As-a-service or subscription model is the ideal solution for any company wishing to rent its goods to customers or to use an asset immediately with no upfront costs.
Secure payment, simplified options, replacement of goods with high obsolescence… There are numerous benefits.
What is a subscription?
A subscription is a contract that gives a company the ‘right to use’ assets from a dedicated supplier.
The contract is for a set period of time, determined in advance. At the end of the contractual period, the customer can choose to continue paying for and using the assets or simply return them.
A third party, the as-a-service partner, is responsible for managing the contract and collecting rentals from the company using the assets. This partner is also the one who takes on the risk relating to the solvency of the customer.
As-a-service contracts are often tailor-made. They include à la carte services (maintenance, installation, delivery, upgrade, disposal etc.) in order to accommodate the users’ needs.
Whether you are a supplier that rents its goods or a company that uses them, an as-a-service model has many advantages, but what are they?
Benefits for the customer
1) Spread costs over time
By opting for an as-a-service contract, you avoid paying for all your equipment upfront.
Instead, you spread costs over time, whilst still being able to use the asset(s) immediately.
2) Pay a price agreed in advance
With an as-a-service contract, there are no unpleasant surprises at the end of the month. Everything is clear and defined in advance, as soon as the contract is signed. This allows better management of your cash flow.
3) Remove obsolescence risk
Some goods require regular maintenance or even replacement. This is particularly the case for hardware. With an as-a-service contract, you avoid the risk of obsolescence and the problems of disposal of the equipment.
4) Take advantage of a customised service
Setting up an as-a-service contract means benefiting from a complete, fully customisable service, with optional add-ons: upgrades, technical support, data wiping, recycling etc. Each contract is adapted to your activity and your company’s needs.
5) Manage your as-a-service contract easily
One of the main advantages of as-a-service contracts is flexibility. At the end of the contract, you have three options: extend the subscription, hand back assets and renew your contract with upgraded tech or buy the assets.
Benefits for the supplier
6) Recognise revenue upfront
If you choose to work with a finance partner to offer your solutions as-a-service, you get paid and recognise revenue upfront (as in a normal sale) while offering a payment over time solution to your clients. In addition, the financial risk is reduced because payment collection is carried out by your as-a-service partner, who takes over the risk of non-payment.
7) Build customer loyalty
A long-lasting customer relationship is the Holy Grail of any company. A subscription makes it possible to achieve it, thanks to the mutual long-term commitment of the contract. In addition, if your customer is satisfied with your products, they will more likely renew the subscription contract.
8) Stand out from competition
Offering an as-a-service contract allows you to stand out from your competitors (who only sell their goods). It is also a great way to reach new customers, especially those who cannot – or no longer want to – spend large sums of money to buy an asset when they can just rent it.
9) Develop your brand image
Offering innovative financing solutions, such as subscription models, will help you gain traction in your market. It also improves your brand image, as your customers see you as a flexible and innovative supplier with unique payment terms.
10) Enjoy tax benefits
Fully tax deductible rentals generate more savings by accelerating your tax relief, especially for higher tax payers.
In conclusion, we believe that subscription models are a great solution to sustainable and financial issues.
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