[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.the-future-of-commerce.com\/2017\/10\/16\/industrial-manufacturing-pay-per-use-equipment-subscription-service\/#BlogPosting","mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2017\/10\/16\/industrial-manufacturing-pay-per-use-equipment-subscription-service\/","headline":"Manufacturing wisdom: How to use pay-per-use subscription models","name":"Manufacturing wisdom: How to use pay-per-use subscription models","description":"More and more industrial manufacturing companies are analyzing the pay-per-use business model for machines and equipment, as well as for software and digital services for their machines.","datePublished":"2017-10-16","dateModified":"2021-09-05","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/contributor\/dietmar-bohn\/#Person","name":"Dietmar Bohn","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/dietmar-bohn\/","identifier":147,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/1a32b307e62b556b047f9c46b6c4d6b18d03ba2620af53742a7f61fc3a1c2fb8?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/1a32b307e62b556b047f9c46b6c4d6b18d03ba2620af53742a7f61fc3a1c2fb8?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"The Future of Commerce","logo":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2023\/01\/logo-foc-schema-app-1.png","width":172,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/10\/thumbnail-e2d64ed7c50cf59080909f6fb1e1311a.jpeg","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2017\/10\/thumbnail-e2d64ed7c50cf59080909f6fb1e1311a.jpeg","height":375,"width":1200},"url":"https:\/\/www.the-future-of-commerce.com\/2017\/10\/16\/industrial-manufacturing-pay-per-use-equipment-subscription-service\/","about":[{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/b2b\/","name":"B2B Commerce","sameAs":["https:\/\/en.wikipedia.org\/wiki\/B2B_e-commerce"]},{"@type":"Thing","@id":"https:\/\/www.the-future-of-commerce.com\/commerce\/","name":"Commerce","sameAs":["https:\/\/en.wikipedia.org\/wiki\/Commerce","http:\/\/www.wikidata.org\/entity\/Q26643"]},"Wholesale Distribution"],"wordCount":695,"keywords":["Customer Service","E-commerce","Field Service","Industrial Manufacturing","Manufacturing","Manufacturing and Distribution","Subscription Models","Subscription Services"],"articleBody":"Today pay-per-use for machines and equipment (EaaS, equipment-as-a-service) has become a successful business model in different industries, especially for office equipment like printers and copier machines, medical equipment, and jet engines.EaaS frontrunners in industrial manufacturing industries have already applied this business model for new revenue streams, to differentiate in the market place, or to meet the expectation of some of their customers.Customers benefit from lower whole-life equipment costs, no upfront capital investments, turning CAPEX into OPEX, industry-leading equipment uptime, and a transparent pricing structure. Vendors of the machines and equipment can also benefit from an EaaS model. If done in the right way, it can be an attractive business model for a long-term sustainable revenue stream for manufacturing\u00a0companies.Pay-per-use subscription models: Industrial manufacturing examplesMore and more industrial manufacturing companies are analyzing this business model for machines and equipment, as well as\u00a0for software and digital services for their machines. Kaeser (compressors), Heidelberger Druckmaschinen (digital printing machines) and Atlas Copco (mining equipment) are prominent examples for successfully applying this business model for industrial machines and equipment.While manufacturing companies aren’t planning to replace their traditional business model, and will continue to sell their machines and equipment, many plan to offer equipment-as-a-service as an additional model for selected machines and selected customers.      Best examples of B2B e-commerce: Companies winning the game                B2B buyers have changed. How are companies keeping up? Here are five brands that provide shining examples of B2B e-commerce.      Challenges in sales and serviceMany industrial manufacturing companies who had a deeper look in EaaS as a new business model have realized that it is not easy to provide this new model to each of their customers in a profitable way: It has an impact on most lines of businesses of the company and requires changes along the entire value chain, mainly across marketing, sales, service, and R&D.Industrial manufacturers need to manage the financial risk of every EaaS case:Conduct a solid\u00a0due diligence\u00a0for every customer caseCalculate the customer-specific\u00a0price points, based on a solid\u00a0lifecycle costing analysisWork out\u00a0smart contracts,\u00a0considering the specific customer situationsDefine\u00a0exit criteriaAnalyze each customer case\u00a0before renewing the contractTo minimize the risks and to ensure a\u00a0profitable EaaS contract, the vendor needs to\u00a0monitor each customer case\u00a0to get the required transparency on the profitability and to clearly understand\u00a0what needs to be adjusted or changed\u00a0when the contract will expire and needs a renewal.All these points could be covered with spreadsheets and manual work. However, when scaling this business model to a larger number of customers, manufacturing companies should consider a proper software support through an\u00a0EaaS management cockpit\u00a0in their sales organizations.      The new B2B customer journey: Winning the moments that matter                The B2B customer journey is changing as buyers begin to expect B2C experiences at work. Smart B2B businesses are realizing new growth by adjusting CX.      Aftermarket management: Pay-per-use is revving retention ratesManaging the financial risk is a key point for many manufacturing companies who embark on an EaaS journey, but there are other key topics to be managed: The optimization of the\u00a0operating costs\u00a0of the machines and fully\u00a0automated process for the subscription billing.Manufacturing companies need the right aftermarket service organizations to provide the required service level agreements for an enhanced asset performance and an efficient service delivery for an attractive cost model to their customers. Predictive maintenance and service powered by\u00a0IoT technologies\u00a0is a key point for the optimization of the operating costs of the machines and equipment \u2013 an enabler for an EaaS business model in industrial manufacturing.As always,\u00a0marketing\u00a0will analyze the market and competitors, identify potential customers, segment and classify them, and define the competitive solution portfolios for the EaaS offerings (considering machines and equipment as well as consumables etc.).And of course,\u00a0R&D\u00a0need to ensure that the machines and equipment are enabled for an IoT-powered service and predictive maintenance and service, also leveraging latest technologies such as predictive analytics, machine learning, IoT technologies etc.  Rev up revenue.Gain loyalty.Innovate NOW.\u00a0"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2017","item":"https:\/\/www.the-future-of-commerce.com\/2017\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"10","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/10\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"16","item":"https:\/\/www.the-future-of-commerce.com\/2017\/\/10\/\/16\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"Manufacturing wisdom: How to use pay-per-use subscription models","item":"https:\/\/www.the-future-of-commerce.com\/2017\/10\/16\/industrial-manufacturing-pay-per-use-equipment-subscription-service\/#breadcrumbitem"}]}]