Blog · Wallet share and penetration · Industrial manufacturers
The complete aftermarket attach calculation on five customers, small enough to check by hand: installed units by model and age band from the register, the norm per unit per year from the two customers with every unit under contract, expected aftermarket per customer, actual parts and service revenue from the ledger, attach and gap, the register check against units shipped that finds a customer whose expected figure is understated, and the identity that actual sums to the ledger, so a reader can reproduce every figure and then run it on their own register and ledger.
Aftermarket attach is units times a norm against a ledger figure, and on five customers it fits on a page, including the register gap. This page works the norm, expected, actual, attach, the register check and the identity.
Model M-1. Age bands: years 1 to 2; years 3 to 8.
| Customer | Units, years 1 to 2 | Units, years 3 to 8 | All under contract? | Parts and service revenue, trailing year | Units shipped in the model's years |
|---|---|---|---|---|---|
| A | 30 | 182 | No | $400,000 | 212 |
| B | 10 | 78 | No | $720,000 | 88 |
| C | 8 | 32 | No | $95,000 | 55 |
| D | 20 | 60 | Yes | $580,000 | 80 |
| E | 5 | 45 | Yes | $415,000 | 50 |
| Total | $2,210,000 |
Ledger parts and service revenue for M-1 across the five: $2,210,000. Identity holds.
D: 20 young units, 60 prime units, $580,000. E: 5 young, 45 prime, $415,000. Solving for the two bands as a pair from the two fully-contracted customers, and stated as medians on a real base:
Norm, years 1 to 2: $2,000 per unit per year Norm, years 3 to 8: $9,000 per unit per year
Check: D = 20 × 2,000 + 60 × 9,000 = 40,000 + 540,000 = $580,000. E = 5 × 2,000 + 45 × 9,000 = 10,000 + 405,000 = $415,000. Both at 100 percent attach by construction; they are the norm.
| Customer | Expected | Actual | Attach | Gap |
|---|---|---|---|---|
| A | 30 × 2,000 + 182 × 9,000 = $1,698,000 | $400,000 | 24% | $1,298,000 |
| B | 10 × 2,000 + 78 × 9,000 = $722,000 | $720,000 | 100% | $2,000 |
| C | 8 × 2,000 + 32 × 9,000 = $304,000 | $95,000 | 31% | $209,000 |
| D | $580,000 | $580,000 | 100% | 0 |
| E | $415,000 | $415,000 | 100% | 0 |
units in the register ≤ units shipped, per model and year
| Customer | Register | Shipped | Gap | Effect |
|---|---|---|---|---|
| A | 212 | 212 | 0 | |
| B | 88 | 88 | 0 | |
| C | 40 | 55 | 15 missing | Expected understated by up to 15 × $9,000 = $135,000; attach nearer 22% than 31% |
| D | 80 | 80 | 0 | |
| E | 50 | 50 | 0 |
C's row carries both: attach 31 percent on the register, about 22 on the shipments, and fifteen units to find.
| Customer | Gap | Reading |
|---|---|---|
| A | $1.3m | 182 prime units on someone else's parts |
| C | $209,000, likely $344,000 | Register gap first; then the gap |
One norm across ages. At $7,400 per unit blended, A's expected reads $1.57m and B looks over-captured at 112 percent.
Register unchecked. C looks like a 31 percent attach; it is a 22 with fifteen units nobody knows about.
Norm from a benchmark. Somebody else's parts intensity; B's 100 percent becomes 80 or 120 for no reason.
Warranty units expected at the prime rate. A's 30 young units add $210,000 of gap that does not exist yet.
The same norms per model and band from every fully-contracted customer, the same expected and actual, the same register check. Covirage runs it on the register, the ledger and the sales ledger every quarter. The aftermarket attach guide covers the measure, and the service contract calendar guide covers what to do with A's units as they leave warranty.
Because a unit under warranty generates almost no aftermarket and a unit in its prime years generates the most. One norm across ages calls young fleets under-captured and old fleets fine. Two bands is the minimum; a real register uses three or four.
At five customers it has to be two; on a real base it is every fully-contracted customer's revenue per unit per band, as a median. The two here, D and E, have every unit under contract, and their revenue per unit is what a unit generates when the OEM has all of it.
Customer C's expected aftermarket. The register has 40 units; the sales ledger shipped 55 to C in the model's years. Fifteen units are missing from the register, expected is understated by their norm, and attach looks better than it is. The row shows both figures.