What is the difference between service-based model and product-based circular model?

• A. Service-based focuses on selling products outright; product-based emphasizes leasing and use-based metrics.
• B. Service-based is about selling accessories and add-ons.
• C. Service-based monetizes function through a service contract without durability incentives.
• D. Service-based monetizes function through product-as-a-service, encouraging durability and reuse.

Answer: (D)

In circular business models, the value is tied to the function or service a product provides rather than to owning the product itself. The service-based approach delivers that function through product-as-a-service, where the provider retains ownership and charges for the service or outcome (availability, performance) rather than for the physical item. This setup creates a strong incentive to design for durability, repairability, and easy end-of-life recovery, because the provider’s revenue depends on the asset continuing to work well over time and being reclaimed for reuse or remanufacture. The option that describes monetizing function through product-as-a-service and promoting durability and reuse captures this dynamic accurately. The other statements either misrepresent who owns the product, the nature of the contract, or the presence of durability incentives.