Machine in Factory

Industrial Subscriptions

Industrial Subscriptions, also referred to as Equipment-as-a-Service or Product-Service Systems are business models where manufacturers do not sell their machines in a transactional way, but offer their clients a complete solution over time, including its machines and complementary services.

 

Manufacturers bundle machines and complementary services into a complete solution. Complementary services can include installation, remote monitoring, predictive maintenance, data insights, financing, etc.

In exchange, customers pay a recurring fee that is either time-, usage- or output--based (or a mix of it).

Customers prefer subscribing to an outcome.

As early as 1962, Rolls-Royce invented 'Power-by-the-Hour', a complete subscription for their jet engines. Instead of selling jet engines, Rolls-Royce offers its customers (airline companies) a functioning engine on a fixed-cost-per-flying-hour basis. All associated products and services included.

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For certain products, customers are happier subscribing to an outcome/solution rather than purchasing a product with the burdens of ownership.

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The Subscription Economy is here.
Where are you?

Manufacturers love Subscriptions

New, recurring, predictable, revenue streams.

Strategic differentiation and restrained competition.

Deeper customer relationships and more customer insights.

Higher margins thanks to a higher proportion of sale of services.

Increased customer loyalty (lock-in effect), cross- and add-on sales.

Sustainability and used equipment potential (+ improved corporate image).

Higher company valuation

Complementary to traditional product-selling model.

Customers love Subscriptions

Reduced investment hurdles: many small payments vs. one big payment

Flexible and scalable vs. burdens of traditional ownership.

Transforming CapEx to OpEx.

Outsourced operational risk towards subscription company.

100% tax-deductible.

When infrequent usage, does not make sense to buy.

Planet Earth loves Subscriptions

Incentive to prolong lifetime of products.

Incentive to implement end-of-life strategies (3 R's).

Incentive to increase product utilisation.

Reduced raw material and energy consumption.

Incentive to design easily repairable products.

Compliance with policy makers' regulations (e.g. European Commission's Green Deal).

How we help manufacturers transition to a subscription business model.

Subscription business models offer attractive benefits, but the transformation from traditional to subscription-based business models is no easy task. Given the complexity of these new business models, a successful transformation requires the right expertise and support.

 

Our strategic expertise in conceptualising and building subscription business models, combined with the network and know-how of our Subscription Expert Ecosystem™ offers companies a pragmatic one-stop-shop solution:

  • P2S Management Consulting helps companies on the whole subscription transformation journey, relying on extensive experience and best practises from +200 subscription companies. With our pragmatic approach (Subscription Action Plan™), we help defining the new subscription value proposition, analysing the solution/market fit, financial modelling of the new business models, pricing models and strategies, legal aspects and implications, required digital capabilities, sales force training, and much more.

  • Each of our 30+ partner companies in the Subscription Experts Ecosystem™ has expertise in a specific area required in the subscription transformation. These areas are: off-balance sheet financing, legal and tax, subscription management software, risk management, IoT. Teaming up creates synergies and speeds up the transformation.

 

In short, P2S Management Consulting and its partners provide a "one-stop-shop subscription accompaniment" for companies who are ready to disrupt their industries.