Medical device leaders consistently emphasize that embedding software unlocks differentiation. But business impact comes from treating software as a commercial product, not just a technical feature.
Many device manufacturers struggle because digital capabilities are added without a clear monetization strategy, limiting ROI. Monetizing medical devices comes with unique challenges, including:
- Working across remote and disconnected environments;
- Regulatory and safety requirements, which drive the need for updates, forcing companies to incorporate both global guidance and local regulation into software product design; and
- Healthcare organizations’ increasingly rigorous procurement processes, focusing on value and evidence-based purchasing.
The software in these devices plays a pivotal role in the ability to diagnose patients. Software, therefore, is the growth engine of digital transformation – but only if it’s monetized intentionally, with a focus on capturing recurring revenue. Here’s how to make that growth possible for medical devices.
5 Best Practices for Monetizing Medical Devices
Within the medical industry, we’re witnessing rapid progress in device functionality. This spans categories including imaging (such as CT, X-Ray), ultrasound (such as for cardiovascular and women’s health), patient care solutions (including EKGs, treadmills, and monitoring devices, such as for bone density and maternal/infant care), and solutions for pharmaceutical diagnostics.
Manufacturers partner with scientists and medical teams to develop potentially life-saving advances based on the data available from these devices and the software running on them. To monetize the value that devices provide effectively, manufacturers must:
- Design for monetization from the beginning: When a product is new, plan for ongoing initiatives to sell and monetize the devices and the data they generate. Build a predictive ROI calculator, which will play an important role before the launched product has customer proof points.
- Plan for AI and a consumption-based future: Profitability of AI-based products and features requires new pricing strategies that deliver hybrid monetization models, largely focused on software consumption, where the price charged reflects actual usage (measured through a variety of metrics). Approaches include consumption-based billing with subscription, tiered pricing (with set usage amounts per tier), and pay-as-you-go. Measure key performance indicators that go beyond the basics of if software was downloaded or where it is deployed; look at adoption rates, features used, updates delivered virtually (and savings over physical/field updates), security patches implemented, and outcome achieved.
- Provide a self-service customer experience: One of the keys to keeping customers front and center is to enable self-service. Make sure that customers have consistent, 24/7 access to products, features, and updates. Self-service portals allow customers to manage their entitlements and license compliance. Customers can view, activate, or request changes to entitlements, allowing them to perform tasks, such as access management changes. This approach reduces the resources and expenses associated with providing support and assistance, also strengthening the CX by providing users direct control of their software access.
- Select the right monetization infrastructure: Manufacturers that embrace cutting edge approaches to digital transformation treat monetization infrastructure as enterprise architecture, not just as product code. Important architectural decisions for medical devices include defining software as a strategic asset; aligning monetization with the value of the software, as perceived by customers; selecting monetization/pricing models (including subscription and/or usage- or outcome-based) that align with the product lifecycles of IoT devices; designing to meet the needs of the highly-regulated healthcare field; and enable AI-driven value capture for the entire product lifecycle.
- Support the procurement process by substantiating claims around ROI and value achieved with evidence: Using the predictive ROI calculator, share results with prospects during the sales cycle; work with the prospect to develop an estimated payback model, which can form the basis of their business case internally. Additionally, invest in a credible third-party to attest to ROI. Customer references and case studies, once available, will provide evidence to support the procurement process with future customers.
Benefits for Manufacturers and Customers
Effective medical software licensing and monetization allows medical device manufacturers to increase top line revenue, improve the customer experience, and drive operational efficiencies. Manufacturers can expect to remove bottlenecks that are all-too-common in development and launch processes. They can also easily launch and iterate on monetization models, relying on software usage data to adjust the mix of models that best meet customers’ needs, particularly in the rapidly evolving AI era.
Customers benefit by smoother passage through procurement processes, with offerings that meet their needs. The end-result is an improved customer experience that supports the device manufacturer, the medical professionals using the devices and the resulting data insights, and – above all – patients.
