In recent years, the ‘as-a-Service’ model has gained significant importance. When I was in university, I was taught there is Infrastructure-as-a-Service, Platform-as-a-Service, and Software-as-a-Service (without really knowing what it actually means). But now, there is pretty much anything available ‘as-a-service’. How come and for what products is that model actually best suitable? 

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What does ‘Anything-as-a-Service’ mean?

Most players don't explicitly use the term ‘as-a-service’ but think about Netflix or Spotify. Effectively it’s ‘movies as a service’, or ‘music as a service’. You don't go to a DVD store anymore to buy a movie or a CD, but you pay a monthly subscription fee to have access to as many movies and songs you want! End-consumers love it because they have high freedom of songs and movies at their fingertips but only pay a little fee every month. 

So, ‘as-a-service’ means, you pay for the result, not for owning the actual product. Think about it: do you need a lamp, or do you need light at home? Do you need a car, or do you need to get from A to B? It’s the result that matters. 

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What can I offer ‘as-a-Service’?

There are three categories of goods that work perfectly for ‘as-a-service’ models: Products that are only needed for a certain duration of time, products that are very service intense, and products that have a high value.

Products that are only needed for a certain duration of time

Imagine you just had a little baby. You only want the best for the baby and you buy a lot of expensive products, like strollers, baby clothes, etc. At the latest after a few months, if not weeks, the baby has grown out and you have to get rid of everything. So baby subscriptions is one of the biggest trends in the ecommerce space.

Why should you offer such product as a service? To increase usage and margin of your products by at least 3x, to get direct feedback from your customers, create a unique selling proposition to differentiate from your competitors, and control the second-hand market.

Products that are very service-intense

Do you have to go out to your customers a lot in order to maintain your product? Is the service due on a regular basis? It’s a perfect opportunity to establish a product as a service model - just like Rolls Royce did, offering their turbines-as-a-service measured by the flight hours. 

Why should you offer your service-intense product as a service? To increase your service-based revenue by 40% (like Rolls Royce did) and keep the customer relationship and customer communication as active as possible. It is 60-70% more likely to cross- and upsell to an existing customer base than to establish a new customer relationship. 

Products that have a high value

The most prominent example of expensive products as a service is probably good old car leasing. But also in the B2B realm, products-as-a-service are widely spread: companies offering dental equipment-as-a-service, smart home products-as-a-service, and furniture-as-a-service.

Why it makes sense to offer high-value products as-a-service? Because the car manufacturers can reach a whole new customer target group with a new price point for their product. Customers who would never be able to buy a BMW, are now leasing it and the whole service that comes with it. Volkwagon has come up with its own car subscription, and many car rental businesses like aboDeinauto disrupt the mobility sector. The microbility rental businesses such as bike subscription, ebike, and scooter rental subscription have seen tremendous growth over the past years.

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Sounds great! But how to start?

Offering your product-as-a-service is a new business model, which can be easily implemented on top of your existing revenue streams. Our subscription management software is designed with product-as-a-service business model in mind. Hit us up for some consultation on how to grow and scale your rental business in no time.