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Selling Goods as a Service

Inventory isn’t something companies want to sit on. You want to sell it as quickly as possible and turn it into revenue, not pay for it to be sitting in a warehouse. Why not turn your unsold goods into a service?

Last Sunday, a friend invited me to opening night of an exhibition by a renowned Melbourne-based artist. As we viewed the 23 pieces on display, Bob started telling me about the artists’ business model.

I was a bit surprised to hear of an artist with a “business model”, especially one with its own TLA (three letter acronym), ICE, which stands for (seek) Inspiration, Create (the artwork) then Exhibit (and hopefully sell) it.

But what I found more surprising was that the artist was sitting on 300 – 400 unsold pieces of artwork, which they valued at $1mill. What sort of business would sit on $1mill worth of unsold inventory?

Believe it or not, this got me thinking about aircraft engines. Rolls Royce and other engine manufacturers ceased selling them years ago, and now sell “power by the hour” service contracts.

The case for selling art as a service, to display in corporate offices & boardrooms, using a subscription pricing model, is a very compelling one.

The client can enjoy a change of scenery every three months or so, and they can expense the cost, rather than capitalize the purchase of the artwork.

In the case of the artist, they retain ownership of their artwork and the utilization of their unsold inventory starts to generate a revenue stream, rather than a lump sum that would be earned on selling the art. Potentially, the artists could earn more revenue from “renting” their artwork out, compared to selling it.

Selling a good as a service is a great way to generate income from unsold inventory. What unsold inventory do you have lying around that you can sell as a service?

  • This article is taken from “Musings on Pricing, Volume 1″, available in the Learning Center on PricingProphets, and was first published by LeadingCompany.com.au on the 29th March 2012

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