Offering & commercial model FAQs

A hardware-as-a-service (HaaS) offering is an end-to-end solution rather than a product. Every solution starts with hardware and software, then draws from a broader set of additional offerings in categories such as delivery, consumables, accessories, installation, maintenance, and warranty.

What sets HaaS apart from traditional leasing is everything beyond the hardware. The proprietary software does ongoing work (such as monitoring performance, pushing updates, and continuously improving the equipment).

Many subscriptions include 3–5 line items, and a lean core is often just 2–3. The right mix depends on the equipment, the solution, and the buyer. Include everything a customer needs to get value from the start, and make the rest optional.

In hybrid HaaS, the vendor sells the hardware outright (or puts it on a capital lease). The remainder of the solution is offered on a subscription basis. In full-subscription HaaS, the hardware billing recurs too. The customer subscribes to the  entire package: instead of buying the machine, the vendor maintains ownership.

Selling hardware ends when the unit ships. Delivering HaaS doesn’t!  The customer is paying for equipment that keeps working across years of a subscription.  The vendor takes on responsibility for the full solution for the life of the contract.  This includes the software and services that run and support the equipment, as well as customer success, field service, and maintenance.  It also includes the back office that keeps the subscription healthy, such as the finance operations that bill and account for every unit.

The difficulty is that these pieces have to run as an interconnected set of people, process, and systems.  Because HaaS programs are complicated, they often stumble by trying to handle each piece in isolation.  For example: a deployment team that doesn't consistently log the install date in the CRM, a CRM that doesn’t send data to the ERP, or an ERP that doesn't use dates to trigger invoices.  Each missing step is enough to delay customer invoices (or worse, trigger them incorrectly).

All these pieces ultimately inform financial reporting, so a single crack in communication lands at the feet of the finance team. That's why finance is often where the cracks show first.  When asset data and financial data don’t reconcile, subscriptions leak revenue and damage customer trust.  Delivering an effective HaaS offering thus requires a connected system, in which the asset operations can automatically drive financial operations, instead of being re-keyed from tool to tool.

Build vs buy isn’t a single decision. A vendor makes it at every layer of the offering, and the general rule is to build where the value lives and buy the rest of the offering.

Hardware: it depends on how custom it is. The vendor buys off-the-shelf parts, builds a special-purpose machine in-house, and uses a contract manufacturer for anything in between. Hardware is rarely what makes the offering defensible, so cost and control determine this layer.

Software platform: build. This is what turns equipment into a subscription a customer will pay for over years: monitoring, analytics, remote control, and any autonomy. It’s the source of the vendor’s differentiation and recurring value, so it stays in-house. It can sit on bought infrastructure like cloud and IoT services underneath, but the platform itself can’t be outsourced.

Back-office software: buy. The systems that run the subscription, CRM, ERP, billing, maintenance, and ticketing, are solved problems, not worth rebuilding. What matters is choosing tools that actually connect, since a back office stitched from systems that don’t share data is exactly where a HaaS program leaks. (This is the layer Hardfin is built for.)

Bundle so the purchase is a single decision instead of many. A clear and compelling bundle can't be pulled apart. The hardware, software, and services work together, so they anchor the base package. Essentially, the core bundle includes anything that nearly every customer needs. Keep other elements separate so more intensive or specialized customers pay for extras.

HaaS vendors can sort every component into one of four groups:

1. Required components are the bare necessities to get running (usually the hardware, the software, and a core accessory like a battery)
2. Essential components are easy to overlook but still needed for the customer to get full value (e.g., an ongoing service plan, since no customer keeps an in-house expert to run the equipment)
3. Optional components make the solution better without being necessary for success (such as an extended warranty a customer can add to minimize risk)
4. Specialized components add specific value for some customers and particular use cases (not all)

Your base bundle is made up of "Required" plus "Essential" components, which are the elements the majority of your buyers will need. Set aside "Optional" and "Specialized" components into higher tiers or add-ons separate from the base bundle. The more required components you have, the more you should bundle them, since every separate line item is one more thing to explain and negotiate.

The pricing split is usually influenced by how much the hardware costs. Cheaper and more commodity hardware implies that the software is commensurately more valuable.

Hardfin has reviewed pricing across the market and the patterns are remarkably consistent.

This is a simplification, since most packages also include installation, shipping, maintenance, and accessories. Some businesses (additive manufacturing among them) draw meaningful revenue from consumables, which shifts the profile. But the hardware-to-software breakdown holds surprisingly steady across high-performing HaaS companies.

Offer fewer than you think. Start by building the cleaner pricing lineup. Sort every component back through the four groups (Required, Essential, Optional, Specialized), keep the base offering to what most buyers need, and push the remaining components into higher tiers or add-ons.

Three bundles is standard: a basic, a middle, and a premium bundle, with a fourth option only if a distinct group of buyers needs its own. Buyers stall when choices are too complex. A HaaS purchase is inherently complicated: a multi-year commitment across hardware, software, and service. Too many options cause hesitation. A good test is whether customers can understand pricing in 30 seconds.

Direct the majority of buyers to a middle bundle, and handle variable pieces like consumables or premium support as a short list of add-ons rather than more top-level plans. Early on, before you know what the market will bear, it's fine to test a few structures before settling on a clear lineup.

It depends on how central the consumable is to the solution. Consumables are items that get used up or wear out as the equipment runs (such as inks, resins, fluids, tires, or sealant). Some consumables are all but required to deliver value.

If the equipment can't do its job without the consumable, include a minimum quantity of consumables as part of the solution rather than leaving it to the customer. This protects the customer experience by ensuring baseline performance.

The base bundle should include the realistic quantity for the "median" customer to be happy and successful. For example: if printer buyers average 1 cartridge per month, the printer vendor might include 12 cartridges so that most customers have a successful first year. That keeps the average base bundle a fixed price, and heavier users pay for using extra.

In contrast, if consumables are not central to the offering, bill them separately. For example: a plug-in device that can also run remotely on batteries might not include batteries in the base bundle.

There are three sales models in hardware-as-a-service. The legacy model is a straight sale with no recurring fee, so it isn't HaaS at all. The hybrid model still sells the hardware as capex but adds recurring fees for software, service, or warranty. Full subscription HaaS keeps you as the hardware owner and bundles everything into a recurring fee.

The rule is to move as much of the price into recurring fees as the sale will bear. That depends on your buyers. If they only purchase with approved capex budgets, sell the hardware and add recurring software or service fees on top. That hybrid HaaS model is where most existing manufacturers start, since it keeps the upfront cash you're used to. Where buying norms are looser, push toward full subscription, in which you keep ownership and everything is recurring. A new company or product line can often start with full subscription HaaS, which avoids setting a capex price in the market that's hard to undo later.

Before a vendor commits to full HaaS, they should weigh the work it will require to operate. Managing owned assets that are deployed in the field is much more difficult than servicing units that have been sold to a customer.

Two different decisions get tangled together here. One is when you collect cash. The other is how you recognize revenue.

On cash, pull as much forward as the customer will accept. Annual or quarterly payments, a prepayment on a multi-year deal, and prepaid installation or shipping all bring money in sooner and help fund the hardware you've built.

On revenue, what matters is how the contract is structured, not when you bill. A contract written as a services agreement, for the use of the equipment, lets you recognize the revenue over time. A contract that reads as the sale of a specific machine, with a buyout option or a named serial number, is treated as a capital lease and recognized upfront.

So cash (the money that hits your bank account) and revenue (the amount recognized in your financial statements) are independent. If the contract is structured correctly, you can take the cash up front, and still recognize recurring revenue over time. That independence pays off, because recurring revenue is valued far more highly than one-time revenue.

The metric to focus on is BOM payback period. (BPP) which is the number of months before recurring fees pay back the bill of materials and any associated deployment costs. BPP determines the cash flow burden of your HaaS program, as well as how easy it will be to finance. Hardfin analysis shows 6–12 months as excellent, 12–18 months as solid, 18–24 months  as okay, and anything longer than 24 months as difficult to manage financing. The exception for long BPP is large and long contracts, such as are more common in government/defense and real estate.

Upfront fees can help shorten the clock. A prepayment, a down payment, or prepaid installation and shipping all help bring in cash sooner, so a vendor recovers the build cost of each unit more quickly. Across the whole book of business, that means fronting less cash while you scale, less working capital tied up, and less debt needed to close the gap in launching and financing HaaS.

A move to recurring revenue, especially from legacy sales models, can be intimidating. Recurring fees can be hard to swallow early on, because early revenue may not exceed deployment costs during the transition. The industry calls this period "swallowing the fish."

The real choice is when a vendor chooses to take the discomfort of subscription units. Each one earns more over the life of a subscription than it did as a one-time sale. Take less cash now, and the recurring model you're building pays off sooner.

The best way through is to commit and get through the dip as quickly as possible, rather than straddling both models. What kills these transitions most often is going in half-hearted, so they limp along and never reach scale.

With a small balance sheet, vendors should pull cash forward and lean on financing built for one-time sales, such as third-party equipment leasing or corporate debt. As you mature toward full subscription, you can reach financing built for recurring revenue, such as HaaS-specific debt and sale-leaseback models. These let vendors hold and depreciate their own assets and protect the margin and valuation that come with them.

There are three core ways to price a HaaS offering, from the simplest to the most ambitious. Time-based pricing charges a flat fee per period; it's the easiest to sell, meter, and forecast. Usage-based pricing charges for what the customer consumes (per hour, per pick, per part, etc.), which ties vendor revenue to customer activity. Outcome-based pricing charges for the result itself, such as guaranteed uptime or process improvement, so the vendor is paid for what the equipment delivers, not the hours or counts.

Each step up (time → usage → outcome) allows the vendor to capture more value by taking on more risk. A flat fee is safe, but caps upside. Outcome-based has the most upside and the most exposure. When the outcome falls short or the customer underuses the asset, vendors have to eat the cost.

So: price on the outcome only when you can measure and control it cleanly, which takes real data and execution. Most OEMs cannot measure or control outcomes sufficiently well to offer outcome-based pricing.

Usage-based pricing works if the vendor has reliable visibility into usage and both sides are aligned on usage patterns (for example, reasonable bounds on typical minimum and maximum usage, or agreed accounting for seasonal usage patterns). Consider this model to capture additional upside if possible. Some vendors insist on minimums when offering usage-based pricing in order to protect downside risk.

Finally, most manufacturers start with a flat fee based on time. It's a tried-and-true method to introduce a hardware-as-a-service model. It's also the simplest to explain to the customer and to adopt internally. As vendor HaaS programs mature, they often consider adopting usage-based or outcome-based models.

Before you design tiers, determine the unit you'll charge on (e.g., per machine, per site, per hour, or per unit of output). Choose one that tracks the value the customer gets and climbs as they grow, so your revenue expands with them without a new negotiation. That matters more than how many tiers you offer.

With that unit set, layer three tiers on top, and ensure they differ by the depth of the software and service, not by a longer feature list. The base tier holds the basics every customer needs to get value. Higher tiers add the things a distinct set of buyers will pay more for, such as deeper analytics, guaranteed uptime, priority support, or tighter security. Design the middle tier as the one you want most customers to land on.

Put limits between the tiers so growth pulls customers upward. Cap the unit or hold back a differentiating feature in the lower tier, so a customer who needs more has a clear reason to move up.

Usage-based pricing for HaaS is often simple to talk about, but extremely hard to execute in practice.

At least one party (the vendor or customer) has to be able to measure usage with ease and certainty, and then report it to the counterparty. Both parties have to trust each other (or have a verification process) in order to have confidence in the numbers.

If the metering is not easily measured and trusted, it's typical to see data problems, delays, and skepticism. This can lead to restated invoices and revenue recognition problems. Many vendors ultimately decide to build their pricing without a usage-based component.

Vendors that do offer usage-based models can protect revenue with a minimum usage threshold, which creates a fixed floor on what they collect even in slow periods. An alternative is to skip usage-based pricing and offer a tiered scale-driven model, which works when usage fluctuates. For example: a single price based on the size of the installation, held for the whole contract, makes the contract negotiation usage based even while billing is effectively fixed.

Either way, usage pricing works best when asset tracking directly feeds the finance engine with accurate metering data. Without that connection, delays are inevitable.

Many buyers are used to owning equipment. HaaS is still new in many industries.

Lead with the capex-versus-opex tradeoff; it's clear that ownership isn't always the rational choice. HaaS makes sense for a buyer when owning doesn't: this can be when the upfront cost is too high to justify or when the equipment might sit idle at times, but it is especially true when the customer has no in-house expertise to operate and maintain complex proprietary equipment.

Make the hidden cost of ownership visible. A $100,000 machine is rarely a $100,000 decision. Over five years, the buyer doesn't just tie up the capital cost, but also keeps paying to maintain the equipment (roughly 2–5%/yr of its value a year), absorbs the downtime risk, and handles end-of-life disposal. A subscription folds most of that into more predictable fees, and leaves the obsolescence risk with the vendor.

An owned machine only ages, while a subscription keeps improving, staying current with updates, support, and model refreshes over time.

Before the sales closes. Agree with the customer (in writing) on the metrics that matter: for example, uptime, utilization rate, output per shift, or whatever they're paying you to deliver. And also define what success looks like on those metrics: for example, 99.9% uptime, 75% utilization, 100 units per shift, etc. After that, you're not debating whether you delivered; you're reporting against agreed dimensions.

During the term. The equipment then proves itself. Track its performance through a live portal where the customer can see all the details (for example: utilization, uptime, output, or downtime and maintenance you've absorbed), all measured against the agreed targets. Review performance with customers regularly (not just at renewal!). Value is best proven on an ongoing basis throughout the term.

Renewal. The value you've documented during the term builds the case you make at renewal. Tally what the equipment delivered over the term and set it against the cost. That cost comparison is your ROI proof. Renewal is also a chance to refresh the equipment. An offer of newer, better-performing hardware can shift the conversation from price to upgrade.

A hidden component of ROI is the cost of switching, and in HaaS it can be significant: returning equipment, sourcing and financing replacements, reinstalling, recommissioning, and retraining, plus the downtime through the changeover.

For most B2B HaaS businesses, a blended gross margin of 65-75% is a good target. The blended rate matters most, because margins vary widely by component. Here are typical gross margins for each component of the solution:

• Hardware: 40-60%
• Software: 85-95%
• Accessories, installation, and shipping: 0-20%
• Maintenance and repair: 30-70% (depending on overhead)
• Warranty and service plans: 40-80% (depending on reliability)
• Consumables: 10-90% (depending on how proprietary they are)

Because software carries the highest margin, a solution weighted toward software and services can reach toward 80%, while a solution that is heavily hardware-weighted will often land closer to 60%.