3 ms·

The problem is that dividing owning the capital (of the machines) and performing the service doesn’t really make sense in this circumstance. This isn’t a situat

The problem is that dividing owning the capital (of the machines) and performing the service doesn’t really make sense in this circumstance. This isn’t a situation where you’re creating efficiency by specializing. What does the servicing company need you for? If all you do is own the machines, they can do that themselves without complicating their business at all.

ctack 6y ago
You’re sourcing the location.
- smogcutter 6y ago
  That works if you own the location, otherwise it isn’t anything the servicing company couldn’t do just as well. Plus they’re more likely to have relationships with property managers, office managers, etc. Double plus, your costs would include the servicing company’s profit margin. So by definition their costs are lower, which gives them room to offer location owners a better deal than you can.
compsciphd 6y ago
there's no capital risk for the servicing company.
- smogcutter 6y ago
  I get that there’s some value-add on the owner’s part by taking on the capital risk, but in this case it seems like it’s mostly an illusion. After all, the servicing company’s business (assuming they don’t own any of their own machines) is entirely dependent on having access to other people’s machines. Your risk might as well be theirs, plus they don’t have assets to leverage. I think the difference here vs something like say owning a building and hiring a property management company is the negligible value of the machine compared to operating costs. The capital portion is such a small piece of the puzzle that just owning the capital and contracting out everything else isn’t going to be competitive. I think this is borne out by TFA, which doesn’t describe any owners working the way that parent suggests.

3 ms·

The problem is that dividing owning the capital (of the machines) and performing the service doesn’t really make sense in this circumstance. This isn’t a situat

by smogcutter 6y ago

ctack 6y ago
You’re sourcing the location.
- smogcutter 6y ago
  That works if you own the location, otherwise it isn’t anything the servicing company couldn’t do just as well. Plus they’re more likely to have relationships with property managers, office managers, etc. Double plus, your costs would include the servicing company’s profit margin. So by definition their costs are lower, which gives them room to offer location owners a better deal than you can.
compsciphd 6y ago
there's no capital risk for the servicing company.
- smogcutter 6y ago
  I get that there’s some value-add on the owner’s part by taking on the capital risk, but in this case it seems like it’s mostly an illusion. After all, the servicing company’s business (assuming they don’t own any of their own machines) is entirely dependent on having access to other people’s machines. Your risk might as well be theirs, plus they don’t have assets to leverage. I think the difference here vs something like say owning a building and hiring a property management company is the negligible value of the machine compared to operating costs. The capital portion is such a small piece of the puzzle that just owning the capital and contracting out everything else isn’t going to be competitive. I think this is borne out by TFA, which doesn’t describe any owners working the way that parent suggests.