Not sure if your product or business is a good fit for the PaaS model? Let these 5 product-as-a-service examples inspire you and show you how the model works.
Business constantly evolves, with entrepreneurs finding better ways to meet customer needs, grow revenue, and become more socially and environmentally responsible.
Achieving these lofty goals means continually reimagining our business models, devising inventive methods to thrive amidst evolving marketing conditions marked by by rising environmental activism, shifting consumer needs, and intensified competition.
One promising business model is product-as-a-service (PaaS), in which physical products are offered as services. As we have seen with the now ubiquitous SaaS model, marketing software and other digital products as services is relatively easy.
Selling physical products as services, however, is more complex. Does the product-as-a-service business model prove effective or is it merely a passing trend? Are there companies using the business model and achieving success? ?
There is no better way to answer these questions than with practical examples.
This article shares 5 product-as-a-service(PaaS) examples you can use as inspiration for your next business idea.
What is product-as-a-service (PaaS)?
Product-as-a-service is a business model in which you sell physical products as services. Instead of a customer buying a product for ownership, , they opt for a subscription model where they pay recurring fees to utilise it and access other associated services.
The PaaS model sells physical products through weekly, monthly, or yearly subscriptions. The manufacturer retains ownership of the product and responsibility for repairs, maintenance, and replacement.
Under the PaaS model, customers sign up for subscriptions to use products for as long as needed. They have the flexibility to cancel their subscription when they no longer require the products or choose to switch providers. The manufacturer will then collect and refurbish the product to initiate a new subscription with another customer.
PaaS benefits everyone - businesses, consumers, and the environment.
Customers love the PaaS model because it allows them to pay solely for usage, relieving them of the burden of ownership that often comes with high capital requirements and expenses for repair, maintenance, insurance, and disposal.
For business, the PaaS model offers consistent and predictable revenue streams, fostering stronger and more enduring relationships with customers. The business model also comes with substantial sustainability points, a major KRA of the circular economy.
Because businesses retain ownership, they are incentivised to make higher quality products that are easy to repair. This means they will make fewer new products, which reduces waste and the need for raw materials, whose extraction negatively affects the environment and increases carbon emissions.
Great benefits all around, but how easy is the product-service system to implement, for instance, for a business that has always followed the linear take-produce-use-dispose-waste model?
5 product-as-a-service examples and businesses thriving with the model.
The traditional linear business model has flaws that have proven fatal for many companies. The biggest issue is that, over time, it detaches the business from customer needs, which should be the initial consideration and constant focus.
If you divert your focus from the customer's needs and fixate on your product, you will eventually lose the customer. The product should solely serve as a means to address the customer problems. This is easy when you sell solutions instead of products, i.e. products as services.
Practically, every physical product offers a form of service. . For you, that service represents the customer problem you aimed to solve when you launched your business.
Adopting the PaaS business model is akin to reverting to fundamentals, where customers pay for the solution to their problem. Below, we will explore five product-as-a-service examples to to understand how some businesses implement this model
1. PRaaS - Printing-as-a-service
PRaaS is a subscription-based business model utilized by printing equipment companies to sell their products as services. Similar to the Managed Print Services (MPS) model but excluding the leasing component, PRaaS offers monthly subscriptions. Rather than selling printers, cartridges, toners, spare parts, and service plans separately, customers pay a recurring fee for their desired outcome: printed documents.
A variation of hardware-as-a-service model, the PRaaS model means the business supplies, but retains ownership of the printing equipment, replenishes the cartridges and other supplies, repairs the printers, and replaces parts or the whole printer when needed.
Customers simply pay their monthly subscription fee and report any equipment issues, allowing them to focus on their core business activities, predict expenses more accurately, and plan their expenditures confidently.
streams and extends the lifetime value of customers for printing equipment manufacturers. That approach compels them to be more proactive in addressing product repairs and updates, as well as responsive with technical support.
Global printing equipment maker Xerox pioneered the PRaaS model. The company's success with the model has not gone unnoticed by the competition, with companies like Canon and RICOH now offering PRaaS subscriptions.
2. CaaS - Cooling-as-a-service.
Africa enjoys some of the most favorable climates on the planet, fostering abundant human and plant life. However, if there's one downside to our weather, it's that it can occasionally become excessively hot.
In essence , we need a method to cool our residential and commercial spaces. However, instead of true cooling solutions, we often encounter air conditioning units that merely circulate cool air. Unfortunately, those things are not cost effective, leaving many individuals to endure uncomfortably hot summers. ,
Certainly, a considerable number of individuals would find it more feasible to attain cooling comfort through a modest monthly fee, rather than bearing the burden of substantial upfront expenses for air conditioning units, along with the unpredictable costs of repairs. Instead of paying for an equipment, its repair and servicing, you would only pay for performance, benefit, or desired outcome: cooling.
That summarises the concept of cooling-as-a-service succinctly. Customers pay a recurring fee for using an AC unit or for the cooled air the unit produces. The AC manufacturer or supplier retains ownership of the equipment. It will also be their responsibility to repair and replace the equipment.
The CaaS model can also be adapted to offer refrigeration equipment as a service. Nigeria-based Cold Hubs and Kenya-based SokoFresh are two PaaS examples of practitioners selling cold storage instead of cold rooms, helping farmers minimise post-harvest produce losses.
The CaaS revolution has benefited greatly from the Clean Cooling Collaborative, supported by organisations like the Basel Agency for Sustainable Energy and the Clean Cooling Collaborative that want to accelerate the path to clean and efficient cooling worldwide.
Among businesses that have adopted the CaaS model are Singapore-based Kaer and South Africa-based EPR.
3. LaaS - Lighting-as-a-service
You are not going to turn on the AC unit every day. Some days and times of the year are just the right balance of cool and warm. Light, however, is an everyday necessity, particularly within households.
Lighting would be the perfect use case for the PaaS business model. Light bulbs, though, are one of the most disposable products. They certainly cannot be repaired.
Well, it's no wonder that Philips, the second-largest lighting solutions company in the world by market share, decided they would try anyway.
Through its subsidiary, Signify, under the LaaS model, Philips designs a lighting solution for your facility that it instals , operates, and maintains. Signify supplies the LED lights and IoT platforms to monitor the lighting system remotely.
Signify's customers pay a fixed and predictable recurring fee. They don't pay anything upfront, yet are guaranteed energy-efficient lighting delivered in intensity levels of their choice. In the company's own words, they 'take care of your lighting, so that you can take care of your business'. The company does not sell LED bulbs; they sell lighting.
4. EaaS - Equipment-as-a-service
What's the most significant expense when setting up a factory or workshop? You guessed it right. It's the equipments. You will require a significant capital investment outlay to outfit your workshop or factory, whether buying the individual machines on a product line, presses, automated wrappers, power tools, or forklifts.
What if instead of purchasing all this equipment, you could simply "rent" it? A manufacturer or reseller rents you the equipment you need for your business in exchange for periodic payments.
Also known as machine-as-a-service, this model focuses on use rather than equipment ownership. It allows manufacturers to concentrate on their core business instead of the added expense of maintaining a workshop with staff.
The equipment provider takes care of repairs and maintenance, while the customer pays for the duration they utilise the equipment. These payments are recurring, on a frequency set out in the subscription agreement.
One of the oldest PaaS examples in the machine-as-a-service sub-category is global power systems manufacturer Rolls-Royce's revolutionary power-by-the-hour service launched in 1962.
Under the pay-by-the-hour program relaunched as CorporateCare in 2002 with additional features, Rolls-Royce's business jet users signed up for a complete engine and accessory replacement subscription that they paid for on a fixed-cost-per-flying-hour basis.
5. TaaS - Trucks-as-a-service.
If you run a factory, a farm or other manufacturing or production facility, you will need a way to deliver your products to your customers or resellers. Typically, you would acquire a fleet of delivery trucks for this purpose.
If you wanted to concentrate on your core business, optimise your capital, and save costs, you would use an on-demand delivery service instead. You would opt to forego purchasing and managing your own trucks and instead seek out a provider who can handle your logistics needs for a fee.
That is the idea behind the trucks-as-a-service model (TaaS). The process involves consulting with your typical business customers to understand their logistical requirements instead of selling trucks.
With that understanding, you would devise a solution to charge customers based on the mileage of goods delivered. You could either manage the fleet of trucks yourself or develop technology or a mobile app connecting customers with independent truck owners, similar to an Uber for the logistics industry!
The TaaS business model can also be applied to the last-mile delivery sector as DaaS (delivery-as-a-service). DaaS companies offer delivery services for direct-to-consumer businesses and e-commerce stores.
Internationally, the most well-known PaaS examples in this sector are Instacart, DoorDash, and Grubhub. Locally, Hello Courier is one of the startups in the space.
Want to sell your products as services and earn recurring revenue?
Every business owner would choose recurring revenue over one-time purchases any day. Only most sellers of physical products aren't sure their products fit the product-as-a-service model.
Indeed, as demonstrated, most products can be offered as services. You may need to re-engineer your sales organisation and find the right technology, but it is a feasible strategy. Thankfully, Intasend has the technology you need to collect recurring customer payments.
Our automatic billing and subscription management software allows you to design subscription plans that fit your customers' needs and automatically bill customers. Our platform saves your business money, guarantees revenue predictability, and enables you to build stronger, lasting customer relationships.
Book a demo to explore all the ways Intasend can help you sell your physical products as services and streamline your business collections, payments, and disbursements.
