3 ms·

Isn't owning typically cheaper than renting? Anyways, it makes no sense that everyone on my block owns their own lawnmower, and yet here we are.

eru 12y ago
> Isn't owning typically cheaper than renting? Depends how you account for all factors. Owning usually comes with some hassle and risk. Renting means you pay someone else to discharge those duties. Another factor is the cost of capital for you vs the company that would rent to you. Having your own lawnmower probably has something to do with transaction costs. Ie it's a hassle to coordinate among people.
aetherson 12y ago
Renting a property or object that you are the sole user of is typically more expensive than owning. Renting a property or object that you are one of many users of is typically less expensive than owning. For instance, you don't imagine that renting one of those steam-carpet cleaners from the grocery store once every year or two is more expensive than owning one, right? (Renting is more expensive than purely your share of the use -- that is, if the steam cleaner gets rented by 100 people in a year, you expect to pay more than 1% of the yearly total cost of ownership of the cleaner). So the concept is that say you effectively use maybe 1/5th to 1/3rd of a car's capacity in a ride-for-hire situation, and so you pay say 25%-40% of the total cost of ownership, allowing a reasonable profit margin for the owner. (Or you use much less, but in that case you probably were never going to own a car).
- millstone 12y ago
  This doesn't seem quite right - if I own a car and use only 1/3rd of its capacity, I generally expect it to last 3x as long, so the unused capacity costs me nothing. Even your annual steam cleaner example will favor the purchaser over the renter, given enough time. So the difference between renting and owning must come down to the cost of unused capacity, which means the fixed costs. Where those fixed costs are high, like a parking space in SF, you want to amortize them by maximizing utilization, which means sharing cars. But where those fixed costs are low, like parking in my driveway, unused capacity may be so cheap that owning costs less than renting, even if the car sits idle most of the time.
  - aetherson 12y ago
    Cars degrade in value pretty strongly based on age, not just mileage. For example, a 2009 Toyota Camry with 5,000 miles on it, base 4-Door sedan, in excellent condition, shows a Kelley Blue Book price of about $13k (in my zip). It would've been about $18k new. But your point is taken, a great deal of the equity burn on a car is mileage-related. (Especially when you consider that if there are three users of a rented driverless car, it drives more than 3x the distance than would three separate owned vehicles for the users -- it must, after all, shuttle itself between users.)

eru 12y ago

> Isn't owning typically cheaper than renting? Depends how you account for all factors. Owning usually comes with some hassle and risk. Renting means you pay someone else to discharge those duties. Another factor is the cost of capital for you vs the company that would rent to you. Having your own lawnmower probably has something to do with transaction costs. Ie it's a hassle to coordinate among people.

aetherson 12y ago

Renting a property or object that you are the sole user of is typically more expensive than owning. Renting a property or object that you are one of many users of is typically less expensive than owning. For instance, you don't imagine that renting one of those steam-carpet cleaners from the grocery store once every year or two is more expensive than owning one, right? (Renting is more expensive than purely your share of the use -- that is, if the steam cleaner gets rented by 100 people in a year, you expect to pay more than 1% of the yearly total cost of ownership of the cleaner). So the concept is that say you effectively use maybe 1/5th to 1/3rd of a car's capacity in a ride-for-hire situation, and so you pay say 25%-40% of the total cost of ownership, allowing a reasonable profit margin for the owner. (Or you use much less, but in that case you probably were never going to own a car).

millstone 12y ago
This doesn't seem quite right - if I own a car and use only 1/3rd of its capacity, I generally expect it to last 3x as long, so the unused capacity costs me nothing. Even your annual steam cleaner example will favor the purchaser over the renter, given enough time. So the difference between renting and owning must come down to the cost of unused capacity, which means the fixed costs. Where those fixed costs are high, like a parking space in SF, you want to amortize them by maximizing utilization, which means sharing cars. But where those fixed costs are low, like parking in my driveway, unused capacity may be so cheap that owning costs less than renting, even if the car sits idle most of the time.
- aetherson 12y ago
  Cars degrade in value pretty strongly based on age, not just mileage. For example, a 2009 Toyota Camry with 5,000 miles on it, base 4-Door sedan, in excellent condition, shows a Kelley Blue Book price of about $13k (in my zip). It would've been about $18k new. But your point is taken, a great deal of the equity burn on a car is mileage-related. (Especially when you consider that if there are three users of a rented driverless car, it drives more than 3x the distance than would three separate owned vehicles for the users -- it must, after all, shuttle itself between users.)