Challenges

Pay-Per-Use business models face high transaction costs

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A very important challenge that Bundles (pay-per-wash) and other similar businesses face are the high transaction costs:

Transaction costs are high because after every washing-cycle a variable transaction follows (pricing schemes depending on user and type of washing programme).

Customer relationships are shaped through contracts, which require credit checks on those customers, the need for receivables management and all the administrative burden that comes with that (Toxopeus, Achterberg, en Polzin 2016).

This administrative burden increases in consumer-oriented pay-per-use models (B2C) as there is higher heterogeneity of users. This leads to the reality that pay-per-use can't operate their ambition and instead charge a fixed periodic fee (subscription model) and actually settle real use payment periodically (e.g. annual).

This lowers the possibilities to directly steer on sustainable consumption, which is oftentimes a motivation to choose a pay-per-use business model. 

 

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