On-demand Features: Opportunities and Challenges of Fractional as-a Service Business Models

As a service innovation in the sharing economy, on-demand features (ODFs) allow customers to temporarily
access additional features of a product they already own in return for a fee. Using ODFs, manufacturers can infuse
existing product-centric business models with sharing economy and servitization principles, in order to generate
recurring revenues. This article conceptualizes the novel phenomenon and delineates it from other concepts.
Moreover, based on two experimental studies and drawing from fairness theory, first evidence is provided for
how consumers react to key characteristics of ODFs, namely their tangibility and pricing structure. While
intangible, software-based ODFs appear to find acceptance, consumers perceive on-demand access to tangible,
hardware-based features as unfair, which explains their reduced purchase intent. Moreover, fairness perceptions
and behavioral intentions are more positive towards ODFs that offer flat rate pricing compared to those that
employ a pay-per-use pricing structure.