Smart Product-Service Systems (Smart PSSs) integrate smart products and e-services into single solutions. Smart products make use of information and communication technology (ICT) to collect, process and produce information, while e-services are web portals, apps and means alike, which facilitate the communication between service providers and consumers. Smart PSSs are relatively novel in the market but their presence and relevance for consumers is increasing. However, there is limited available information that can help designers be prepared for this new task of integrating products and services. In this article, we extend this knowledge by outlining seven important characteristics of Smart PSSs: consumer empowerment, individualization of services, community feeling, service involvement, product ownership, individual/shared experience and continuous growth. These characteristics were identified by means of two studies. In Study 1, individual in-depth interviews with 16 industrial designers were conducted. During the interviews, participants were asked to analyze 29 commercially available Smart and non-smart PSSs, and to classify them according to their perceived similarities. In Study 2, stakeholder checks were conducted by means of 10 in-depth interviews with professionally experienced designers of Smart PSSs. In this paper, we exemplify the ways in which these characteristics are being implemented, we discuss the potential value of Smart PSSs both for consumers and companies, and we discuss the challenges designers are likely to face when designing this type of offerings.