#1076 2000 · Hilti Corporation · Power tools / construction equipment
Hilti stopped selling power tools and guaranteed a working one was always on site
the problem
Construction firms owned tool fleets full of idle, broken or stolen tools that stalled jobs and tied up capital
background
Hilti made premium, expensive power tools, but a construction company that bought them still had to manage the whole downstream problem itself: tracking which tools were where across scattered job sites, repairing or replacing broken ones fast enough to avoid a stalled crew, and absorbing the constant losses to theft that are endemic on construction sites. None of that was Hilti's problem once the sale closed, even though a broken or missing tool cost the contractor far more in lost labor time than the tool itself was worth.
Hilti's own sales team worried that any move away from selling tools outright would cannibalize the company's core revenue, making the idea a genuine internal risk to propose, let alone launch.
what everyone would do
Compete on tool durability, offer a standard warranty and paid repair service, or extend financing to help contractors buy larger fleets outright — the usual ways a premium tool maker defends its price against cheaper competitors.
what they saw
A contractor doesn't want to own tools — it wants a working one on site the moment it's needed, so Hilti sold the guarantee, not the object, making tool failure Hilti's cost, not the contractor's.
the move
In 2000 Hilti launched Fleet Management: for a fixed monthly fee per tool, Hilti provides a company's entire fleet, replaces every tool on a set schedule (12 to 48 months) with the latest model, repairs any tool that breaks and issues a free loaner in the meantime, and covers theft — the contractor never owns a single tool and simply pays for continuous, reliable access to a working one.
why it works
Bundling replacement, repair, loaner coverage and theft protection into one fee removes every reason a contractor has to think about tool ownership at all, converting a scattered set of operational headaches (which Hilti was never paid for) into a single line-item Hilti is paid to solve directly. Because Hilti now bears the cost of breakage and theft, it's motivated to build even more durable tools and manage its own fleet efficiently — the opposite of a sales incentive, which profits from tools wearing out and needing replacement purchases.
the payoff
By 2015 Hilti managed 1.5 million tools under Fleet Management in 40 countries, worth over 1.2 billion Swiss francs.
where it breaks
It requires tool usage predictable enough to price a flat monthly fee against, and a customer base large or professional enough that the guaranteed-availability premium is worth more to them than the flexibility and lower long-run cost of owning tools outright — for very small or occasional users, straightforward ownership or simple rental can still be cheaper.
what came after
Hilti's own chief technology officer called it 'the most important innovation in Hilti's history,' and the model became a landmark Harvard Business School case study on shifting a manufacturer from selling products to selling business solutions.
references
- [1]Hilti Fleet Management (A): Turning a Successful Business Model on Its HeadHarvard Business School, 2016hbs.edu
- [2]Tool Equipment Leasing with Hilti Fleet ManagementHilti GB, 2024hilti.co.uk