let’s take a piece of industrial equipment worth $15,000. It could be an MV Drive, an industrial Robot, an AMR, a DGA, a Reefer, a large pump, an industrial compressor, a powerful GenSet, a UPS or a Switchgear. 

For ease of calculation, we’ll assume a 1000 units production and a 90% automated registration thanks to asset tracking. 

Step 1. Shipment

1000 units installed in bundles of 3 (that’s the average installation bundle size at the final location)

Step 2. Registration

1000 units x 90% visibility / 3 units = 300 new asset owners detected and registered

Step 3. Old IB discovery

90% of asset owners are repeat buyers who own 7 similar units, on average. That’s a legacy installed base of 2100 old units already in service for typically 8 years or more. 

If 50% of the old units are not under service and maintenance contracts, that’s 1050 units for which a new contract can be offered. 

Step 4. Opportunity generation

So we now have 900 service opportunities for the new products and 1050 service opportunities for the uncovered legacy assets.

Step 5. Closing

With a closing rate of 35%, the 900 + 1050 new service opportunities would bring 680 new service contracts. 

Assuming the lifetime service value from this piece of equipment is roughly equal to its catalog price ($15,000) and the asset’s serviceable lifetime is 12 years (after a 3 year warranty period), each year should generate approximately $1,250 in service, parts and subscription revenue. 

Step 6. Billing

During the first year, the legacy assets’ service contracts would generate an additional $450,000 in revenue. 

After the warranty period, the new assets’ service contract would generate $390,000 on a yearly basis. 

Considering renewal rates, one year of production of one product line could return over $4,000,000 in additional service revenue over its lifetime, of which $2,000,000 in immediately accessible revenue from the old, uncovered installed base.