Product Service Systems (PSSs) introduce new business models for enterprises to promote tangible products along with intangible functions or services, thereby incentivising product sustainability with profitability, economic stability and customer satisfaction. However, the unique characteristics of a PSS challenge obsolete product development processes and demand a dynamic change in the complex building blocks of the underlying design and in the development infrastructure to attain high quality services. This implies a need for radical change in the team structure and the team collaboration model, in the organizational structure, technical infrastructure and in the complex process models by taking the complete product life cycle into consideration. This paper, firstly, identifies PSS unique features that challenge the capabilities of existing frameworks to design a standard PSS. In response, new business models are proposed to address the challenges relating to actors’ involvement, technology provision, organizational needs and process workflow modelling. Secondly, these proposed business models are combined into one comprehensive collaborative PSS design and development methodology by modifying existing modelling techniques. An assessment framework based on Goal-Question-Metrics approach and McCall Quality Model is successfully used to evaluate the PSS development methodology and subsequently, the developed framework through a use-case study analysis.