Manufacturing, autos and logistics
Installed base
The number of a company's machines or systems currently in use at customers.
Last reviewedWhat does Installed base mean?
The installed base is all the units of a company's equipment, such as engines, elevators, turbines or medical scanners, that customers are still using. Each one needs parts, service, software and upgrades for years, so the installed base drives aftermarket revenue. Example: 20,000 machines in use, each bringing in 15,000 a year of parts and service, give 300 million a year of recurring revenue. A company that wins a large share of new equipment sales today builds the installed base that pays for decades, which is why some sell new equipment at thin margins.
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Related terms
- AftermarketParts, service, repairs and upgrades sold after the original equipment.
- Switching costsThe cost or effort for a customer to change supplier.
- CLV (customer lifetime value)The profit a customer is expected to bring over the whole relationship.
- Backlog (order book)The value of orders a company has received but not yet delivered.
- OEM (original equipment manufacturer)In autos and machinery, the company that designs, assembles and brands the final product.
- Tier 1 supplierA supplier that sells complete parts or systems directly to the carmaker.
- Vehicle platformA shared set of engineering underpinnings used for many car models.
- Battery pack costThe cost of an electric vehicle's battery pack, usually quoted per kWh of capacity.