- Usage and behavior
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- Business models
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What is Product as a Service?
- Department of Waterways and Public Works |
- August 26, 2022 |
- Leestijd < 1 minuut
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To arrive at a conclusive circular business case, two things are important. A circular design strategy AND a circular business model. Whereas the design strategy is about product and service design, the business model is about creating financial value and sharing revenues and costs. Which chain party earns money from your circular proposition at what point? Within a circular revenue model, we don't just set the revenues generated against the costs of an individual provider. We look at the financial implications for the entire chain.
Circular design thus has different revenue models than the "classic" linear revenue models. To put it bluntly, the linear revenue models are aimed at achieving a maximum sales margin at minimum cost. In a circular model, you as a producer or chain partner are also involved in your product after the sales moment. That means you spread the value, income and costs over a longer period.
All this leads to other models where you can also make money after the traditional sales moment. And it leads to other choices, because you compensate an investment in extra functionality or more expensive material with a much higher residual value. Extra costs that may be added in the production process often far outweigh cost savings that are thereby realized further down the chain.
In any case, it is important that you design the business model in such a way that there is a (financial) incentive for all parties involved to fulfill their role. And that you look at the value over the entire lifetime of the product.This way you ensure that a sustainable product also provides a profitable business case. Win-win for all parties.
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