Pattern description

The customer doesn't buy the product, but instead rents it. This lowers the capital typically needed to gain access to the product. The company itself benefits from higher profits on each product, as it is paid for the duration of the rental period. Both parties benefit from higher efficiency in product utilization as time of non-usage, which unnecessarily binds capital, is reduced on each product.

Inventive problem

Application examples

An example of applying the model is the first car rental agency, which came into being in the late nineteenth and early twentieth centuries. One noteworthy pioneer of the system is Joe Saunders: he began by lending his Ford Model T to business people in 1916, using the ten cents he earned per mile driven to maintain the car. As a clever entrepreneur he soon realised that he could build an entire business around the idea, and by 1925 the Saunders System car rental company had branches in 21 states.

Blockbuster LLC is an American rental service offering videos, DVDs and online films. At its peak, Blockbuster employed 60,000 people in 17 locations worldwide. As a result of mismanagement and increased competition, however, the company lost significant revenue and filed for bankruptcy in 2010.

With a history dating back to 1908, CWS-boco is a Swiss provider of working clothes and laundry services whose products can be rented as well as bought. CWS-boco provides convenient all-inclusive service in the fields of hygiene and sanitation that go beyond mere sales, so that renting is often more attractive and convenient to the customer than buying.

References

The Business Model Navigator: 55 Models That Will Revolutionise Your Business