Sizing and pricing workplace equipment offered as a service

The question

A workplace technology company sold its equipment outright. Businesses bought it as a one-off cost and replaced it when it wore out.

Offering the same equipment as a service, for one regular fee with support and upgrades included, would change the business model as much as the product. The company wanted to know whether businesses would take it, which ones to approach, what would persuade them and what to charge, and it wanted an answer that allowed for no.

Our approach

We took the service ideas to the IT and office managers who make these purchases, first unbranded and unpriced, so the idea itself was judged.

Stated intent to buy was scaled down before any market was sized, because people agree to a new service more readily than they sign up for one.

A second stage then put packages at different prices in front of the same kinds of buyer in a trade-off exercise, so price was tested against what each package included.

What the team came away with

Two reports and a pair of price simulators gave the company a basis for weighing whether to build the service, and how to shape it.

The first sized each service idea on its own, on conservative estimates, with the added features that would make it more attractive and a clear read on whether the idea was worth taking further.

The second modeled how revenue would change across the tested prices and package levels, with the billing and inclusion preferences behind them. The simulators let the team try price combinations of its own, as estimates under the conditions tested.

Between them, the team could judge the opportunity, the packages and the price points from the same body of evidence.