Equipment as a Service: The Transition Towards Usage-Based Business Models

44 Pages Posted: 9 Mar 2021

See all articles by Isabella Stojkovski

Isabella Stojkovski

Technische Universität München (TUM) - Center for Entrepreneurial and Financial Studies

Ann‐Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Thomas Lange

acatech - DEUTSCHE AKADEMIE DER TECHNIKWISSENSCHAFTEN

Date Written: January 9, 2021

Abstract

“Equipment as a service” is perhaps one of the most drastic examples of usage-based business model innovation (BMI) in the field today. To date, a systematic analysis of this phenomenon is lacking. This study aims to close this gap and develops a primer for usage-based BMI. Drawing on BMI theory and expert interviews, our contribution is three-fold: We clarify (1) why firms move towards usage-based business models, (2) what the main usage-based business model archetypes are, and (3) how shifting to these archetypes impacts business model components and innovates the business model. Our analysis identifies macro- and firm-level supply- and demand-side drivers and inhibitors which lead to four main usage-based business model archetypes: “Leasing Plus”, “Flexible Contracting”, “Renting/Sharing”, and “Performance Contracting”. The most radical model in terms of its supply-side risk-return profile is “Performance Contracting”. Evidence suggests that two groups of firms are particularly drawn to usage-based models: Firms in “young”, tech-enabled industries and firms in more mature or even declining industries. The former apply usage-based models as a proactive effort to push their products into the market. The latter do so as a defensive move to secure their market position and not lose customers with liquidity problems. Digitalization is likely to reinforce these developments.

Keywords: Equipment as a service (EaaS), usage-based business models, industrial subscription, pay-per-use, business model innovation, Business Model Canvas, Business Model Innovation Typology

Suggested Citation

Stojkovski, Isabella and Achleitner, Ann-Kristin and Lange, Thomas, Equipment as a Service: The Transition Towards Usage-Based Business Models (January 9, 2021). Available at SSRN: https://ssrn.com/abstract=3763004 or http://dx.doi.org/10.2139/ssrn.3763004

Isabella Stojkovski (Contact Author)

Technische Universität München (TUM) - Center for Entrepreneurial and Financial Studies ( email )

Arcisstraße 21
München, 80333
Germany

Ann-Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25181 (Phone)

Thomas Lange

acatech - DEUTSCHE AKADEMIE DER TECHNIKWISSENSCHAFTEN ( email )

Karolinenplatz 4
München, Bavaria 80333
Germany

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