The Vienna University of Applied Sciences, in collaboration with the strategy consultants Kaufmann / Langhans, has produced a remarkable study on the mega topic of “pay-per-use”. More than 100 machine and plant manufacturers from the DACH region were surveyed. The study comes to the conclusion that “pay-per-use models” ensure additional sales of machines even or especially in times of crisis. In this study, 94 percent of manufactures confirm that they are aware of such financing models, but only 28 percent offer these options to their customers. A study by KPMG on the same subject claims to have found that more than half of all machine users who previously financed their machines conventionally will consider a “pay-per-use” solution in the future.
This new form of financing is also driven by teh behaviour of the conventional banks, as they are less and less available for conventional financing. The confidence of banks in medium-sized printing companies has been declining for years, thus preventing the modernization of the industry in the long term. At the same time, the need for investment is particularly high in the industry right now. The transformation from traditional craft business to modern print factory is in full swing in the industry. However, this will only succeed if print shops can get their modernization investments financed, along the entire value chain.
“Pay-per-use financing models” represent a real win-win situation between print shops and press suppliers. According to the study, high one-time investments and the lack of flexible financing options are the biggest hurdles in the sale of presses.
According to many experts, the age of “pay-per-use models” has only just begun. Instead of buying a machine, the customer pays for its use alone. When the financing agreement expires, the customer can purchase the machine. Use-dependent financing will make companies more resilient to production downtime and declining product demand. With usage-based financing, the print shop bypasses the risk of tying up capital. Instead of capital expenditures, there are operating costs. Users of this form of financing repeatedly report increased availability of equipment, because manufacturers naturally have an increased interest in running machines.
Financing partners of the new form of payment are just establishing themselves. One example is the start-up Linx4 GmbH from Vienna. Its business model is structured like that of a conventional leasing company, except that it offers usage-based financing. With its model, Linx4 is a platform and a bank.
Feel free to contact us with your questions or suggestions about “pay-per-use models”. We look forward to hearing your opinions.