We all know subscription services, for meal boxes and razor blades for instance. The customers pay a monthly fee for a recurring service. But new are the ones based on data of actual usage. Ordering and paying for a replacement only when you actually need it.
Selling your product as a service instead of just the product. Ownership stays with the manufacturer, but you charge a fixed fee for clients using the product or for their actual usage. For a manufacturer this means a shift from short term high income to long-term low income per product. But in the end, you are able to make a higher profit per product. Also, product as a service is great for sustainability goals: re-using the products in the production cycle.
Is basically the same as product as a service, but more b2b focused and related to high investment products. With the 4th industrial revolution in full swing asset management becomes smarter and is shifting to asset as a service-propositions. Complete factory lines are delivered as a service and charged on a pay per use basis. But also, medical equipment such as CT scans are already operated on a pay per use model. Shifting service and downtime risks to manufacturers improves profit and productivity with producers by only paying for uptime. Manufacturers can increase their market by lowering the entry point for usage.
Usage based pricing models are mostly one of the examples above or a combination of pay per use and a fixed fee. Shifting to usage-based pricing has some very clear advantages:
Enabling these kinds of business models lead to a shift in ownership: from client to manufacturer. Selling products or assets a a service also means shifted responsibility for service, maintenance and insurance. With the help of sensors and IoT, maintenance is managed better and therefore better predicted. This helps to avoid downtime and increases profitability and productivity. Also the financing needs for ownership shift to manufacturers which makes it easier to operate a business. Finally, usage-based business models are good news for sustainability goals as the product ownership stays with the manufacturers - who can reuse it to make it circular.