Product as a Service a 2023 Trend

Product as a Service, or PaaS, is having a moment in manufacturing—one that’s been brewing for quite some time.

In the past, customers purchased equipment. Once the sales process was finalized and installation was completed, they may not interact with the manufacturer again until they were in need of repairs or replacements.

Today, customers only want to pay for what they need on a residual basis, which opens new opportunities, and challenges, for manufacturers—enter PaaS.

What is Paas?

According to TechTarget, “Product as a service is the concept of selling the services and outcomes a product can provide rather than the product itself. In its purest form, the manufacturer continues to own and maintain the product, and the customer leases it for use or subscribes to a menu of services. In other scenarios, the customer owns the product but is not responsible for maintenance, or such responsibilities are divided according to the license agreement or warranty.”

What are PaaS benefits?

In many instances, the product may be monitored remotely. In doing so, predictive analytics are applied to the data to identify and address mechanical problems or find opportunities to offer new products and services to the customer.

It can also foster the customer relationship that allow the user to monitor and control certain aspects of the product, provide feedback to the manufacturer, and order new products and services. This is done through a mobile app.

PaaS also shifts manufacturers from selling equipment as a capital expenditure to an ongoing expense model, meaning rather than process a series of one-time transactions, you can now enjoy recurring revenue.

There are also opportunities to grow aftermarket value streams and capture revenue throughout the equipment lifecycle. Plus, it enables you to collect equipment usage data from customers, and bring new products to market.

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