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as templates. In software, the unit cost is close to
nil. Adobe, for example, takes some financial risk in
releasing Creative Cloud for the price of a monthly
payment rather than the license fee of its compa-
rable on-site software. But it doesn’t have to ship
individual pieces of machinery that cost thousan-
ds, or millions, of dollars to produce—a greater risk
than sharing code. Revenue disruption at this scale
could lead to a more sustainable income stream,
but if anything were to go wrong the financial re-
sults could be devastating.

Still, given the potential that sellers and buyers see
in this pricing model, there’s a strong incentive to
make it work for all parties. In our work with com-
panies trying to get this right, three main obstacles
slow their progress:
• agreeing with customers on the value created
and how to share risk;
• managing the internal changes required to sup-
port a service pricing model; and
• “swallowing the fish”—planning for a disrupti-
ve period of rising costs and falling revenues,
before the financials find their new trajectory

When executive teams understand the risks and
opportunities of the equipment as a service (EaaS)
pricing model, they can develop offers that work for
buyers and sellers, limiting exposure and maximi-
zing the gains for both sides.
Makers and sellers of industrial
equipment and machinery Fig. 1- 2
“would like to
capture more value from their based on operational or financial achievements,
wares by retaining ownership can deliver more value to suppliers—providing they
and charging customers for can assess and measure that value accurately.
subscription rates. But the • Operational outcomes. This model is good for
transition to this model has solutions that perform well-defined discrete ta-
been slow, reflecting the sks, such as industrial robotics or automation
equipment. One warehouse robotics provider
difficulty in pricing accurately charges per cycle, where each cycle is defined
as picking a carton, bringing it to a packing area
Determining the best pricing and returning the carton to its original location.
model • Financial outcomes. This model works well
when you can establish a direct link between
Manufacturers have been trying to develop service the equipment and measurable financial re-
lines that deliver more reliable streams of revenue sults. A supplier of compressed natural gas
for decades. Equipment as a service represents systems for fuel stations found that station
the ultimate pathway to getting there: As long as operators were put off by the high capital costs
the machines are running, revenue continues to for the compressor and related hardware nee-
flow and suppliers share in more of the value that ded to deliver the gas to vehicles. The supplier
the equipment delivers for customers. Some of that switched to a model where stations receive
value comes as it would with any service contract, the compressor and hardware and then pay
but additional value can also come from the sup- fees based on the volume of gas sold. In this
plier’s role as owner of the equipment (see Figures case, the model worked well because the fuel
1 and 2). But to tap that value, manufacturers first station operator and the supplier agreed on
have to determine the right pricing model. the revenue that resulted from the availability
of the new equipment.
Outcome-based models, in which payments are

Impiantistica Italiana - Gennaio-Febbraio 2020 23