Is your board ready for pricing outcomes-based solutions?
More directors and investors are asking the same question: how can we capture the full value of Asset Performance Management (APM)? It’s a timely debate. APM has moved beyond promise to deliver measurable, auditable gains in asset life, energy use, and carbon reduction. Automated Industrial Optimisation (AIO) goes further still, making those improvements sustained, repeatable, and transparent. For boards, that shifts the conversation from whether APM works to how its proven impact can be converted into financial and governance value.
Outcomes-based pricing is seen as a good fit because it links payments directly to the efficiency gains and sustainability improvements that APM and AIO make visible, aligns suppliers and operators around verifiable results, and turns operational data into the foundation for contractual commitments. The ability to approve investments, confident that ROI will be delivered and auditable has a strong appeal.
A new buyer/supplier relationship
But I think the appeal extends beyond the financials. We know the traditional buyer/supplier relationship doesn’t serve either party especially well today. And we are all aware of the benefits Rolls Royce achieved through a cultural shift in buyer/supply relations through its version of outcomes-based pricing, the Power by the Hour model [6].
Instead of buying engines outright, airlines “rent” engines, paying for hours of reliable performance in the air rather than absorbing unpredictable maintenance costs. A shift that turned a transactional sale into a governance framework built on shared risk and continuous accountability. Today buyers gain financial certainty. Sellers link revenues directly to operational performance, incentivising relentless innovation and service quality.
We’re seeing the same shift reshaping industrial operations. In manufacturing, predictive maintenance contracts are being structured around avoided downtime, not technician hours. Energy providers increasingly guarantee reductions in consumption and carbon emissions, with fees linked directly to savings achieved. These examples show that outcomes-based pricing is no longer theory or sector specific. It’s reshaping capital-intensive industries.
Commercial models may differ. Some boards adopt pure results-based contracts, tying payment entirely to performance. Others prefer hybrids, blending a baseline fee for stability with variable payments linked to measurable outcomes. Bonuses may also apply when targets are exceeded. But the point for directors is that these structures reduce volatility, align incentives across the value chain, and build accountability into the commercial relationship.
Investor perspective
For investors on the board, outcomes-based pricing is particularly significant. Traditional procurement makes it difficult to distinguish between suppliers that promise value and those that deliver it. Outcomes-based contracts, by contrast, tie supplier revenues directly to measurable performance.
The implications for valuation are considerable. Businesses adopting these models demonstrate lower operational risk, greater predictability of returns, and tighter alignment between costs and performance. Investors also see governance benefits: boards that insist on proof rather than persuasion display a culture of accountability and transparency. Qualities that usually command a premium in the market.
Equally, investors will probe risks. Can outcomes be measured fairly? Are suppliers strong enough to shoulder performance risk? Is the governance framework robust? For investors, outcomes-based pricing is attractive not because it removes uncertainty, but because it makes risk explicit, measurable, and contractually shared.
Three implementation challenges
While the case for outcomes-based pricing is strong, universal adoption is being held back by execution concerns. Boards want assurance that measurement is watertight, procurement processes can adapt, suppliers are financially resilient, and investors will understand the reporting impact. Until these conditions are met, hesitation will outweigh the logic.
Boards that want the benefits must focus on three execution challenges.
First, measurement discipline. Outcomes can only be priced if baselines are robust and metrics are agreed upfront. Boards should insist that management invest in credible data capture before any contract is signed. Without this, disputes are inevitable.
Second, cultural alignment. Procurement teams are used to controlling upfront spend, not governing performance-linked partnerships. Finance, operations, and sustainability leaders must work to the same metrics. Boards need to test whether management is ready for this shift.
Third, supplier resilience. Vendors must have the financial strength and technical confidence to shoulder outcome risk. Boards should probe whether suppliers can sustain delivery over the contract life, not just at launch.
Ultimately, outcomes-based pricing demands more than a new contract structure. It requires trust, transparency, and strong governance from both sides. Boards that treat these as strategic issues, not operational details, are the ones most likely to see success.
Automated industrial optimisation as the enabler
What makes outcomes-based pricing credible today is Automated Industrial Optimisation (AIO). AI-driven analytics, predictive algorithms, and real-time monitoring continuously tune plants and assets for peak efficiency. What once needed painstaking human oversight now happens automatically, second by second.
For boards, this transforms optimisation from a technical upgrade into a governance tool. AIO creates an independent, auditable record of performance improvement. Evidence that regulators, investors, and lenders can trust. Verified reductions in carbon and energy use can also unlock preferential financing, improve sustainability ratings, and reduce the cost of capital. The data generated by AIO is as valuable in the boardroom as it is on the factory floor.
The results are proven. Firms adopting predictive optimisation achieve up to 18% reductions in energy use, 25-50% drops in downtime, and 18-25% maintenance savings, with most achieving payback in under twelve months [2,3]. The U.S. Department of Energy reports predictive maintenance alone delivers a tenfold return on investment, cutting maintenance costs by 25-30%, reducing breakdowns by up to 75%, and lowering unplanned downtime by 35-45% [4]. With AIO, these gains are not aspirational. They are repeatable, auditable, and sustained.
Boards often underestimate the governance value of AIO. It is too often seen as an operational tool, useful for cutting costs, extending asset life, or reducing energy use. But the real value lies in its ability to generate an independent, auditable record of performance improvement.
This record does more than prove efficiency; it opens access to preferential financing, strengthens sustainability reporting, and underpins outcome-linked contracts. Boards that treat optimisation as a strategic governance asset will not only run more efficiently but also strengthen investor confidence and create financial flexibility their competitors lack.
References
[1] IIoT World. (2025). Moving from Reactive to Predictive: How IoT-Enabled Maintenance Drives Efficiency and Cost Savings
[2] Deloitte UK. (2024). Digital Transformation in Industrial Manufacturing: Enhancing Operational Efficiency
[3] McKinsey & Company. (2024). The Future of Outcome-Linked Pricing in Industrial Operations
[4] U.S. Department of Energy. (2023). Operations and Maintenance Best Practices: A Guide to Achieving Operational Efficiency
[5] International Energy Agency. (2025). Gaining an Edge: Efficiency as a competitive Advantage
[6] Rolls-Royce. (n.d.). Power by the Hour®
