For companies building and operating IoT services, growth is often constrained less by demand than by economics.
Once a service is live and proven, expanding it tends to introduce complexity faster than it introduces margin. Deployments increase, support requirements grow, and customer expectations rise. Revenue grows too, but not always in proportion to the operational effort required to sustain it.
At that stage, growth is shaped less by what the service does and more by how it is structured, priced, and owned.
This is where connectivity becomes commercially significant.
After the early stages of an IoT business, the number of meaningful ways to change unit economics is relatively small.
Hardware revenue is typically front-loaded. Once devices are sold or deployed, there is limited opportunity to revisit pricing without introducing friction. Software pricing is often constrained by market expectations and competitive benchmarks. Support and service layers add value, but they also add cost, and are difficult to scale without increasing headcount.
As a result, many IoT services reach a point where:
At that point, improving growth is less about adding features and more about identifying structural levers that change how revenue behaves over time.
Connectivity is one of the few components that can do that.
In earlier phases, leaving connectivity outside the core service offer is often a rational decision.
Customer-supplied SIMs or generic connectivity arrangements reduce friction in sales conversations. They avoid introducing additional operational responsibility before demand is established, and they allow teams to focus on proving the core service.
Commercial models at this stage are typically built around:
Connectivity is treated as an external input: passed through, priced separately, or left entirely to the customer.
This approach works when services are small, relatively uniform, and easy to support.
As deployments grow, the economics begin to shift.
Each additional device increases exposure to usage variability, network behaviour, and operational edge cases. Support teams are drawn into issues that sit at the intersection of software, hardware, and connectivity. Customers increasingly expect a managed outcome rather than a collection of components.
When connectivity remains outside the commercial bundle:
Over time, the business absorbs more responsibility without gaining much additional control over revenue or margin.
This is often where growth starts to feel incremental rather than compounding.
Connectivity is economically distinct from other parts of an IoT service.
It is:
These characteristics make connectivity one of the few elements that naturally scales alongside the service itself.
When connectivity is governed as part of the service, revenue grows with active deployments rather than only with new sales. Pricing can be designed to absorb usage variability. Margin becomes easier to forecast. Support costs become more predictable.
Importantly, the focus isn’t to maximise connectivity revenue in isolation. It’s to align revenue with the operational reality of the service.
When more established IoT services revisit connectivity, the decision is rarely framed as an add-on or upsell.
What’s changed is the structure of the service.
Bundling connectivity allows providers to:
These changes alter the relationship between effort and return. Revenue becomes more closely tied to live services rather than one-off transactions. Growth becomes easier to forecast. The service gains commercial resilience as complexity increases.
Despite these advantages, reluctance to bundle connectivity is understandable.
Bundling introduces real considerations around operational load, billing complexity, support responsibility, and commercial risk. Without the right structures, it can add friction rather than remove it.
This often leads to partial or inconsistent approaches: bundling connectivity for certain customers or use cases, passing it through in others, or handling it differently across the estate. While this can feel pragmatic, it limits the impact bundling is intended to have.
The challenge isn’t whether bundling connectivity can support growth, but whether it can be done in a way that improves unit economics rather than diluting focus.
Where bundling supports growth effectively, connectivity is treated as part of service design rather than as a bolt-on.
That usually involves:
In these cases, bundling reduces fragmentation and makes it easier to scale delivery without proportional increases in operational effort.
At Pangea, we work with companies building and operating IoT services that are evaluating how connectivity fits into their growth model.
We provide a connectivity platform that lets teams manage connectivity across live estates with the visibility, controls, and diagnostics needed to operate it as part of the service. Alongside the platform, we work with teams on how connectivity is applied within their commercial and operational model — including bundling, pricing, margin protection, support responsibility, and change over time.
The focus is on making bundling commercially viable when growth depends on stronger ownership of service delivery, not on introducing complexity.
Used in this way, connectivity supports recurring revenue, margin stability, and operational clarity as the business scales.
For IoT services, sustainable growth depends on aligning revenue with responsibility.
Once a service is live, there are relatively few levers that materially change unit economics, but bundling connectivity is one of them. When it’s designed in deliberately, it allows services to scale with greater predictability, stronger margins, and clearer accountability.
That’s why, for many companies building and operating IoT services, connectivity eventually becomes part of how growth is built — not just how services are delivered.
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