(Extracted from Confessions of a Pricing Man by Herman Simon)
That explains why General Electric and Rolls Royce sell thrust, not engines, to their airline customers. In this model, they charge by the hour for performance. For a manufacturer this can mean a completely different business model , as it marks the transition from a product to a service business. The company no longer sells products; it sells services. Taking it one step further, these companies now offer a system which creates the potential for even greater revenue than their previous product-based business did. In GE’s case, the price per hour can comprise the operation of the jet engines, their maintenance, and other services. Their airline customers gain several advantages from this price model including reduced complexity, lower capital spending, and the elimination of fixed costs and personnel.