A service contract changes who approves the purchase and what the channel earns.

• What share of the installed base will pay for a service, or for an outcome: the service attach rate the plan assumes.
• At what price, under what uptime guarantee, and in what contract structure, and whether the customer pays once from a capital budget or from an operating budget at every renewal.
• Whether dealers and distributors will carry the offer or block it, whether it sells direct, through a service partner or an OEM marketplace, and what it does to field service incentives.
• What the transition does inside the OEM: parts and service revenue, renewal rates, reported revenue while each sale spreads over a contract term, who funds the fleet under contract, and how sales and field service are paid.

The prize and the risk are both in annual reports. One elevator OEM reports service as 65% of net sales and 91% of segment operating profit. One agricultural OEM reports slower than expected customer adoption of its software subscriptions. Finding out which you have after the pricing is public, with the channel already protecting its margin, is the expensive way. → The sources, in the servitization paper

Capital-heavy sectors show what customers will move. Airlines own or lease the engine and pay for its maintenance per flying hour. Railways own or lease the locomotive and contract its maintenance for years. Power plants own the turbine and pay for its service per fired hour. What moved to an hourly price was the maintenance, already an operating cost; the asset stayed on a balance sheet.

Thing Company's founder has been through this shift before: a white-label subscription sold through partners and billed on the partner's bill; an enterprise infrastructure company's move from hardware to as-a-service, with the provider answering for the outcome; and subscription, pay-per-use and pay-per-outcome pricing for an industrial platform across several sectors. → The record behind it

→ Before the pricing is public · → A specimen scorecard for an OEM service offer · → Before the offer goes to the whole installed base

The servitization bet, on validating Equipment-as-a-Service before the OEM carries the risk · Through the integrator, on testing the dealer or partner route · The committee nobody mapped, on who signs a service contract

What does moving to service do to an OEM's reported revenue?

It can lower it for a while. A machine sale books revenue at delivery; a multi-year contract spreads it over the term, so reported revenue can fall during the transition even when the commercial result is good. Where the OEM or a financing partner owns the machines under contract, the fleet also ties up capital, and sales teams paid on equipment revenue at signing have little reason to sell a contract that pays over years. Show the board and lenders the transition before launch, next to the customer evidence on attach rate and renewal.

Will customers pay for Equipment-as-a-Service?

Many will pay for service by the hour; fewer will give up owning the machine. In aviation, rail and power generation, the customer or a lessor owns the asset, and the OEM sells maintenance and availability per flying hour, per fired hour or per year. Full equipment-as-a-service works best where the output is metered and the asset is not core, such as compressed air sold per unit. Test which customers will move which costs, at what price, before the pricing is public.

Will our dealers carry a service or subscription offer?

Only if the route leaves them something to earn. Under a direct service model a dealer's margin on equipment and parts can disappear, so test the route with the dealers before the price is public: whether the dealer sells and bills the subscription, stocks it, or delivers service for a fee while you sell direct, and in each case who owns the renewal. Ask which sites the dealer services today that you cannot reach. Dealers are interviewed as their own segment, scored on the same scale as customers.

Will customers trust an uptime figure the OEM measures?

Not by default. Agree whose instrument is the record, the baseline, which downtime is excluded, the rule for missing data, and what happens after a disagreement. ISO 22400-2 defines availability and overall equipment effectiveness, but it does not settle those questions. Rehearse a dispute before the first contract: give the customer's plant manager and plant controller, and your own service and finance teams, the same month of real data and have each calculate the payment. If the numbers differ, the contract is not ready.

Does as-a-service keep equipment off the customer's balance sheet?

Not anymore, and it can lower EBITDA. Under ASC 842 and IFRS 16, nearly all leases, including leases embedded in service contracts, go on the customer's balance sheet. Under US GAAP an operating lease is a single operating cost that reduces EBITDA; under IFRS 16 it shows as depreciation and interest. A service contract with no embedded lease is an operating expense. The case has to rest on uptime, cash flow and who carries the risk.

Is our installed base a commercial model?

Not by itself. An uptime promise is priced for an average site, and the installed base is not average: distance, operating conditions, customer maintenance, spare parts and machine age each change the true cost of the promise. A price that ignores them subsidizes the hard sites with the easy ones. That can be a deliberate choice, but it should not be an accident. Sort a sample of the base by these conditions before pricing, and ask the field team which sites they already know are expensive.

Does the person who buys our hardware also buy our digital layer?

Often not. The hardware buyer is usually the plant manager approving capital equipment. The digital product's buyer is often an IT or operational technology leader or a digital transformation executive, with an operating budget renewed annually and justified by ongoing value. The distributor that carries hardware may not be set up to sell subscriptions to that person. Validate the digital hypothesis separately, even at accounts you know well, and interview the digital buyer, not the hardware contact.

How do we get field service to support a subscription offer?

Check what the new model does to what field teams earn before launch. Technicians are often paid on service calls, parts and time-and-materials work, and under a multi-year contract with an availability promise every call is a cost to the OEM, not a source of revenue. Unless those incentives change, the team closest to the customer resists without saying so. Ask field operations leaders directly, and change service pay and sales commission plans before the external rollout.

What happens at renewal if the customer can unbundle the service?

That is the real test, and it arrives years after the signature. A signed term is weak evidence because a good price or attractive financing can win it alone. Earlier evidence comes from three places: attach and renewal rates on existing service agreements, customers near the end of a contract who are asked by someone other than the account manager what they would do if the support were unbundled and quoted from scratch, and the price tested without the financing.