• MARKET REPORT SPECIAL TOPIC •
Severe Service Valves- An Important Revenue Source
AI, smart tech, and VAR metrics provide suppliers with the leverage to turn service and support into promising revenue streams.
• By Robert McIlvaine- CEO – McIlvaine Company
The severe service valve market exceeds $ 10 billion per year and is growing at a rate faster than the general valve market. The repair market, too, is quite large. Over the life of a severe service valve, repair and support revenues can be three times the initial price.
The performance of these valves is required to be closely monitored, and adjustments are made as needed. Oversight and service, which is traditionally undertaken by the manufacturer, are now more commonly being transferred to third parties, including valve suppliers.
Condition and performance monitoring systems continually alert the operator of changes that need to be made. Expert service engineers can be involved virtually in any of the operations to analyze and repair valves at sites thousands of miles away.
The valve service market is quite large. Over the lifecycle of a severe service valve, repair and support revenues can be three times the initial price.
With AI, analytical tools are now being employed and proving to be the most useful. If a valve manufacturer has a site capable of producing 6,000 sixinch severe service valves per year, with the list price being $ 5,000 a piece, the annual list price revenue for the manufacturer is $ 30 million.
There is a new tool called Volume Adjusted Revenue( VAR), which in this case would be $ 30 million annually. In some hypothetical cases, due to discounts, the actual projected revenue is $ 27 million. However, this is the price for the distributor who also takes a cut of usually 10 %. So, the revenues from the distributor are $ 24 million per year.
The big players in the valve industry and investment firms are buying service companies. So, actual reported revenues by the valve manufacture jump back to $ 27 million and are 90 % of VAR.
With smart technology and automation, manufacturers can capture a large percentage of the support revenue. The end result is the valve supplier can generate revenues several times the VAR by including all the smart technology opportunities.
Severe service valves require a great deal of knowledge on the part of the valve suppliers. This also ensures higher Earnings Before Interest,
Valve Revenues with Support Revenues
* $ = Millions
Initial Purchase
Support Yr 1
Support Yr 2
Support Yr 3
Support Yr 4
Support Yr 5
Support Yr 6
Support Yr 7
Support Yr 8 |
Support Yr 9 |
Support Yr 10 |
TOTAL |
|
|
|
REVENUE |
Purchase Yr 1 $ 30 $ 6 $ 36 Purchase Yr 2 $ 30 $ 6 $ 6 $ 42 Purchase Yr 3 $ 30 $ 6 $ 6 $ 6 $ 48 Purchase Yr 4 $ 30 $ 6 $ 6 $ 6 $ 6 $ 54 Purchase Yr 5 $ 30 $ 6 $ 6 $ 6 $ 6 $ 6 $ 60 Purchase Yr 6 $ 30 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 66 Purchase Yr 7 $ 30 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 72 Purchase Yr 8 $ 30 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 78 Purchase Yr 9 $ 30 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 84 Purchase Yr 10 $ 30 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 6 $ 90
10 Valve World Americas | November 2025 | www. valve-world-americas. com