Selling a product as a service has the potential to create long term customer relationships and ongoing cash flow from the offering. It can be realized by adding services to core products, by replacing single products through complete solutions or by selling products using leasing models or by charging a regular fee. Example: sofware is often sold as a service. Instead of buying a license/copy of the software, access to the application is retained by making recurring payments.

When and how to apply Product as a Service:

In recent years, producers and manufacturers have prioritized the sale of their products in a single transaction. We now refer to this as the linear economy. Customers are now the legal owners of the product, and producers are no longer responsible for its upkeep. As these businesses are not incentivized to produce the best possible product, they benefit most from selling as much as possible.

Product-Service Systems, also known as Product-as-a-Service (PaaS), is a combination of products accompanied by services. Additional features or service contracts to repair or replace the product are included. With PaaS, products are offered through subscription models that include services.

Customers who subscribe to the product and pay recurring fees are considered subscribers. PaaS providers have a higher level of ongoing customer engagement and support. Since ownership is not transferred, there is a significant opportunity for a circular economy, as the company is now responsible for producing a superior product.

The transition from a product to an all-inclusive service engagement lifespan extends the customer lifecycle, which is supported by the associated services. Combining physical products with services and software to monitor the customer process.

In lieu of a one-time payment, customers subscribe to the product and pay a weekly, monthly, or annual fee; the product is then delivered as an experience or additional service. The majority of the products we encounter every day are delivered as a service.

Well-known companies that use this pattern are Miro and Netflix.