4. Introduction to PSS models and Product groups

This report provides an overview of PSS models in the Nordic region and identifies key product groups relevant to further PSS development. These product groups are categorised into distinct clusters covering a wide range of sectors, such as transportation, textiles, and packaging, reflecting how PSS can touch nearly every aspect of daily life for Nordic citizens.

Each product cluster presents different PSS alternatives, targeting specific needs and transforming traditional consumption practices. Some clusters focus on replacing single-use products, such as packaging, while others aim to transition ownership-based models into service-based solutions, like tool or clothing rentals. The markets for these PSS models vary: some are predominantly B2B (e.g., heavy machinery), others B2C (e.g., casual and special occasion clothing), while certain categories, such as computers and smartphones, overlap between B2B, B2C, and B2G.

Across all product groups, the models illustrate a potential to increase resource efficiency, reduce waste, use sustainable materials, and lower CO₂e emissions. Common services include product repair, refurbishment, take-back options, and extended warranties, which help extend product lifespans. In the product-specific sections of this report, we provide in-depth analyses of the current conditions of PSS in these sectors and highlight existing drivers and barriers for further development. However, the environmental benefits of these models depend heavily on specific use cases and logistical arrangements. A key part of this project involved evaluating how effectively these models can meet environmental goals and contribute to advancing the Nordic countries toward a more circular economy. The report section 15 provides a more conclusive assessment of PSS models, their environmental potential, and possible rebound effects.

The figure below provides a comprehensive overview of key product groups for which PSS models are offered across the Nordic region. Each category is broken down into specific sub-groups, where PSS models can replace traditional ownership with service-oriented solutions. These product groups and sub-groups were selected through an extensive mapping of more than 300 Nordic PSS solutions and categorised acordingly.

Following the categorisation, each product group was assessed based on its social, economic, environmental, and innovative potential and suitability for the Nordic market. Evaluation criteria included parameters such as market size, material consumption, Nordic market spread, adoption of innovations, replication potential, and both social and environmental impact potential (Egebæk et al., 2023). Through ongoing evaluations and iterations that reflect updated insights into these parameters, the following product groups and categories have emerged as key focal points in the PSS in the Nordics project.

Figure 3: Overview of product groups relevant to PSS in the Nordics.

4.1 Well-established PSS models

Before delving into product-specific sections, this chapter highlights a number of successful, well-established PSS models in sectors where they are already deeply embedded in the economy. Though not the primary focus of this project, these models offer valuable lessons for unlocking the potential of PSS in other sectors or product categories.

The concept of PSS is not new, even if the terminology is relatively recent. For decades, business models such as car leasing, laundry services, and shared workspaces have existed. Initially driven by profitability and service provision, these models can also integrate sustainability practices, optimising resource use and reducing waste. Service-based models offer economic advantages, including increased customer retention, personalised solutions, and product longevity (Baines & Wilson, 2007). This ability to stay flexible when considering the customer’s needs increases user satisfaction while positioning these businesses as forward-looking, responsive entities in a rapidly changing marketplace (Kjær et al., 2018).

For example, Lindström, a Finnish company that has been operating for 175 years, originally produced textiles but shifted to a workwear rental service in the 1950s in response to a shortage of textile products (Lindström, n.d.-a). Today, Lindström operates globally and brands itself as a sustainable textile service. Their B2B rental model includes washing, maintenance, repairs, renewals and storage. With recent acquisitions of Cintas, the world's largest textiles services company, and Alsco’s operations in Shanghai, Lindström’s growth has the potential to reach new heights as it expands into the Asian market (Lindström, n.d.-a).

Another well-established and rapidly growing PSS is the car share business concept. ShareNow, a car share business, has seen huge growth in its European market and, since 2015, has expanded its operations to 16 cities worldwide with an estimated 3 million users (Li et al., 2021). Despite some setbacks during the pandemic, their recent acquisition by Stellantis (Free2Move) in 2022 has allowed them to expand their fleet of vehicles across Europe. The growing development and implementation of the car share market both in the Nordics and around the globe is attributed to its convenience and flexibility compared to public transport (Li et al., 2021). Despite competing with traditional car ownership and the many other forms of transportation offered in major cities, the market for care sharing is expected to grow substantially between now and 2030. Since 2019, car ownership has steadily declined across the European market (Díaz et al., 2021) , and car-sharing services such as ShareNow have established themselves by targeting the high ownership costs for vehicles, MOTs, high fuel prices, availability of spare parts, etc. While sustainability may not be at the centre of car-sharing PSS models, it can bring environmental benefits to the mobility industry by reducing traffic, pollution, and oil dependence, especially with the ongoing growth within the electric vehicle market (Li et al., 2021). Read more about car-sharing systems in chapter 5.1.

Finally, facility management businesses such as Coor have quietly employed PSS business models for years. The Swedish enterprise has provided cleaning and catering services since 1998 and has successfully competed and replaced in-house management systems for decades. Management services such as the one Coor provides offer flexible solutions that can be adapted and integrated to meet the needs of the customer on a case-by-case basis. Activity outsourcing models such as cleaning allow facility management companies to employ new technology that reduces resource use (such as water and chemical cleaners), which would be too expensive for individual businesses to use (Tukker, 2004a). Despite a dip in growth due to the COVID-19 pandemic, the market for facility management PSS is expected to continue to grow from 290.4 billion USD in 2022 to 426.6 by 2030 (Fortune Business Insights, n.d.). The growth of these services has been attributed to increased tourism within the EU and new technologies for cleaning and facility management services.

These examples demonstrate that PSS is not a theoretical concept but a practical, competitive alternative to ownership-based models. Companies like Lindström, ShareNow, and Coor have thrived by focusing on customer convenience, flexibility, and resource efficiency – qualities that resonate with evolving consumer preferences. These businesses, while not always founded on sustainability principles, have contributed to changes in consumption patterns, which optimise the use of resources, and extend product lifecycles. The widespread adoption of these PSS models has been largely motivated by material shortages, economic challenges, and consumer convenience rather than sustainability alone. So, while PSS models have already proven their competitiveness and adaptability, their future growth in other sectors – and their potential to support a circular economy – will depend on both market dynamics and the proactive role of policy in encouraging sustainable business practices.

4.2 The Nordic PSS landscape

While well-established PSS solutions demonstrate the viability of PSS models in the Nordic market and their potential for global expansion, most Nordic companies – whether linear, circular, or PSS-based – are SMEs. Over the course of the project, more than 300 PSS solutions were identified and analysed over three years. Through over 100 interviews, five national workshops, and two joint Nordic workshops, an extensive dataset was developed, highlighting trends in PSS across a diverse range of companies, from start-ups to well-established firms, both small and large. The project analysed emerging challenges and enablers, along with the rise of new PSS solutions and the exit of others from the market.

4.2.1 General tendencies for Nordic PSS

The extensive mapping of PSS cases in the Nordics reveals some general trends. Use-oriented PSS models are generally the most common and well-known among consumers. B2C and B2B are the primary target markets across product groups. In the Nordic countries, newer PSS companies (established within the last five years) predominantly serve B2C markets, while older PSS companies often cater to both B2C and B2B markets. This shift suggests that PSS solutions are becoming normalised for consumers, with greater acceptance of service agreements for maintenance and repair or even the idea of not owning products at all. However, PSS adoption within B2G remains limited, as public procurement rarely integrates PSS models.

Most PSS providers in the Nordic region are small and medium-sized enterprises (SMEs), and many do not manufacture the products they offer. Nonetheless, these providers tend to prioritise durable, repairable products in their procurement processes, particularly in use-oriented models. While some providers maintain close relationships with their suppliers, they often have limited influence over product design. Providers that manufacture their own products through PSS models often introduce radical innovations that disrupt the market and significantly reduce environmental impacts.

Across the product groups, the PSS providers consulted have expressed a desire to support the Nordic regions' development towards a circular economy. Their main motivation lies in creating models that increase product utilisation, addressing issues like short usage periods or underused products. Interestingly, many of these businesses adopted circular economy principles without consciously identifying their models as PSS, meaning that sustainability emerged organically as part of their value proposition.

Despite their potential, several SMEs discontinued operations during this project, highlighting the significant challenges of the start-up phase. Use-oriented PSS models require large initial capital investments, primarily to build stock. Many providers struggled to secure financing, making it difficult to sustain their business models. These challenges, along with the costs of developing digital administrative systems like inventory tracking, add further pressure on emerging PSS businesses. However, once established, most providers report that these challenges diminish over time (learn more about financing PSS in chapter 16).

Few PSS providers have conducted comprehensive environmental impact assessments, largely due to the complexity and cost of such evaluations. However, existing assessments indicate that PSS models can deliver substantial environmental benefits if certain conditions are met. Factors such as product return rates, transportation logistics, and what the PSS solution replaces (e.g. if car-leasing replaces public transport) significantly affect the overall sustainability of PSS models. For example, a reusable packaging service could offer significant environmental advantages. Still, if customers fail to return the packaging or if transportation costs to recover the items are too high, the benefits may be negated (learn more about potential environmental impact in Chapter 15).

4.2.2 Target markets

As PSS models continue to evolve in the Nordics, understanding their target markets is key to addressing both sustainability and economic viability. PSS is being adopted across various sectors, with distinct challenges and opportunities in each market. These markets – B2C, B2B, B2G, and B2B2C – affect how PSS models are designed, implemented, and received:

B2C (Business-to-Consumer): Companies directly serve individual consumers. This market is often characterised by flexibility, shorter product life cycles, and a growing acceptance of shared or leased services over ownership.
B2B (Business-to-Business): PSS providers offering services to other businesses, often through long-term contracts. The B2B market is established but slower to adopt radical innovations due to conservative industry practices and liability concerns.

B2G (Business-to-Government): Companies offer services to public institutions. B2G holds strong potential due to governments' significant buying power, but PSS adoption remains limited as public procurement processes rarely integrate service-based models.
B2B2C (Business-to-Business-to-Consumer): A hybrid market where businesses serve other companies that ultimately provide services to consumers. This market is complex, requiring careful coordination between all stakeholders.

Table 5 explores the key product categories within Nordic PSS, highlighting the most prominent target markets and additional insights into how these markets influence both sustainability and business performance.

Table 5: Overview of product categories and target markets.

Product category	Target market	Additional insights
Transportation	B2C, some also B2B	PSS models such as Mobility as a Service (MaaS), peer-to-peer sharing, and product pooling are gaining traction. In the Nordics, pooling/sharing models are particularly popular, especially for cars and bicycle solutions. These models cater to the growing consumer preference for access over ownership in the category, though sustainability may not always be the primary focus. Instead, convenience and cost savings often drive adoption, while sustainability outcomes depend on usage patterns and integration with broader environmental goals.
Packaging	Mostly B2B and B2B2C	The packaging sector is primarily dominated by start-ups founded in the 2020s, with the exception of a few long-established companies in the freight segment. This category typically involves low-value products, often designed to replace single-use items. A key challenge is encouraging the return of low-cost products, as small deposit fees often discourage consumers from returning them. Despite this, there is significant potential for scaling circular systems, though achieving consumer engagement remains a key hurdle.
Machinery & Tools	Primarily B2B	The B2B market for machinery and tools is mature, but conservative users and safety concerns – especially in B2B2C settings like tool libraries – pose barriers to adoption. Liability issues are key challenges, but the economic and environmental benefits of leasing or sharing high-value tools remain strong in industrial contexts.
Household Appliances & Furniture	Mostly B2C	B2C PSS providers are gaining traction by offering flexible, non-ownership models for household appliances and furniture. B2G markets show growing potential as governments and institutions seek sustainable, cost-efficient furnishing solutions. B2B providers, particularly in office furniture leasing, have proven to be more financially viable.
Products for Children	Primarily B2C, dominated by micro-companies	PSS models for children’s and maternity products are well-suited due to the short usage periods as children grow. However, many providers in this sector, often start-ups, have shut down operations over the course of the project due to significant challenges. Limited funding, high operating costs, and the need to offer a wide range of products to meet diverse consumer preferences make profitability and scalability difficult, especially for smaller, micro-companies. Despite these hurdles, PSS models in this sector hold strong potential for sustainability by reducing waste and promoting product reuse.
Textiles	Strong presence in both B2C and B2B	In the textile industry, B2B PSS providers are typically larger, more established companies, while B2C providers are often smaller micro-companies with shorter lifespans. Many of these smaller B2C textile PSS providers have shut down operations over the course of the project, facing challenges such as limited funding, high operational costs, and the increasing demand for fast fashion. However, the rising interest in circular fashion and rental models offers a potential pathway to address these sustainability challenges and promote more durable business models in the sector.
Seasonal & Special Occasions	B2C and B2B, though B2C faces more difficulties	B2C PSS providers for seasonal goods and special occasions are often start-ups and struggle in B2C markets due to high costs related to logistics and customer service. B2B providers have more stable models, and the environmental impact could be reduced by focusing on reuse and rental, particularly for items that are infrequently used.
Electronic Equipment & Solutions	Primarily B2B and B2G	Leasing models in electronics are gaining traction, particularly in the B2B and B2G markets. Most PSS providers of computers and smartphones in the Nordic region are larger, well-established companies. However, significant barriers exist, such as legal complexities around ownership and liability, as well as concerns about data security. Overcoming these challenges could unlock further growth in the sector.
Buildings	Primarily B2B, with some B2B2C and B2G	The buildings sector’s diverse ownership models prompt PSS providers to target a mix of B2B, B2B2C, and B2G markets. Sustainable building services, such as energy-efficient retrofits and green construction materials, appeal to businesses and governments aiming to achieve environmental goals. However, the variety in ownership structures creates added complexity for deploying PSS solutions in this sector, making it challenging to implement consistent models across different stakeholders.

In the Nordics, PSS models are generally more established in B2B markets, particularly in sectors like machinery, workwear, and buildings, where companies tend to be larger and the market more mature. While PSS providers often face financial challenges, mainly due to substantial upfront investments and slow returns, long-term contracts in B2B settings can help convert these investment costs into manageable operational costs, which is attractive from a financial standpoint. B2B clients typically take a calculated approach, valuing the reduced risks, convenience, and the shift from capital expenditures to operational costs offered by PSS models.

Additionally, B2B models often benefit from offering a smaller, more uniform product range, simplifying the message and reducing complexity. Their focus on functionality and ease of repair streamlines maintenance, extends product lifespans, and enables more efficient logistics. For example, transporting workwear in bulk for businesses lowers emissions and costs per unit compared to B2C models, which typically involve individual shipments. Additionally, B2B models offer convenience to companies, allowing them to outsource operational tasks like managing workwear and focus on core activities.

In contrast, B2C-oriented PSS models must cater to a wider range of consumer preferences, requiring a diverse product selection that increases procurement and maintenance costs. While B2C models can capture niche consumer segments by appealing to emotions, ideals, and personal preferences, they often face more operational complexities. Each market offers distinct advantages, but providers must tailor their strategies to balance operational complexity with market expectations.

4.2.3 Nordic frontrunners – transcending common barriers

Through extensive analysis of both successful and challenged PSS solutions and providers, several trends have emerged among Nordic PSS frontrunners that have managed to transcend common barriers (further discussed in section 16). While these insights are not a one-size-fits-all solution, as PSS models differ across product groups, target markets, value chain collaborations, and communication strategies, they offer useful guidance on business model approaches that have helped Nordic PSS providers overcome obstacles. These trends are organised according to the three overarching categories of PSS: product-oriented, use-oriented, and result-oriented.

Product-oriented PSS models

Product-oriented models in the Nordics tend to have lower visibility, as they are often communicated as an add-on to existing products or services, such as product sales or combined with other PSS models. These models focus more on the product itself and less on associated services. Although product-oriented PSS models generally offer lower environmental impact potential compared to other types of PSS, they can still deliver meaningful environmental benefits when strategically implemented. These models often sit at the intersection of traditional linear models and newer circular models, making them somewhat familiar but still novel to customers. As a result, the economic risks of product-oriented PSS models tend to be lower than those of other PSS categories.

Key strategic activities adopted by Nordic product-oriented PSS models:

Providing advice, guidance, and directing the customers towards procurement of products with less environmental impact, greater durability, repairable products, etc.
The inclusion of extended warranty or similar guarantee solutions in the value offer

Inclusion of post-sales solutions, e.g. repair and maintenance services to extend product life, reducing the need for product manufacturing or product take-back, ensuring resale or proper waste handling
Fixed pricing on added-value service pre- and post-product-sales makes the economic costs predictable and manageable for the PSS providers. Further, this approach to pricing enables clear communication with customers, supporting trust in the systems.

Utilising in-house staff for maintenance and repair services reduces costs compared to outsourcing, e.g., if these activities are done in close proximity to the point of sale.
Modulation of added-value services based on the product price. In practice, this would mean that more expensive/high-quality products are granted an extended amount of services, motivating product sales, while low-quality products come with less added-value services.

Use-oriented PSS solutions

Use-oriented PSS models typically offer a balanced value proposition, combining both tangible and intangible aspects related to product usage. These models are the most common in the Nordics, and throughout the project, extensive data has been gathered on their successes and challenges. Use-oriented PSS solutions hold significant potential for reducing environmental impact, particularly when the focus is on sustainable product selection, high return rates, and responsible consumption behaviour.

However, their economic viability varies widely. Some use-oriented PSS businesses go bankrupt within a year or two, while others have thrived in the Nordics for over a century. The sustainability and success of these models depend heavily on product choice, efficient logistics, and consumer engagement.

Key strategic activities adopted by Nordic use-oriented PSS models:

Convenient product (return) systems, motivating customers to access and return the products of the PSS solutions. This reduces the need for extensive product stock and transportation and increases the recirculation product use rate throughout its lifespan.
Clear consumer guidance on proper product use, along with an emphasis on the environmental benefits of responsible usage, improves product durability and reduces the need for repairs, spare parts, and premature replacements. For example, providing washing guides for textiles helps extend their lifespan, minimising wear and tear and ensuring products remain in use for longer periods.

Producing or prioritising products designed for durability, ease of repair, availability of spare parts, and effective tracking helps ensure sustainability, especially in cases of poor return rates. Inclusion of durable products made for reuse, where spare parts are available, where repair and maintenance are conductible, and where product tracking (e.g., if there is a poor return rate) is possible.
Prioritising or producing products designed for reuse that are durable, repairable, and supported by the availability of spare parts ensures a longer product lifecycle. These products should also be easy to maintain, with built-in tracking systems to monitor usage and return rates, especially when return rates are low.

Clear value propositions tailored to specific target groups enhance customer retention, satisfaction, and willingness to pay for the service, fostering stronger customer relationships.
Applying diverse revenue streams by, e.g. combining subscription models with additional on-demand services. This helps generate steady income from multiple sources, ensuring financial sustainability for maintaining product stock, wages, and operations.
Offering flexible prices based on the length of product use, especially in the product-rental and -leasing models. There is a tendency for B2B and B2G customers to want insights into Total Cost of Ownership (TCO) and prices flexible enough to accommodate a reduction of TCO compared to product sales. For B2C customers, the focus should rather be on reduced costs achieved in product rental and leasing, e.g. lower costs/day with long-term compared to short-term rental, as this is more relatable and easier for B2C customers to understand.
Offering flexible pricing based on product use duration, particularly in rental and leasing models. B2B and B2G customers often seek insights into Total Cost of Ownership (TCO) and prefer pricing structures that reduce TCO compared to product sales. For B2C customers, the focus should be on simplified cost savings, such as lower daily rates for long-term rentals, which is more relatable and easier to understand than TCO calculations.

Result-oriented PSS solutions

Result-oriented models, which focus more on services than products, are fairly common in the Nordics. However, their long-term success is challenging to predict due to their intangible and highly varied value propositions. The environmental impact of these models also differs significantly, depending on the nature of the result delivered and the resources involved (e.g., products, materials, flora, or fauna). Similarly, the economic viability of result-oriented PSS models is highly dependent on the specific solution offered. Successful examples often involve expensive, innovative technology development, services that support critical societal functions (e.g., infrastructure maintenance), or services that ensure compliance with regulations for manufacturing companies.

Key strategic activities adopted by Nordic result-oriented PSS models:

Documenting cost savings for customers, often using TCO calculations, which helps secure long-term agreements, especially in B2B and B2G markets. This also underscores the environmental benefits alongside financial savings, improving customer retention.
Leveraging customer feedback and data-driven insights to tailor services more precisely to customer needs, strengthening relationships and increasing the likelihood of contract renewals.
Timely maintenance and repair, as PSS providers handle the products directly. This ensures high product utilisation and extends product lifespan, significantly reducing operational costs for the provider and the customer.
Managing the entire product lifecycle, including end-of-life processes. PSS providers extract additional value, reduce waste, and improve environmental performance by reusing, remanufacturing, or recycling product components.

With this overview of the Nordic PSS landscape, we will now explore the ten key product groups that highlight how PSS models are applied across various sectors. Each product group presents unique challenges and opportunities, providing insight into how PSS models are evolving and adapting to market needs. The following sections will examine these groups in more detail, focusing on the specific dynamics, successes, and barriers encountered within each.

4. Intro­duc­tion to PSS models and Product groups