Product-service combinations

Product-service systems (PSS) are business models that provide for cohesive delivery of products and services. PSS models are emerging as a means to enable collaborative consumption of both products and services, with the aim of pro-environmental outcomes. (Wikipedia)

What we want is the hole, not the drill

Alex Steffen

In a product-service combination (PSS), the usefulness of a product and its accessibility are more important than ownership. The focus is on the function, not on the ownership. PSC is a potentially successful model for a more circular economy. Product-service combinations have great ecological potential because they help ensure that a smaller quantity of finished product is better utilised, while being processed better in the disposal phase by the manufacturer who, in principle, continues to be the owner.

1. The focus is on the function, not the product

In the sharing economy, we see product-service systems as forms of co-consumption. In this system, we pay for the service that the product provides without the need to own the product itself as a consumer. The best-known examples are car and bicycle sharing.

The focus shifts to the function of the product. The manufacturer achieves turnover from selling the product. The less material needed, the greater the potential profit margin. If the business model is also arranged in such a way that the manufacturer takes its products back at the end of the cycle of use, all the reasons are there to not only give products a longer working life but also make them reusable. The manufacturer also stays the owner of its materials and, as a result, is less affected by fluctuations on the raw materials market.

2. More careful use of materials

Product-service systems can mean more careful use of materials and products. In linear business models, manufacturers generate turnover by selling as many products as possible. The transfer of ownership from manufacturer to consumer involves too little inducement to design products with a long life, to allow them to be easily repaired, or make it easy to recycle their components.

Eight versions

There is a range of product-service combinations between only products at the one end and only services at the other. Pooling, sharing, leasing, outsourcing: these are but a few of many imaginable product-service combinations. This graphic shows the eight main combinations.

Tien varianten van product-dienstcombinaties

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There is a range of product-service combinations (PSCs) between only products and only services. Pooling, sharing, leasing, outsourcing: these are but a few of the many imaginable product-service combinations. We have included the different product-service combinations in the graphic above to give a better understanding of all the possible versions.

The combinations can be grouped in different ways, but we use the system devised by SusProNet, a temporary European network that carried out research on Sustainable Product Service Development between 2002 and 2004. SusProNet makes a distinction between three categories:

  1. product-oriented services;
  2. use-oriented services;
  3. result-oriented services.

A. Productgeoriƫnteerde diensten

The heart of the business model is still the sale of goods, but it includes one or more additional services. There are two versions:

  1. Product-related services: in addition to the product, the seller also offers a service needed during the life of the product. This can be a maintenance contract or take-back agreement.
  2. Advice and consultancy: the seller of the product gives advice on how the product can be best used.

B. Use-oriented services

The traditional product is still a key aspect here, but the business model no longer aims at its sale. The product remains the property of the supplier. There are four versions:

  1. Leasing: the product remains the property of a supplier, but the user has unlimited and individual access to it.
  2. Renting or sharing: the product remains the property of a supplier, but different users can use it in turn, rather than simultaneously.
  3. Pooling: the product remains the property of a supplier, but different users use it simultaneously.
  4. Pay-per-service unit: an ordinary product is also the basis here. The user does not pay for temporary possession of this product, but for a certain result (the output) linked to use.

C. Result-oriented services

In this business model, the supplier and customer have an agreement about a certain result, without an agreement about which specific product is needed to achieve this result. There are two versions:

  1. Outsourcing: a third party offers a service and may need a product for it. The customer only pays for the service and is not involved with the choice of a suitable product for this service. Known examples: catering and cleaning contracts.
  2. Functional result: the supplier offers the customer a certain result. Contrary to outsourcing, this result can be more abstract, such as the provision of comfort, lighting, and mobility. In principle, the supplier is completely free in how it achieves this result.

The graphic above shows which product-service combinations can be used for the product 'car'.