How Rolls-Royce Sells Power by the Hour

This episode of Business Models Explained dives into 'Power by the Hour' — the pioneering servitization model from Rolls-Royce that transformed aircraft engine manufacturing into a recurring revenue stream. Lucas and Luna unpack how the British engineering giant moved from selling $25 million jet engines outright to charging airlines for every hour an engine is in the air, including maintenance, repairs, and data-driven predictive analytics. They trace the model's origins in the 1960s, its full rollout in the 1990s, and how it aligns incentives between manufacturer and airline. Specific numbers include the 13,000 engines currently under TotalCare contracts and the estimated $6 billion in annual aftermarket services revenue. The hosts contrast this with GE's comparable OnPoint program and discuss why servitization hasn't spread as fast to other industries. A concrete takeaway: when a company shifts from selling a product to selling an outcome, margins can triple and customer retention can become near-permanent. #RollsRoyce #PowerByTheHour #Servitization #BusinessModel #JetEngines #TotalCare #Aviation #Industrial #RecurringRevenue #Manufacturing #Airlines #GE #OnPoint #PredictiveMaintenance #Business #BusinessPodcast #FexingoBusiness #Podcast Keep every episode free: buymeacoffee.com/fexingo