Shifting to a leasing ownership model

buyer and supplier shaking hands

Leasing, in which a person rents rather than buys a product from a company, has been heralded as a new circular ownership model with the potential to extend products’ useful lifetime, improve resource efficiency, reduce virgin resource intake, and reduce value and material losses to the economy.

That all sounds great for the environment and the economy, but what about the costs of setting up and maintaining a model of sales that requires complex contract and production coordination, maintenance costs, and recovery methods? What benefit does leasing rather than selling products bring to a business? And is renting rather than owning something that customers want?

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Leasing: The New Circular Ownership Model

Leasing agreements benefit the circular economy

Leasing is an ownership model in which a person rents, rather than buys, a product from a company. Instead of paying the full price upfront in exchange for ownership over the product – as done in a purchase-based ownership model – the customer instead pays the company in installments in exchange for continued access to the product over an agreed period of time. During this time, the customer can keep the product and make use of it as they wish, but they never actually own the product. The provider is the one who maintains ownership over the product, as well as the responsibility to maintain it, replace it if it is broken or outdated, and retrieve it once the lease period is over.

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