Rapid Sales Growth Mechanisms and Profitability for Investment Product Manufacturing SMEs Through Pay-Per-X Business Models

Manufacturing small and medium enterprises (SMEs) are recognized as a major driving force economically in the European Union (EU). However, manufacturing companies and SMEs have often met with major difficulties in digitalization, and more specifically, in the implementation of novel industrial internet-enabled business models, such as pay-per-X (PPX) type business. The overall aim of this study is to understand how manufacturing companies (especially SMEs) can make use of PPX business models largely in capital product markets, and how this impacts rapid sales growth and profitability for these investment product manufacturers. The studied two investment product manufacturing companies experienced rapid sales growth and there was an impact on the overall profitability for the companies. Sales growth was significant in both companies and PPX business models opened various new opportunities to extend company businesses. We found four main mechanisms that enabled rapid sales growth through PPX business models: strategic, pricing, financing and risk management mechanisms. Both the SME companies also experienced a negative impact on profitability despite rapid sales growth through PPX business models because of issues related to financing the investment product.