Buy

Services (not products)

Purchasing services instead of products may be a financially attractive strategy that also results in less resource consumption for you and the supplier. There are multiple -unit models including pay-for-performance and pay-per-use.

In the service model, the service provider is typically responsible for installation, maintenance and take-back of the product. By tying the service price to performance, the provider has incentive to provide the best service to its customers.

Industry examples of Pay for Performance schemes include:

  • Lighting: Pay per lux
  • Tires: Pay per kilometer
  • Solar Power Purchasing Agreement (PPA): Pay per kilowatt-hour
  • Office Equipment: Pay per page

It is important to establish a performance metric that aligns objectives of both the service provider and customer.