Design of Tailored Subscription Business Models – A Guide for Machinery and Equipment Manufacturers

Abstract

Machinery and equipment manufacturers especially from high wage countries are increasingly under pressure to extend their competitive differentiation. Studies show that innovation in business models can create stronger differentiation than innovation in products and processes. Especially in the software industry, subscription-based business models have recently formed new champions who dominate the markets. Unfortunately, it is so far unclear what “subscription” means in the machinery and equipment industry, what offers it can contain and how the offers can be delivered. This work supports machinery and equipment manufacturers by answering these three fundamental questions. Firstly, an adequate definition of subscription business models in the machinery and equipment industry is introduced. Secondly, a holistic understanding of potential offers within a subscription business model is provided. Thirdly, supporting success factors and requirements for the creation of the offers are identified.