← Business Models: Core (all topics)
Rental, leasing & equipment-as-a-service
What it is
Supplying the use of an asset rather than the asset itself - construction equipment on hire, aircraft on operating lease, an air separation unit built inside a customer's plant, or a machine billed per hour run. The provider owns, maintains and often operates it
The customer converts capital expenditure into an operating cost; the provider converts a one-time sale into a stream tied to utilisation
Impact on industries
- Removes the customer's balance-sheet constraint, which is why rental penetration rises even when equipment demand is flat
- Gives the provider a recurring revenue stream plus residual value in the asset, and control of the maintenance and spares that go with it
- Suits assets with intermittent use, since one machine can serve several customers that could not each justify owning it
- The provider now carries utilisation, maintenance and residual-value risk that the buyer previously absorbed
- Capital intensity moves upstream, so growth requires funding the fleet before the revenue arrives