Inside AED Group's new Pay Per Use business model
AED Group recently revealed its new Pay Per Use business model, whereby rental firms keep AED gear in their warehouses and only pay when the gear is rented out to clients. Marc Maes attended the Group’s annual customer get together to find out more…
On the occasion of the AED Group’s annual customer nights, held in December with some 1,200 professionals in attendance, CEO Glenn Roggeman revealed a new business model for the AV industry.
In its 32 years of existence, AED Group has been pioneering in various domains to stimulate and facilitate the professional rental business: being the first AV material bankers worldwide, AED also premiered AED Lease, combining finance formulas with equipment expertise, currently adding up to some 500 lease contracts Europe-wide.
“Today we are announcing the world premiere launch of AED ‘Pay Per Use,” said Roggeman. “We have been studying the model for five years, making it futureproof and viable. The key idea is that rental companies have AED-equipment in their warehouses, and only pay when the gear is rented out to their clients. The difference between the rates they charge and the net price invoiced by AED Group is the rental company’s profit. There’s no initial rental fee to be paid or investment to be made – rental companies can generate profit margins without investments. I believe this will be the industry’s future business model.”
In addition to the client’s direct profit when equipment is rented out, Roggeman sees more advantages with Pay Per Use.
“First of all, it’s a solution for our own warehouse capacity in Benelux, Germany, France and the UK,” he commented. “A second bonus is that we extend our business reach: clients who sometimes drive 300km to pick up their gear in our AED-warehouses can now stock sufficient inventory without having to drive back and forth – they simply use the equipment when they need it for rental assignments.”
In 2012, AED Group started developing dedicated software to administrate the Pay Per Use model. Roggeman explained that the idea was born with Barco’s HDF-W30 FLEX remotely controlled projectors. “The intensity and operating hours of these projectors can be controlled and monitored with specific software. Today, we are launching the prototype of a new platform which will fully automatise Pay Per Use activities and invoice them to our clients.”
Roggeman said the Pay Per Use model stems from the financial world – it’s based on the difference between CAPEX (to acquire or upgrade physical assets such as property, industrial buildings or equipment) and OPEX (operational expenses a company pays to run its basic business). “And AED Group is the world’s first AV company introducing this model,” he stated.
In September of last year, AED Group initiated tests with three major European rental companies, and in preparing the December announcement Roggeman explained: “The international launch will be accompanied by a huge toolbox campaign. Starting with our Customer Nights in Belgium, we present the new business models on our January customer nights in the Netherlands and Germany, the Open Days in the UK (February 21-22, at the AED premises in High Wycombe) and the 2018 professional audio-visual trade fairs: we distribute some 10,000 AED toolbox-kits to our clients and business relations. Because that’s what we are: a toolbox company, unique in the world. We offer a variety of tools to the industry: sales, rental, lease, second-hand and now Pay Per Use. I’m convinced that finding the right balance between these tools can make any professional rental company profitable.”
The Pay Per Use strategy will be implemented and rolled out by AED Group across 2018 and will encompass the following industry segments: audio (including the new QSC KS212C active subwoofer, which was presented at the AED customer night, the K12.2 and K8.2 active speakers and the KLA series powered line array speakers and subs), video, Prolyte trussing gear and lighting equipment.
Commenting on the company’s focus for 2018 and beyond, Roggeman is taking a comprehensive view on the new strategy’s potential reach.
“Lighting is a creative and rapidly evolving segment, and video requires more and more high quality equipment – very expensive and the ideal target for Pay Per Use,” he said. “In 2019 we will add amplifiers and hoists to the programme.” Clients take on maintenance of the equipment under the Pay Per Use terms.
He also highlighted the ecological elements at play in the Pay Per Use formula. “We only use LED lighting equipment and by storing the gear with our clients they cut in transport energy – they can use their trucks more efficiently,” concluded Roggeman.