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PaperclipPerfector  3d ago (text post)   1821 thread views

Small-Scale Question Sunday for October 13, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

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Nah, I'm suggesting you COULD do that. But there could just as easily be a service that does it for a flat fee anytime you want to update, and perhaps there's also a guarantee to replace anything that breaks as part of the deal.

The point here is, what's the benefit to you from owning your furniture and decor? Why would you argue against someone renting it to you instead? Is it really just about having the 'option' to do what you want and decorate however you like?

Change my furniture any time I want for a flat fee and with a warranty? we already have this, it's called having someone deliver/haul away your furniture and buying a manufacturer's warranty, no renting necessary. People don't usually do this because it isn't really worth it to them. Extended warranties in particular have a real bad reputation afaict.

To put it simply, it's difficult to imagine that a company providing this service can make money while the customers are not losing money over the alternative setup.

Maybe there really are people who change their decor every month, and for those people, yeah this might make sense. But for everyone else, the transactions costs are just too great for this to pencil out I think.

In theory, it reduces complexity a lot. Now the expense to you is collapsed down to a monthly or annual fee which represents the entire expense of using the carpet. And if you want to replace the carpet, you can call up a replacement from the same company. Maybe they even have an app.

Again, how does this pencil out? You basically are marketing a kind of insurance scheme or extended warranty scheme for my carpet, plus I guess the option to swap it out.

We all know that self insurance is the best insurance. Especially when we're talking about something like carpet where there's no catastrophic risk to consider (unlike a car where if I hit someone I can be liable for millions in medical costs), I just don't see a path to profitability for the firm renting out carpets without a price increase for the consumer over the status quo.

Is the option to swap out your carpet important enough for people to make this financially viable? I doubt it, because replacing carpets is pretty expensive and the firm would need to amortize the cost of the guy who swaps his carpet out every week across the entire customer base, even if the median customer changes carpets once a year.

Apparently you can rent fucking clothes these days, so I'm trying to hear the strongest arguments against doing such a thing, if we assume the service that allows you to do so exists.

How is this different from renting a tuxedo for prom, or renting some equipment from the hardware store? There's clearly a place for services that rent you something that you're only going to use once, and clothing for special events seems to be the target market for this list of services.

Change my furniture any time I want for a flat fee and with a warranty? we already have this, it's called having someone deliver/haul away your furniture and buying a manufacturer's warranty, no renting necessary. People don't usually do this because it isn't really worth it to them. Extended warranties in particular have a real bad reputation afaict.

Right.

So the model I'm proposing avoids you needing to pay for the hauling away part, or the repair or the warranty. It would all be folded into the subscription/rental fees, so you only have to worry about paying your monthly cost.

Its a close-to-identical outcome, but you are not the 'owner' of your furniture and decor.

If the cost ends up being somewhat less, then what argument remains for choosing ownership?

I doubt it, because replacing carpets is pretty expensive and the firm would need to amortize the cost of the guy who swaps his carpet out every week across the entire customer base, even if the median customer changes carpets once a year.

Or offer the "swap it out every week" guy some other kind of deal. I think we're hitting a point where companies have extremely creative business models and can use tons of data to identify how to best provide for each customer's personal use habits.

There's clearly a place for services that rent you something that you're only going to use once, and clothing for special events seems to be the target market for this list of services.

Yes.

And if there's a market for renting things you'll only use once. Why not a market for things you'll only use twice? Or 12 times?

People who try to keep up with fashion trends or who prefer to wear new clothing on the regular could probably save TONS of closet space (or trips to the thrift store) by having a service that will rent them clothes on some kind of set time frame.

If the cost ends up being somewhat less, then what argument remains for choosing ownership?

If you're proposing that someone offers a couch subscription service that costs less over the lifetime of the couch than the value of the couch itself, we're talking about some kind of economic paradox. But yeah, if someone's cutting their own throat and offering me a couch rental for less than the value of the couch, I'd probably take them up on it so long as I don't need to care about the damage I'll inevitably do to the couch.

People who try to keep up with fashion trends or who prefer to wear new clothing on the regular could probably save TONS of closet space (or trips to the thrift store) by having a service that will rent them clothes on some kind of set time frame.

Probably, but that's kind of a niche demographic. We're pretty far from the average consumer at this point.

If you're proposing that someone offers a couch subscription service that costs less over the lifetime of the couch than the value of the couch itself, we're talking about some kind of economic paradox.

Well, these companies do in fact exist, explain that to them.

Seems like I would have the option to buy a sofa for about $1000 new or pay $43/month for a year lease, after which point it looks like they sell it used for like $400 used. If I planned on moving after a year, then paying $500 for the sofa rental for the year would cost less than buying the $1000 sofa then selling it for $400 when I move (unless I really thought I could get more for it), as that would cost me $600.00.

I think I can imagine a scenario where I'm not planning on living in a given place for greater than a year, and rather than buy furniture, use it, then try to sell it on facebook marketplace OR pack it up and move it to my new place, I just rent the stuff I want and they arrange for pickup when it is time to move.

And incidentally, if we're living in this "own nothing and be happy" world, it should be pretty easy to pick up and move because you don't need to drag your belongings with you. Better job offer in another town? Drop everything, move into a new rental, rent new furniture, get a new vehicle subscription (don't even need to worry about updating registration!) and move along almost seamlessly. If you want to move to a new town every year, its much easier if you don't have to worry about the cost of moving or liquidating all your existing furniture, to say nothing of the house.

For a type of person who just follows the highest salary or moves about on a whim, surely this is the best arrangement?

Seems like I would have the option to buy a sofa for about $1000 new

And you believe that's a good price? As far as I can tell, rental-purchase prices exist to fool suckers and justify their exorbitant rental rates (and occasionally to dodge laws that set maximum rates based on purchase prices).

I didn't find that exact couch anywhere else, so instead compare the PS5 available for $449.99 from Best Buy to the PS5 available for $766 Cash + $942 lease fees = $1709 = $84.99/month for 18 months. Sure, you could compare buying it for nearly double the market price to leasing it for double that again. Or you could pay less.

People who move on a whim are surely just best renting furnished apartments?

Indeed.

But that sort of person is seemingly becoming more common these days, and it would surely make sense for them to have subscriptions/rentals for everything since that gives them maximum mobility and minimal friction?

Well, these companies do in fact exist, explain that to them.

Do they? Who said that this service charges less than the value of the couch? I strongly suspect that you pay a premium for them to deal with everything for you.

For a type of person who just follows the highest salary or moves about on a whim, surely this is the best arrangement?

Probably, but much like people who replace their entire wardrobe every season, it's far outside the modal behavior.

Would modal behavior start to change if the economics of renting were blatantly better than the economics of owning?

I think that's the thrust of the discussion. In a more mobile world where people DON'T live in the same town for their whole lives, there's value in being able to transfer to a new location with minimal friction.

Likewise, in a world where ownership becomes more and more complex.

T-Mobile, for instance, offers a monthly subscription that guarantees your ability to trade in your old phone for the latest version every two years. Can you actually do the math to figure out whether it is preferable to trade-in and upgrade every two years... WITHOUT knowing how much the new models will cost two years out?

They also offer a plan that is explicitly a lease of a smartphone and lets you change every 30 days.

Smartphones are a complex product, so I can't blame anyone for deciding just to pay a small monthly fee to know for sure they'll be able to get upgraded after 24 months. It does not appear that the majority of cell users take this deal, however, as it seems most just buy the phone outright.

Would modal behavior start to change if the economics of renting were blatantly better than the economics of owning?

Yes, and it's not just the millionaires, but in e.g. the bay area the modal person does not own a house.

There's still other frictions in moving, e.g. losing all your friends, that will continue to discourage moving even for people without mortgages and even if those people rent their furniture.

Can you actually do the math to figure out whether it is preferable to trade-in and upgrade every two years... WITHOUT knowing how much the new models will cost two years out?

It's not much of a leap to assume that the new models will cost about as much as the current models. The base model iPhone has been $799 for a few years now. It doesn't really seem like this plan is worth it (and the math in the post you linked bears it out).

There's still other frictions in moving, e.g. losing all your friends, that will continue to discourage moving even for people without mortgages and even if those people rent their furniture.

There are no subscription models for friends... yet. But there are plenty of ways to stay connected with them across physical distance.

Indeed, maybe in this future we have a fully-realized VR metaverse where as long as your subscription is paid up you can go 'visit' and hang out with friends in an idealized environment as much as you like.

Is this tangibly worse than being 'forced' to live geographically near your friends if you want to spend time with them?

Yes, that is tangibly worse. And that will affect people's decision making for sure. As you indicated in your reply a bit further down, it's better to spend time together digitally than not at all. But it's still sufficiently worse than in-person interactions that it'll be a deterrent against people moving for the foreseeable future.

Unless you're positing a kind of experience machine in which you literally can't tell that you're not there, it's always going to be better to interact in person. Otherwise, it's true that if you remove everything that distinguishes A and B, then A and B are the same.

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