Product as a service Business Model

Product-as-a-service has become more and more popular within the digital transformation process. It reduces the upfront costs for the client/customer, who pays only for the usage of the item. It means that if this item fails to work, the client/customer receives a new one without having to worry about all the logistics and financial consequences. For the manufacturer/retailer, it means responding better to the customer needs. If you were originally a manufacturer, it also involves establishing an infrastructure to manage the customer/client relationship. Moving to this business model will also have a serious impact on cash flow.

Well-known examples are:

  • Hilti
  • Coolblue (Belgium/the Netherlands/Germany)

Before you start

How to start?

  • Propose offer to selected group in order to test it

What are the key success factors?

  • Maintaining a high usage of the product by either keeping subscription duration long or rotating the product as much and as quickly as possible between users.

How to cope with threats?

  • Price comparison is too easy
    • Provide extra services such as insurance, 24/7 helpline etc.
  • Client/customer realizes buying is cheaper in the long run
      • Provide extra services such as insurance
      • Provide extra guarantees such as quickly replacement/quick recovery/24/7 assistance
      • Make it possible to buy the product

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