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Product as a Service
‘Product as a Service’ refers to a business model where products are not purchased outright and owned by customers but are instead “rented” through subscription or pay-per-use agreements.
The adoption of ‘Product as a Service’ has been especially driven by developments in sensor tech, data analytics, IoT, and cloud computing.
Product as a Service
‘Product as a Service’ refers to a business model where products are not purchased outright and owned by customers but are instead “rented” through subscription or pay-per-use agreements.
The adoption of ‘Product as a Service’ has been especially driven by developments in sensor tech, data analytics, IoT, and cloud computing.
Overview
A Unique Opportunity for Enterprises
‘Product as a service’ can be offered through various models, including rental, subscription, or pay-per-use. This business model offers many advantages and benefits, including an enhancement of the overall customer relationship by offering flexibility and financial freedom.
Furthermore, ‘Product as a service’ offerings extend product access to new customers, who may otherwise not be able to afford products outright. This increases returns overall by creating new and recurring revenue streams.
High Product Entry Costs
Customers tend to avoid high upfront investments of expensive products due to the financial burden and potential risk associated with it.
Limited Time of Usage
Certain products are only needed for a specific timeframe are not attractive for permanent product ownership.
Product Obsolescence
Offering customers access to the latest products and upgrades helps combat product obsolescence and encourages continuous innovation.
Operational complexity
Complex products require deep understanding or on-site knowledge to use and maintain them effectively, adding to the products overall cost.
Attract New Customers
Temporary product usage without ownership means a lower cost of entry, which widens the potential pool of customers.
Increased Revenue
Recurring revenue streams with long-term commitments create a more predictable and consistent cash flow.
Enhanced Customer Satisfaction
Customer satisfaction is improved due to increased flexibility. Customers can access the latest products and services without the commitment of ownership.
Increased Sustainability
An increasingly sustainable consumption pattern is encouraged due to a more efficient use of resources.
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