Hey Reader,

In the late 2010s and early 2020s, it felt like everything suddenly became as-a-service.

Software, mobility, then construction products.

If we wanted to keep materials in use and avoid waste, business models had to change. Selling something once and losing control forever clearly wasn’t helping.

Fast forward a few years.

Many of these as-a-service models still exist.

But to me it feels like there has never been a real breakthrough.

So what does as-a-service actually mean in construction? Is it still relevant or should we just forget about it?

Leasing versus as-a-service

Let’s start with the essentials. What actually is “as a service”?

Leasing and “As a service” is often mixed up. Time to clear this up.

Leasing is about using something without buying it. You pay to use an asset for a fixed period. Ownership stays with the supplier or leasing company. Maintenance may be included, but it’s not the core idea.

Leasing mainly changes how you pay, not what you buy. You’re paying for access to a product, spread over time.

As-a-service, on the other hand, is different.

Here, you don’t buy or lease equipment. You pay for outcomes: heat, comfort, light.

The supplier keeps ownership and responsibility. Maintenance and replacements are included by default.

As-a-service changes what is being sold, not just how it’s financed.

How as-a-service is supposed to work

As a client, you don’t pay the full price upfront. You pay monthly installments over a defined period — three, ten, or twenty years - linked to your consumption.

At the end of that period, you either become the owner, or the product is returned and replaced.

During the contract, the provider is responsible for maintenance and performance. In an ideal scenario, the product comes back, needs little refurbishment, and can be used again.

This lowers initial investment for the customer and should stimulate the circular economy. Product quality improves.

For producers, the upside is clear:

• Long-term customer relationships
• Predictable revenue streams
• Materials return —> lower future production costs

For users, the benefits are:

• Lower upfront investment
• Predictable operational costs
• Maintenance included, one contact person

At least, that’s the idea.

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Why it struggles in practice

Despite these advantages, as-a-service still faces some hard barriers.

Tender logic.

In most construction tenders, contractors must price exactly what the client asks for. That ensures comparability, which makes sense. But it also locks the system into business-as-usual.

Offering other business models is often impossible, especially in early phases and public procurement.

This reality stops as-a-service business models, while they could actually help with the tough challenges of affordability and construction prices.

Unfamiliarity.

There are many open questions. What happens if the provider goes bankrupt? What if the building is sold? What if tenants change? What are the legal aspects?

Not having answers might stop contractors from offering the solution in the first place.

Scale and relevance.

If a €20,000 optimisation sits inside a €10 million project, it feels like it’s not moving the needle. Construction processes are fast, with countless decisions. Slowing things down for something that represents a fraction of a percent is hard to justify even if the concept makes sense.

Business model transformation & bankability

That sounds super high-level, but stick with me:

If the producer stays owner, they need to pre-finance the materials themselves. Revenue no longer comes in directly but trickles in through small monthly installments over decades. That completely changes revenue models and puts pressure on balance sheets. And often banks don’t know how to evaluate this and stay away.

Together, these four barriers explain why many as-a-service ideas remain pilots instead of scaled solutions.

Where as-a-service does work

As-a-service tends to work best for expensive systems especially where maintenance is expected anyway.

Think of:

• lighting as-a-service
• lifts as-a-service
• heat as-a-service

Often a third-party is involved for financing the assets.

These systems are expensive. Heating and lift systems can easily reach seven figures in large projects.

That makes them interesting for developers: initial investment costs are reduced and shifted to operational costs. Which are typically being paid by their end-customers.

I’m an optimistic person and give them the benefit of the doubt that this decreases initial purchase prices of buildings. Which makes it a win-win-win.

For producers, developers and their end-clients.

In my work, I see that the heat as-a-service of my colleagues at C-energy shows strong traction.

Here, users don’t pay for a heat pump, but for heat. Their real consumption. Maintenance is essential anyway. Potential replacement costs are included. No unpredictable costs for the clients.

Where it seems not to work

It tends not to work for products that are integral part of buildings and stay there for a long time.

A building without a facade isn’t really a building.

Remove waterproofing and you have a serious problem.

These elements are essential, long-lived, and typically low maintenance. Facades and water-proofing may need attention every five or ten years. But in general, they are designed to last.

Also, paying a monthly fee for a brick feels absurd.

Take-back as in between solution

That’s why many of these “as a service” ideas, explored in the late 2010s eventually changed direction.

Some examples: clip-in bricks, bitumen roofing products, carpet tiles or facade elements.

The idea of circularity wasn’t abandoned, but the business model was adapted.

Instead of full as-a-service, companies moved toward take-back/buy back programmes.

Products are sold traditionally, but after X-amount of years (could be up to 40-50 years), the producer commits to taking them back for a predefined residual value.

This keeps materials in the loop without turning the entire business upside down.

Circular discount

And then there is one more option that recently was developed by the Circular Value Institute: The circular discount is a price reduction at the moment of sale. This has nothing to do with the as-a-service concept.

Circular products tend to have higher material costs (better design, demountability, durability), but also lower future costs because they can be sold again easier.

Without a discount, they often cost slightly more as business-as-usual products. Especially in the current market where prices are under pressure, it feels like a hard sell.

The circular discount solves this by:

• lowering the initial purchase price
• linking that discount to a contractual obligation to return the material after the agreed use period
• being financed by a third party

The most known product where this is used are the modular interior walls of Juunoo.

In short: future circular value is monetised upfront.

Reverse logistics and residual value

One insight keeps coming back.

The circular business models I described only work when the residual value survives the reverse logistics.

Every step costs money when you keep materials in the loop: dismantling, transport, cleaning, refurbishment.

The business models only makes sense if products return with enough value left. The fewer handlings required, the stronger the business case.

The Circular Value Institute defined a formula to check whether it’s worth reusing the products. You divide the residual value by the cost of reuse and multiply it with risk.

When the result is bigger than 1, it’s worth it.

Take-away

As-a-service and related circular business models are not a solution to everything.

But they help with something important.

Instead of endlessly negotiating who can deliver the lowest price, as-a-service shifts the conversation to how something is financed.

That shift creates value on all levels:

• Clients get high-quality solutions with lower initial investment and fewer surprises later on.
• Contractors gain flexibility to optimise construction budgets instead of cutting quality and “sustainable products”
• Producers move from one-off sales to planned revenue and keep materials in the loop.
• The environment benefits from fewer primary raw materials used and less waste.

Which as-a-service models have you already used or considered?

Which ones worked and which didn’t?