The customer does not buy a product, but instead rents it. This lowers the capital typically needed to gain access to the product. The company itself benefits from higher profits on each product, as it is paid for the duration of the rental period. Both parties benefit from higher efficiency in product utilization as time of non-usage, which unnecessarily binds capital, is reduced on each product.
How they do it: Mobility’s value proposition is to have a model of shared car ownership. Hence, individual customers can avoid purchasing and maintaining a car but join the cooperative and thus get the right to use a car as they need it. As a lot of cars that are privately owned have significant downtime, the model of shared ownership increases the utilization of the individual car and thus lower the cost for everyone.
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How they do it: Hilti’s ”Fleet Management” allows customers to rent its tools for a fixed monthly payment instead of needing to buy them. This contract includes the exchange of tools for the newest models as well as service and maitenance. The customer avoids a upfront investment and has an easy way to budget the tool costs going forward.
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How they do it: Initially Netflix started with a DVD rental by mail, allowing customers to order DVDs to their home. In 2007 they introduced the streaming platform which is now the core offering of the company.
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How they do it: Foxconn also acts as contract manufacturer for companies such as Apple. This allows Apple to utilize Foxconn’s large production facilities and low cost facilities to mass-produce their products. By offering contract manufacturing Foxconn allows its customers to avoid building own production facilities which would require large investments.
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How they do it: Xerox was a pioneer in supplying photocopiers and printers to enterprises on a rental basis in the late 1950s. Instead of buying equipments with a high initial capital expenditures, firms could rely on flexible rental contracts.
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