# Robotics as a Service: Renting Robots Instead of Buying Them

Author: Marin Niehues, Niehues Consulting · Published: 2024-05-09 · AI Adoption & Operations
Source: https://www.niehuesconsulting.de/en/blog/robotics-as-a-service-rent-or-buy/

Robotics as a Service means a provider supplies a robot together with maintenance and software for a recurring fee instead of selling it. The model pays off when utilisation is still uncertain, the technology ages quickly or investment funds are tight. With a stable process and high utilisation over many years, buying is usually cheaper. The decision therefore rests on a calculation over the whole service life and on the question of who is responsible for operations.

This article explains the model, works through an example comparing purchase and rental, and lists the questions to settle before you sign a contract. It provides an overview and does not constitute legal advice. Questions on contract drafting and accounting belong with your legal and tax advisers.

**The rental form shifts cost and risk; it does not remove them. The provider takes on part of the technology and utilisation risk and charges you for it through the fee. Whether that is worthwhile is decided by the length of use.**

## What is Robotics as a Service?

Robotics as a Service, or RaaS, is a business model in which companies pay for robot capability monthly or by use instead of buying the equipment. The provider supplies the robot, and maintenance and software are usually included. Billing is, depending on the provider, a flat monthly amount or by use, for example per operating hour.

The model comes from the software industry, where "as a Service" describes the shift from buying a licence to subscribing. In robotics it reaches first those applications where the hardware is standardised: automated guided vehicles in warehouses and mobile robots for order picking. The International Federation of Robotics (IFR) reported around 158,000 professional service robots sold in 2022, an increase of 48 per cent. For industrial robots, around 553,000 units were newly installed worldwide in 2022, of which around 25,600 in Germany. Anyone entering this growing market has to plan operation and maintenance from the start, and this is exactly where rental models come in.

## How do buying, leasing and renting differ?

When you buy, the robot and the risk are yours; with leasing you finance the purchase over a fixed term; with RaaS you pay for the service including operation. The three models solve different problems.

**Buying, leasing and RaaS compared**
Criterion | Buying | Leasing | RaaS | With Niehues Consulting
Initial investment | High, one-off | Low, monthly instalment | Low, monthly fee | Business case with real values before the decision
Maintenance and software | Own responsibility or a service contract | Mostly own responsibility | Included in the price | Responsibility for operations settled before start
Technology risk | With the operator | With the operator | Partly with the provider | Risks named and assessed per model
Flexibility when things change | Low, the robot is tied up | Low to medium, depending on term | Medium to high, depending on contract | Exit and switching questions answered in advance
Cost over many years | Usually lowest at high utilisation | Between buying and renting | Usually highest over a long term | Comparison over the whole service life
Own know-how | Gets built up | Gets built up | Partly stays with the provider | Introduction and enablement of users planned

On the balance sheet: under IFRS 16, lessees reporting under international standards in principle show leases on the balance sheet, so the earlier advantage of keeping them off the books largely falls away for them. How a specific contract is treated under HGB or IFRS is a question for your tax adviser.

## What does a robot cost compared with renting?

Buying a robot means paying for the whole installation of arm, gripper, safety technology and integration including commissioning, and that total is what you compare with the rent. In many applications the robot arm is only part of the total investment. The article on [planning robot cells](/en/blog/planning-robot-cells-investment-payback-space/) describes how the items of an installation add up.

An illustrative calculation shows the logic. A robot cell costs 150,000 euros to buy, including integration. Maintenance and software cost 8 per cent of the investment a year, so 12,000 euros. As rent, a provider charges 3,200 euros a month including maintenance and updates. The values are assumptions for the calculation, not market prices. Ranges for your application come from provider quotes, and you record them in the business case.

**Example calculation, buying against renting (illustrative)**
150,000 euros | Purchase price of the cell including integration
12,000 euros | Maintenance and software per year when buying
3,200 euros | Monthly rental fee including maintenance, 38,400 euros a year

With three years of use, buying costs 150,000 plus 36,000 euros of maintenance, so 186,000 euros. If the company then sells the cell for 60,000 euros, 126,000 euros remain. Renting costs 115,200 euros over the same period and comes out lower. With eight years of use and no residual value, buying costs 246,000 euros against 307,200 euros of rent, and buying is ahead. Without residual value and without cost of capital, the break-even lies at around 5.7 years, because the rent costs 26,400 euros a year more than the maintenance. Cost of capital shifts the break-even in favour of renting, a high residual value in favour of buying.

## When does Robotics as a Service pay off?

Robotics as a Service pays off when at least two of the following conditions apply: utilisation is still uncertain, the technology will foreseeably age within a few years, operations lack expertise for maintenance and programming, or investment funds are committed elsewhere. In a pilot project that is meant to prove whether a process can be automated, the advantage of renting is the option to exit after the trial.

Buying pays off when the process is stable, the cell will run in two shifts for six years or longer, and the company can handle maintenance or buy it in. That typically holds for series production with fixed products. For warehousing and order picking with changing peaks, renting offers more room. Which applications are economical for mid-sized companies today is shown in the article on [robotics in mid-sized companies](/en/blog/robotics-mid-sized-companies-economic-case/), and for driverless systems in the article on [AGVs and AMRs in the warehouse](/en/blog/agv-amr-warehouse-business-case/).

## Which questions should you settle before signing?

Before signing you settle eight questions that decide later benefit and cost.

1. Minimum term: how long does the contract bind you, and what does early termination cost?
2. Scope of service: what is included in the fee, and what costs extra, for example changeover to new products?
3. Availability: what availability does the provider guarantee, and how does it respond to a failure?
4. Data: who owns the data the robot generates, and where is it stored?
5. Price adjustment: how does the fee develop over the term?
6. Exit: who dismantles the installation, and what happens to integration and safety equipment?
7. Operations: who runs the system day to day, who responds to faults, who plans product and process changes?
8. Scaling: on what terms can further units be added?

**Checklist: is your process suited to RaaS?**
- The process is described and repeatable, and its exceptions are known.
- Utilisation has been estimated, and there is a scenario for low usage.
- The business unit names a person responsible for operations.
- The installation has been checked for layout and safety, and for interfaces to your systems.
- An exit scenario has been agreed.

## Who is responsible for operations under a rental model?

You are responsible for operations, even when the provider supplies maintenance and technology. The provider makes the robot available, but whether staff use it, who reports faults and how the surrounding workflow changes is decided by the business unit. This is exactly where many introductions fail: the installation runs, but the process around it has not been adapted. How robots and people work together day to day is shown in the article on [cobots](/en/blog/cobots-collaborative-robots/).

Steering is a further question. With several providers and sites, a portfolio of different rental contracts quickly builds up with no shared view of benefit and cost. One metric per installation, such as utilisation and cost per completed unit, makes the contracts comparable and shows which should be renewed.

## Introducing robotics with Niehues Consulting

[Niehues Consulting](/en/) is a consultancy for AI management and organisation design from a delivery perspective, based in Düsseldorf. Founder Marin Niehues brings new technology into operations, in projects ranging from VC-funded scale-ups to DAX 40 corporations and in more than 20 countries on six continents. Niehues Consulting is not a robotics integrator and does not supply installations. The work comes before and after: in the business case and in the introduction, that is, in the question of whether buying or renting pays off and how an installation lands in the day-to-day work of the business units.

The approach follows the Niehues Delivery Model with its three phases. Three of its test questions matter for the choice between buying and renting: Is the business case confirmed with real values? Who is responsible for operations from day one? Which metric shows after 90 days that the solution has landed? You start with a free initial consultation of 30 minutes, which you can book via the [contact form](/en/#kontakt). The scope and terms of an engagement are discussed in the free initial consultation.

**Conclusion**
Robotics as a Service moves cost and risk towards the provider and buys flexibility. That pays off with uncertain utilisation, quickly ageing technology and missing operating know-how. With a stable process and long use, buying is usually cheaper. Calculate over the whole service life, and settle who is responsible for operations before you sign.

**Sources**
- International Federation of Robotics: World Robotics 2023, Industrial Robots, statistical report, 2023
- International Federation of Robotics: World Robotics 2023, Service Robots, statistical report, 2023
- IFRS Foundation: IFRS 16 Leases, accounting standard, 2016

## Frequently asked questions

### What does Robotics as a Service mean?

Robotics as a Service means you use a robot, including maintenance and software, for a recurring fee instead of buying it. Billing is monthly, per operating hour or per unit of output. The provider remains the owner of the hardware.

### How much does Robotics as a Service cost?

The fee depends on the application, the term and the scope of service, and only quotes for your own application give reliable figures. A worked example in this article shows the logic with assumed values. For your decision, compare total cost over the service life with the cost of buying.

### Is renting a robot cheaper than buying?

Renting is cheaper for short use and uncertain utilisation, and buying for long use and a stable process. In this article's example the break-even without residual value lies at around 5.7 years. Your own figure depends on the fee and the residual value.

### Which robots are available for rent?

Rental models exist mainly for standardised applications, such as automated guided vehicles, mobile picking robots and palletising systems. The more individual the installation, the rarer the rental, because the provider cannot pass it on to other customers.

### What are the risks of Robotics as a Service?

The risks lie in long minimum terms, an unclear scope of service and dependence on the provider. Settle availability commitments and price adjustment as well as data rights and exit before signing. A further risk is that no one in the company is made responsible for operations.

### What is the difference between leasing and RaaS?

With leasing you finance the purchase of a robot, while with RaaS you pay for the service including maintenance and software. Leasing generally leaves technology and operating risk with you, and RaaS shares it in part with the provider. The RaaS fee is therefore usually higher.

### When does RaaS make sense for a mid-sized company?

It makes sense with uncertain utilisation, in a pilot project and where maintenance know-how is missing. Mid-sized firms without their own robotics department benefit from the provider taking over maintenance and updates. For series production with fixed products, buying usually pays off.

### How do you prepare a rental contract for robots?

You first describe the process and its utilisation, calculate the business case and then obtain quotes with the same scope of service. After that you settle the eight questions set out in this article. Your legal adviser reviews the contract itself.