consumer devices do. So often it makes more sense with M2M to go with a pay-per-use plan, where you pay only for exactly what you use.

Pay-per-use plans make the most sense in instances where a device is monitoring a fixed system with a small amount of usage that rarely fluctuates.

For example, pay-per-use is ideal in situations where the device is monitoring a security alarm panel as part of a home security system. In this instance, the device typically calls in to the support center once a day to report that everything is fine. Known as a heartbeat, this daily check-in may use 1KB of data each day, which comes to about 30KB each month. In a situation like this, it’s always best to use a pay-per-use plan because in most instances the usage will never fluctuate. Anytime it might — for example, if an emergency triggers an alarm — then that exception to the norm would incur only a small amount of overage. But because an exception like this is rare, the savings by going with pay-per-use is significant.

Pay-per-use also is generally the best choice for managing a fleet of vehicles. In this example, usage is difficult to gauge because it fluctuates based on how much a vehicle is driven. If fleet usage is sporadic — for example, a work van sits for several days before being driven — then pay-per-use makes more sense than paying for a per-device plan.

There are also other reasons that pay-per-use is a viable option even if you have thousands of devices in use. Let’s say your organization has 1,000 devices on 1MB plans, 2,000 devices on half-MB plans and 5,000 devices on 3MB plans. In this example, even if you employ a full-time person to keep track of all the devices and plans, you will almost certainly end up with overages — a half-MB plan will inevitably end up on a device using 1 or more MB of data. And the overages that you may experience before a mistake like this is discovered could be substantial.

Pay-per-use is most cost-effective for lower-usage device profiles. If your devices tend to reach into higher-usage levels — 10MB or more — a per-device data plan may be your best option. The key is to work with an M2M provider to analyze your organization’s usage to determine which option will be most cost-effective for your needs. Then continue to use the data management tools provided by your M2M service provider to gauge whether your organization is always using the most cost-effective option.

Aeris Communications provides benefits across all these factors. To view a real world case study of how Aeris provides the lowest Total Cost of Ownership, click here.