Subscribed: Why the Subscription Model Will Be Your Company's Future - and What to Do About It

by Tien Tzuo

Again, let’s head to Sweden for some more enlightened thinking around creative usage and pricing strategies. Based in Uppsala, Ngenic sells a smart thermostat, or an “extra brain used to heat up your house.” Ngenic offers three basic purchase plans: buy the thermostat outright, buy it for a lower price with a small monthly subscription, or buy it as part of a discounted bundle with an energy provider. More than half of Ngenic customers wind up saving more than 10 percent of their heating costs over the course of a year. The device monitors their home energy usage by taking into account variables like sunlight, occupancy, and (this is where it gets really interesting) favorable electricity rates. Unlike here in the United States, where you generally get assigned a single power utility, Sweden has an extraordinarily deregulated energy market. There are more than 120 electricity providers, and most customers have rate agreements that can change on an hourly basis relative to supply and demand. Ngenic’s physical asset is relatively inexpensive to manufacture and assemble. And thanks to all this rampant free market activity in supposedly socialist Sweden (most kilowatt-hours are bought and sold at least six times before reaching the end customer), electricity there is really cheap. So how does Ngenic create value? It sells to consumers to help them save energy and protect the environment. It partners with suppliers to add “green intelligence” and differentiation to their value ...