4 ms·

That's the thing tho. Make it cheap enough to not be more expensive. Make it a quality product so there's little maintenance cost. Don't replace it every 10year

by pbnjay 6y ago

That's the thing tho. Make it cheap enough to not be more expensive. Make it a quality product so there's little maintenance cost. Don't replace it every 10years and there's less overheard across the board.

bawolff 6y ago
> Make it cheap enough to not be more expensive Are you expecting it to be cheaper to rent than buy in the long term? That's pretty impossible since the person you are renting from has to buy at least 1 and provide additional services. It doesnt matter how cheap you make it; x<x+1 for all x no matter how small x is.
- hakfoo 6y ago
  I think there's a few possible angles here. * Cheap and Expensive as a subjective thing. Paying a $10 per month fridge bill in perpetuity may feel less uncomfortable than the sudden expense of a $700 fridge every 8 years, even though the latter is cheaper. * A service can take some of the bad-decision factors out of it. Many appliances are panic-bought when the previous unit fails, rather than waiting for the price to bottom out. A predictable lease price and service organization avoids that risk. It might not be as cheap as the cheapest unit on the best day, but it's competitive with a mid-line product. * The rental service product could benefit from economies of scale and standardization that direct-to-consumer brands don't offer. Whirlpool sells a few dozen different 25-cubic-foot fridges, with constant model churn. Any given model may only have a total run of a couple thousand units. Fridge-as-a-service may only offer one, and offer it for 10 years, allowing slower amortization of engineering costs and less expensive service/spares management. * A structured end-of-life program could bring down the cost of leasing. After five years, they swap out the old fridge, but then they can refurbish it and either return it to the lease pool or resell it in a less ad-hoc manner than listing individual units on Craigslist.
  - macspoofing 6y ago
    This model does not work very well for consumers. It really does raise the prices of goods and drains consumer income and forces an opportunity cost of not investing in retirement, and not paying down mortgage faster (for example). It's almost always better for consumers to lay out the capital up-front and own the item. For businesses, the calculation is different. Maintaining appliances, or cars, or coffee machines, means redirecting resources (that you're already paying for) away from building widgets to something that isn't your core competency. Plus you get a bit of a discount because you're working with pre-tax capital. Again, it's why car leases make sense for business, but are a terrible deal for consumers.
    - pbnjay 6y ago
      Paying $10-20/mo for a fridge is not going to significantly impact retirement savings over the long term. The alternative is putting that little bit extra into savings every month to buy the next fridge when it breaks. It balances out.
      - bawolff 6y ago
        But your fridge is not the only thing you own. Presumably you would do this for all your appliances. Keep in mind, that $20 a month for 40 years at 4% interest is $23000. If you add in more appliances this scheme can add up to be surprisingly expensive.
      - macspoofing 6y ago
        >Paying $10-20/mo for a fridge is not going to significantly impact retirement savings over the long term. First, your numbers are way too low. Nobody is going to lease you, for example, a $2500 fridge where the capital cost will take 20 years to be paid back, especially since cost of service, depreciation of asset, and profit, needs to be priced in as well. You'd be looking at something on the order of $50/mo. The opportunity cost of putting $50/mo into a tax sheltered investment account (with a reasonable 6% return) is around $15,000 after 15 years. In other words, you paid $15k for a fridge that retails for $2500. > The alternative is putting that little bit extra into savings every month to buy the next fridge when it breaks. It balances out. Huh? If you're overpaying for an appliance, you don't really 'fix that' by saving more.
  - pbnjay 6y ago
    Exactly! It's what I see of the spacex model - if you standardize one model and do it well, you find the weak points and either reinforce them or improve them.
ksec 6y ago
The problem is consumer electronics break way more often than business not because they are not designed for heavy duty, but because some consumers are likely to misuse / misplace / misconfiged it. Since the price of your monthly payment is ultimately determined by the percentage of failure. This will drive up the total price, and hence it wont be cheap. I think it will work well for Rental Apartments with property makers where large quantities are purchased and with design / placement standardise. And those price are included in rent or management fees.

by pbnjay 6y ago

bawolff 6y ago

> Make it cheap enough to not be more expensive Are you expecting it to be cheaper to rent than buy in the long term? That's pretty impossible since the person you are renting from has to buy at least 1 and provide additional services. It doesnt matter how cheap you make it; x<x+1 for all x no matter how small x is.

hakfoo 6y ago
I think there's a few possible angles here. * Cheap and Expensive as a subjective thing. Paying a $10 per month fridge bill in perpetuity may feel less uncomfortable than the sudden expense of a $700 fridge every 8 years, even though the latter is cheaper. * A service can take some of the bad-decision factors out of it. Many appliances are panic-bought when the previous unit fails, rather than waiting for the price to bottom out. A predictable lease price and service organization avoids that risk. It might not be as cheap as the cheapest unit on the best day, but it's competitive with a mid-line product. * The rental service product could benefit from economies of scale and standardization that direct-to-consumer brands don't offer. Whirlpool sells a few dozen different 25-cubic-foot fridges, with constant model churn. Any given model may only have a total run of a couple thousand units. Fridge-as-a-service may only offer one, and offer it for 10 years, allowing slower amortization of engineering costs and less expensive service/spares management. * A structured end-of-life program could bring down the cost of leasing. After five years, they swap out the old fridge, but then they can refurbish it and either return it to the lease pool or resell it in a less ad-hoc manner than listing individual units on Craigslist.
- macspoofing 6y ago
  This model does not work very well for consumers. It really does raise the prices of goods and drains consumer income and forces an opportunity cost of not investing in retirement, and not paying down mortgage faster (for example). It's almost always better for consumers to lay out the capital up-front and own the item. For businesses, the calculation is different. Maintaining appliances, or cars, or coffee machines, means redirecting resources (that you're already paying for) away from building widgets to something that isn't your core competency. Plus you get a bit of a discount because you're working with pre-tax capital. Again, it's why car leases make sense for business, but are a terrible deal for consumers.
  - pbnjay 6y ago
    Paying $10-20/mo for a fridge is not going to significantly impact retirement savings over the long term. The alternative is putting that little bit extra into savings every month to buy the next fridge when it breaks. It balances out.
    - bawolff 6y ago
      But your fridge is not the only thing you own. Presumably you would do this for all your appliances. Keep in mind, that $20 a month for 40 years at 4% interest is $23000. If you add in more appliances this scheme can add up to be surprisingly expensive.
    - macspoofing 6y ago
      >Paying $10-20/mo for a fridge is not going to significantly impact retirement savings over the long term. First, your numbers are way too low. Nobody is going to lease you, for example, a $2500 fridge where the capital cost will take 20 years to be paid back, especially since cost of service, depreciation of asset, and profit, needs to be priced in as well. You'd be looking at something on the order of $50/mo. The opportunity cost of putting $50/mo into a tax sheltered investment account (with a reasonable 6% return) is around $15,000 after 15 years. In other words, you paid $15k for a fridge that retails for $2500. > The alternative is putting that little bit extra into savings every month to buy the next fridge when it breaks. It balances out. Huh? If you're overpaying for an appliance, you don't really 'fix that' by saving more.
- pbnjay 6y ago
  Exactly! It's what I see of the spacex model - if you standardize one model and do it well, you find the weak points and either reinforce them or improve them.

ksec 6y ago

The problem is consumer electronics break way more often than business not because they are not designed for heavy duty, but because some consumers are likely to misuse / misplace / misconfiged it. Since the price of your monthly payment is ultimately determined by the percentage of failure. This will drive up the total price, and hence it wont be cheap. I think it will work well for Rental Apartments with property makers where large quantities are purchased and with design / placement standardise. And those price are included in rent or management fees.