Op-ed by Ellie Gabel, associate editor, Revolutionized.
Traditionally, ownership was the primary means of acquiring things, but this concept now competes with access-based models that offer flexibility for cash-strapped consumers. This shift is a response to environmental and economic pressures. For businesses, this often means transitioning from capital costs to operating expenses.
Product-as-a-Service (PaaS) sits at this crossroads. The approach is promising yet complicated, raising new questions about impact, accountability and long-term value.
PaaS as a consumption model
PaaS is a model where clients pay for a result, such as access to mobility or having equipment available 24/7, instead of buying the asset itself. The supplier retains ownership and includes upgrades, maintenance and performance guarantees into a recurring fee. This turns products into long-term service agreements instead of one-time transactions.
The model is rapidly gaining popularity worldwide. Precedence Research estimates that the U.S. PaaS market could exceed $140 billion by 2034, driven by demand for usage-based access and advances in Internet of Things (IoT) and cloud platforms that make metering and remote monitoring feasible.
In this model, manufacturers make more money when their products remain in service longer and work reliably. This shifts the attention from pushing volume distribution toward designing for durability, recoverable materials, software-enabled upgrades and service quality. In short, manufacturers have a vested interest in keeping their assets functioning for the longest possible time.
The environmental promise of PaaS
If providers keep responsibility for the full life cycle, they have direct financial reasons to reduce failures, extend asset life and recover materials. This logic places PaaS within the broader circular economy agenda.
A catalyst for the circular economy
PaaS inherently incentivises producers to create goods that last longer and are easier to fix. Products are designed to be rapidly upgraded, repaired or adapted to meet shifting consumer needs. This boosts a culture of sustainability and innovation.
When combined with take-back obligations or extended producer responsibility policies, this approach can reinforce manufacturing decisions that favour refurbishment, reuse and material recovery over disposal.
Handling the global waste problem
Waste is a central concern for environmental, social and governance (ESG) strategies. A review on overpopulation and the environment notes that the average person in the U.S. already generates around 4.6 pounds of waste per day, contributing to the mounting volumes of municipal solid waste.
PaaS tries to counter this tendency by keeping assets in use for longer and sending them back through organised reverse logistics networks at the end of the contract. Instead of throwing away underused or broken items, suppliers recover units for remanufacturing or recycling. When tracking and rewards are strong, fewer products wind up in landfills and informal waste streams.
Optimising resource utilisation
PaaS also promotes the shared use of vehicles, workspaces and equipment that aren’t being used to their full potential. Sharing increases the use of assets and can reduce the total number of products needed to deliver the same level of service.
For instance, industrial equipment-as-a-service (IEaaS) models use industrial IoT data to better plan predictive maintenance and distribute units. This reduces the need for excessive backup equipment.
The hidden cost of a service-based world
While it’s clear that PaaS has a lot of potential, switching can also present new risks that can make it challenging to maintain sustainability. The rebound effect happens when efficiency improvements make a product or service cheaper or simpler to access. This can lead to higher overall consumption that offsets the environmental benefits.
In PaaS, customers can access more resources than they would under ownership, thanks to usage-based pricing or low entry costs. Research on the circular economy rebound suggests that improved efficiency and reuse can still result in higher total resource use when markets expand or usage increases. Teams need to watch for volume effects even when they use individual products more efficiently.
PaaS in action – industries leading the change
Across sectors, PaaS models are already shifting expectations about how products are financed, managed and retired. Several sectors are already proving their viability.
- Consumer goods: Fashion rental companies and subscription services for designer items now operate alongside resale and repair platforms. In electronics, smartphone upgrading platforms and device-as-a-service offers let you get new models while providers handle trade-ins, repairs and reselling of returned units.
- Manufacturing and industrial: In the heavy industry sector, equipment-as-a-service agreements allow customers to pay for uptime or output, while manufacturers retain ownership. Providers leverage IoT telemetry to offer performance-based contracts, plan predictive maintenance and recover components as assets cycle back.
- Mobility: Vehicle subscription services bundle access, insurance and maintenance under a single monthly payment. It offers flexibility without the long-term financial burden of a loan.
What PaaS means for ESG-focused leaders
For ESG leaders, PaaS is a strategic design choice that changes how supply chains operate and who is responsible for what.
To manage it efficiently, companies need to integrate product life cycle data, usage insights, and recovery rates in ESG reporting. This way, decisions are based on actual system results instead of assumptions.
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