If you are responsible for pricing in an OEM business, you have three major revenue streams: finished products, spare parts, and services and service contracts. In the life science business and a few others, most of your income and profit comes from selling a fourth category: consumables.
In 2023, I spent many days pouring through public industrial, medical, and analytical instrument companies’ annual reports to determine each company’s service revenue as a percentage of total revenue. I was able to find 69 mostly U.S. companies. The average service revenue as a percent of total revenue was 35%, and the median was 29%.
This article appeared in Thomas Insights on December 1, 2023. To read the complete article, click here.
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