There is demand for connected products and solutions, but a deep understanding of competition, customer needs, and pricing strategies is required to create value for customers and increase adoption.

The Industrial Goods and Services team surveyed 145 customers across our clients’ key end markets including building/facilities managers, commercial construction companies, packaging, and general manufacturing. We asked these customers about the current penetration, value, and willingness to pay for connected products and services for their equipment.


Our survey found OEM connected product and service offerings appears are rare, with approximately 50% of customers reporting that 0-10% of their equipment suppliers offer connected services. This is most evident with commercial construction customers, where larger off-road equipment have some connected service capabilities, but most equipment and tools do not. In contrast, building and facilities management customers appear to have the highest percentage of suppliers offering connected services (47%), followed by hospitals and healthcare (35%), and 3PL, distribution, and warehouse (33%). Connected services were first introduced to these markets over 20 years ago due to several factors, including their stationary environments, recurring and predictable equipment usage, durable asset lifecycle, and high cost of downtime. As connected service offerings have scaled and customer needs have evolved, OEMs have been able to offer new service offerings across a wider range of markets and applications.

The vast majority (~65%) of these connected services can be defined as basic connected services, which include remote monitoring and diagnostics. Some customers, particularly in oil & gas and manufacturing are opting to utilize advanced connectives services, which include predictive maintenance and energy consumption insights. These services tend to address customer needs during late stages of the equipment lifecycle, but as customer needs evolve, equipment and connected service capabilities will likely rise. This is driven by the adoption of more complex equipment, as well as a greater need for flexibility by customers to meet market demands.


OEMs that offer holistic connected service offerings are better positioned to address their customer’s most critical business needs. Customers cite reducing downtime (52%) as their primary, equipment-related business need, followed by maximizing ROI (17%), maximizing utilization (10%), reducing operating costs (10%), reducing repair / maintenance time (3%), and extending useful life (8%). Confirming the ability of connected products to address the needs, customers cite decreased downtime (59%), reduced time, money on repairs (56%), and increased longevity (38%) as the most valuable potential benefits of connected equipment and commercial model solutions.

Customers perceive the current range of connected service offerings to be valuable but can differ in their level of value, with 82% of customers indicating basic services to be moderately to extremely valuable, compared to 55% for performance-based services, the lowest cited. Coupled with the fact that basic services are the most common and performance-based services the least common connected services offered by equipment vendors, these findings suggest a gap in the market.

Customers have suggested a propensity to pay for these services with 57% indicating that they would pay up to 25% more than the current price of their non-connected equipment for connected equipment. A smaller subset of customers prefer all costs to be embedded into the price of the equipment, likely due to budget predictability, ease of approvals, and invoicing simplicity.

These findings suggest that OEMs that are developing or expanding their connected equipment will find market demand, but need to ensure that their offerings align with customer needs and expectations. By collaborating with customers directly, OEMs can stay ahead of evolving needs and expectations, embedding themselves within the customer’s value chain, and creating greater supplier stickiness. In addition, customer education will be critical to highlighting key benefits, capabilities, efficiencies, and cost savings. Additionally, OEMs can evaluate and offer different pricing structures to help customers meet their budgets, achieve greater visibility into future expenses and certainty of cash flow, and generate greater cost savings over the equipment lifecycle.