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Why OEMs are moving to Pay Per Use business model

Updated: Jul 14, 2021

Equipment as a service (EaaS) is the term used to describe a new way of paying for and consuming the utilization of equipment. Sometimes referred to as “pay per use” or “product service systems”, equipment as a service business model let manufacturers transfer a CAPEX into an OPEX and transfers responsibility for maintaining the asset from the end user to the equipment supplier.

Both Original Equipment Manufacturers (OEMs) and end users benefit from EaaS business models.

There are several benefits associated with consuming physical assets “as a service”, including:

✅ Reduced CAPEX: Migration from OPEX to CAPEX : this is the #1 reason equipment suppliers stated their customers were interested in moving to EaaS.

✅ Lower Total Cost of Ownership (TCO): by only paying for defining outcomes, customers can realize a lower TCO of equipment.

✅ Increased flexibility: EaaS end users have more flexibility to scale their operations up or down as their needs change.

✅ Improve margins: OEMs can adapt their pricing by utilization: in hours, days, months, etc.

✅ Acquire new customers: by providing EaaS, OEMs access to a bigger market of customers, fi