Survey for Photographers

[eravedesigns]

Done

 

[TheOtherBob]

Completed it. To echo others, I think the "rent to own" concept is attractive on two ends. First, it means that you can get used glass at a decent price, AND get to try it out first. Second, it would make it more likely that the glass you rent is fairly "fresh."

The only downside I see is if it worked too well - and everyone rented to own. Here's what I mean:

Let's say the Company buys a new lens at a wholesale price ("W"). Company rents it to Person A. One of two things happens - either Person A buys it (presumably at the "new" price, "N"), or returns it, paying only the rental ("R"). It's now a used lens, and therefore loses some amount of value ("D" for depreciation). Person B then rents the now-used lens, and buys it at the used price - which is "N" minus "D." If N - D + R is greater than W (plus the company's other fixed and variable costs) - if the used sale price plus rental income outweighs what Company paid to buy, rent, and sell the lens - then Company makes money. If not, then it loses money.

(Note that if Company buys new lenses, and then sells them to Person A at a used price, it should quickly fail.)

To rent and sell used lenses, the Company needs to get used lenses somewhere. The theory is that those used lenses will come from renting new lenses...but if everyone turns out to prefer to be Person B and buy lightly used lenses, then that breaks down because no one rents and returns, and Company keeps selling out its stock of once-used lenses. Company needs to (1) maximize rental income by making multiple rentals prior to selling the lens, and (2) avoid taking a big depreciation hit from selling a virtually-new lens at a used price.

One way to do that might be for Company to buy used lenses in the first instance - but that means having a source of supply for good used lenses.

None of that is insurmountable - for one thing, it's likely that in this industry, "D" is very small (because of the strong resale value of lenses).

But enough economic theorizing...back to my real job.

 

[RentalInfo]

Wow guys.... Do you want to sit on my board of directors?

Seriously, this is really great info to hear. The thought of "rent to purchase" had crossed my mind, but I hadn't put a whole lot of thought into it due to the fact that I wasn't sure *why* people were renting equipment.

My only experience renting photo kit has been on a professional basis (backup equipment for weddings, etc). I'm really glad that I thought to include the "try before you buy" option on that survey question, because it is by far the most popular response (~75% as of this post). Now that I know *why* a majority of people are interested in renting, it makes sense to include that as an option.

However.... (there's always a "however", isn't there?)
The biggest problem I'm running into now is that in order to make any money selling the equipment, I have to be able to get the equipment at wholesale. That is turning out to be a bigger problem than I initially thought. But I'm working on it....I'm working on it.

Once again, thank you to everyone who has responded, and especially to those who are adding to the discussion via new posts. I truly appreciate it. It had gotten down to 1-2 participants per day, but since you guys posted, I got another 10 responses! If I hit 267, then my margin of error drops to +/- 6%, so that would be great. Right now I'm at 231.

I'm out of town for a wedding this weekend, but probably sometime next week I'll close the survey and tally the final results (depending on # of respondents). I'll come back and share some of the more interesting morsels with you once I'm all done.

Thanks again!

--Jared

 

[schumionbike]

this is my opinion, keep some lenses out for the puposes of renting only. If the person is interested in buying the lens afterward, give them a new len, and take off whatever they already paid in renting. If they rent 5 different lenses, just give them discount on the lense that they end up buying. If the person is not interested in buying the lenses in first place, they can always rent the already use ones. If the customer is already interested in buying the lense to begin with, then you'll get your money either way, either by renting or selling it. For example, if the lenses rent for 35 dollar a day and it cost to buy the lens is 700, if you'll rent it for for 20 days, you can have a brand new lens for free or maybe 100 dollars. Then old lens would just go back to being rent, this would avoid brand new lens from being rent. Renting brand new or use lens doesn't matter much to the person who rent, buying a use or new len mean a lot.

I'm not sure if I just confuse the heck out everyone. The sparknote version is, keep lenses for renting separate, if they want to buy, give them a brand new one at a discount. This way, the people who just want to rent can rent old lenses. This way, no severe depreciation come from just renting lense. Basically, if the person have intent to buy, you'll get your money either way, if the person just want to rent, no lost in depreciation.

I hope this make sense. Hope to hear from you soon, rentalinfo. And one more thing, if you like this idea, can I sit on your board of directors?

 

[DSLR noob]

Did it. Glad to help.

 

[RentalInfo]

And one more thing, if you like this idea, can I sit on your board of directors?

Maybe so, schumi, maybe so.

I think your overall idea is probably a good one. Again, I'm still trying to figure out if I can even get products at wholesale or not. If not, then there's no way I could make enough money to have it work.

Originally I had never entertained the idea of becoming a retail shop, due to the overabundance of them online. But perhaps my "in" would be the rental combined with the retail. It might just work. Gotta run some more numbers, but that may be the way to go.

Thanks again to you all! It's up to 245 responses, so things are looking good to hit 267.

Best regards,
Jared

 

[rmh159]

I'd be curious to know what you're overhead would be. Not to be a skeptic but let's do some quick math. A $500 lens x 20 lenses to keep in circulation (wouldn't want someone to have to wait 6 months) = $10k. $10k / $50 per rental equals 200 rentals just to cover costs. You'd need a hell of a library to cover the major brands and lens types too.

Interesting idea though, even if you only have 3 lenses as long as 1 is a Nikon I'd be interested.

Maybe another idea (this might cross into the realm of advertising) would be to collect emails of those that are interested so we can keep up on your available equipment and the progress of your idea.

 

[RentalInfo]

rmh-
Your post hits the nail on the head for one of the main reasons I believe there aren't more businesses doing this. Similar to a manufacturing business, the key point will be to optimize the amount of inventory for each item, so that there are enough to meet customer needs, but not so many that they are sitting around unused in my warehouse.
My guess is that it will take a little trial and error to discover that sweet spot for each piece of equipment. Luckily, optics tend to hold their value pretty well, so if I overbuy I should be able to recoup my costs without *too* much loss. On the other hand, there are enough places to buy equipment I should be able to purchase extra kit on short notice if the need is greater than I anticipated.

Maybe another idea (this might cross into the realm of advertising) would be to collect emails of those that are interested so we can keep up on your available equipment and the progress of your idea.

I don't know if you took the survey, but the very last question is a completely voluntary e-mail sign up for those who are interested in getting more information as it becomes available. There is *no way* I would ever ask for that kind of stuff on the open forums. I'd be run right off the boards!
It's a very tricky balance between market research and advertising, especially when there is so much spam going around right now. I've been very fortunate that 99% of all the people who have responded (moderator or otherwise) have been supportive of what I'm trying to accomplish.
I absolutely respect the desire to keep the boards free of advertising, and neither will I collect any information from people who don't want to give it freely. I would love to come back here (if everything goes well) and give you a link and tell you all about it, but I won't. Not on this board anyway. I see there is a "Buy and Sell" board, so maybe it will be appropriate there.
Regardless, I'm trying very hard to respect the terms of service and what this forum does and does not want on their boards. That has been my goal from the beginning.

BTW, this forum in particular has been *very supportive*, and I sincerely appreciate that. It is really refreshing to have good discussion and talk about ideas so openly.

Thank you very much!

Best regards,
Jared

 

[RentalInfo]

Hi guys-

Thank you to all who have responded to the survey. Your input is very valuable, and I truly appreciate it.

I will be closing the survey Friday May 25th at 12:00 PM MDT. Those who wish to participate should do so before then.

The link is: http://www.surveymonkey.com/s.asp?u=310313756630

Thanks again, and happy shooting!

Best regards,
Jared

 

[RMThompson]

You could also consider a RENT TO OWN option for us poor folk. For instance, if there was a 500 dollar lens, I'd gladly pay upwards of 750 dollars for it if I could spread the payments out over a 6 or 12 month period... and I bet I am not the only one!

Charge weekly, on a credit card they have set up before hand, charges automatically come out!

 

[RentalInfo]

RMT-
I get what you're saying, but I think most people would choose to just pay over time on their credit card. The math is seriously in favor of that option:

With an 18.99% interest rate compounded daily and monthly payments of $50, your finance charge would only be ~$49 for the year on a $500 purchase. That's a heck of a lot less than the $750 you're willing to spend!

I think most people would choose to handle the financing through their banks, but I could be wrong there.

Anyone else want Rent To Own? I will freely admit that I hadn't thought of it until now, and it could be an interesting option.


Thanks for your ideas!

Best regards,
Jared

 

[RMThompson]

Jared,

I still say it's viable, at least with a 90 days same as cash sort of thing. Let's say I am not sure if I want to buy a lens. I rent it, and end up keeping it, say 5 weeks. Now I've already invested X amount of dollars into it.

I could look at the value and decide whether or not to keep paying monthly, or paying it off completely I have the option!

Plus some of us like NO BALANCE on our credit cards every month.

 

[RentalInfo]

I still say it's viable, at least with a 90 days same as cash sort of thing. Let's say I am not sure if I want to buy a lens. I rent it, and end up keeping it, say 5 weeks.

From a consumer point of view, you are absolutely right in saying that would be an appealing state of affairs. From a business point of view though.... I think there's a reason no company does anything like that. It think it would be difficult to predict sales, and if the "buy it now" price falls below the wholesale price paid for the lens, then the company isn't making any money on the rental (unless the rental prices are sky high, which could lead to other issues down the road).
There is probably a way to make it work, but my brain is too slow to figure it out right now.

Plus some of us like NO BALANCE on our credit cards every month.

I suppose the psychological benefit of carrying no balance on credit cards could be a motivating factor. I'm too pragmatic for that, I guess.
In the end, I would still owe the money to someone, whether that's a credit card company or some other company. The end result is still debt! However, I'm old enough to realize that the way I look at things is not always (in fact, rarely ever) the same way as others do. Thus, the survey!

Thanks for the good discussion, I really enjoy hearing your ideas and thoughts.

 

[schumionbike]

I'd be curious to know what you're overhead would be. Not to be a skeptic but let's do some quick math. A $500 lens x 20 lenses to keep in circulation (wouldn't want someone to have to wait 6 months) = $10k. $10k / $50 per rental equals 200 rentals just to cover costs. You'd need a hell of a library to cover the major brands and lens types too.

You're right, you need a hugh investment just to buy the lense needed for rental.
However, if these lenses are to be replace every 5 years, and you're renting it at 50 dollar a week. You can rent it out every single week for five years, then you would make 13000 dollar over the five years for the five hundred dollar investment. If you only rent the lense say twice a year at the inflation adjusted rate of 50 dollar a week, after five years, you should even out. If the lense could only be rent twice a year, I suggest you not get it . Now you would have to take into account the cost of storing all these lenses and the cost of hiring people and all that.

Most business tend not to make money the first year anyways, you will have to spend a lot of money before you get your money back.

 

[Iron Flatline]

Survey done.

Focus on renting lenses as your core business for now, I think rent-to-own is effectively a credit business, you don't want to be there. However, if customer acquisition is easier by giving a try-then-buy option you will want to become a VAR for Nikon and Canon so you can deliver customers a new lens at a certain discount - you can't just subtract the rental value, that wouldnt work in business terms. Also, expect a strong competitive response if this works, in which case you might be able to ally yourself with a big reseller who wants into this market more quickly.

Finally, take all business advice with a grain of salt that is given by strangers online without a stake in your success ;-)