Abstract
Services are not only offered by “typical” service providers such as hotels, airlines or banks. Industrial companies also generate a considerable part of their revenues from services. Services such as maintenance, repair, refurbishing, and spare parts often account for 20% of the revenue of industrial firms and for an even higher percentage of their profits. Services, including spare parts, usually achieve higher margins than new products. The results of a study among mechanical engineering companies shown in Figure 7.1 reflect large differences in the profit margins.
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Notes
- 1.
Installed base refers to the accumulated number of units of a durable product or system actually in use. Because installed base includes products that may have been in use for many years, it is usually a much higher number than the annual sales volume.
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Name disguised for confidentiality reasons.
- 10.
For examples see Hermann Simon, Preismanagement, second edition, Wiesbaden: Gabler 1992, p. 451.
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“Kein offenes Scheckbuch,” Wirtschaftswoche, February 19, 2009, p. 12.
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© 2010 Hermann Simon
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Simon, H. (2010). Quick Solutions for Services. In: Beat the Crisis: 33 Quick Solutions for Your Company. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0823-0_7
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