Change your business model. Build your userbase and products



I like your products but it's clear from the forums that development is slow and users get frustrated with a lack of progress on features that should be there

I feel that your business model of selling hardware to users is partly to blame here as once you've sold the kit, you have no income stream to fund new development.

So, why not make the whole system a subsciption service. Rather than have users pay out hundreds of £/$/€ on hardware, perhaps just have a small upfront payment and then a monthly subscription charge. This would provide a regular income to fund support and development

Given that I paid around £500 for Tado in my 3 bed house (extension kit, smart thermostat and 7 TRVs), I would happily have paid pay £50 upfront and £10-15 per month for the same equipment over a 3-5 year period to fund the initial equipment outlay, automation, support (24/7, replacement hardware etc) and development of new hardware. You could even team up with respected CH cover provider (not 24/7 Homecare!) to offer installation and hands-on support.

I do think the initial outlay puts off a lot of potential customers so a monthly plan could make it more appealing. This is especially true with the current cost of living crisis as homeowners try to reduce costs but cannot afford to make the changes necessary

For existing customers who made the big outlay already, you could offer a period of complementary service before starting the monthly charge e.g. free service until the system is 3 years old then charge after that

How about it?

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  • Previously Tado's business model included monthly rental of devices. It wasn't popular and they ended the rental model about 4 years ago. £50 up front instead of the full £500 will mean they initially have to sell ten times as many devices to maintain the same level of income. Putting them in a worse position to fund new development.

  • davidlyall
    Didn't know that but I'm sure you know the reality is that the devices must cost a fraction of the sale price so the outlay for tado wouldn't be so bad. I just can't see the current model being sustainable if Tado want to develop their product lines

    The thing is, the landscape has changed significantly in the last 6 months and people who previously didn't care about their bills are now very much focused on minimising them so perhaps the previous incarnation of the rental model was just around at the wrong time
  • @davidlyall yes the bill of materials for the devices will be relatively small - overheads always make up a large portion of costs. I imagine it's not just staff costs, but the daily cost of providing the IoT backend to millions of individual customers. You're kind of right by suggesting the need for additional monthly income, but it could be done by diversifying to create new income streams from new services/devices beyond the residential heating market. It's precarious to depend on the sale/rental of just thermostats and TRVs.