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The "Wash my Ferrari" Problem: A Meditation on Risk

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Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#21

Post by dkokelley »

jiggy2011 wrote: post #20

I vaguely know somebody through work who is involved in high end legal services. Around a year ago he hired a webdesigner to redesign his website, apparently the cost paid was around $20,000. Now bare in mind that this was for website design only (logo etc already existed). The website itself was a relatively bog standard wordpress setup with about 10 pages of copy, a basic WP template and a handful of stock art imag…

From what I (think I) know about the web development business, I'm guessing it had more to due with the fact that this developer found a goldmine of customers. Then again, maybe the developer is very concerned about clients from hell so he can quote princely sums to clients he or she isn't sure are worth the hassle. I suppose that's still a measure of risk. Not risk that you will be sued, but risk that a demanding client will require special treatment and hand-holding.

Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#22

Post by dkokelley »

ComputerGuru wrote: post #14
monochromatic wrote: post #13

Earlier quoted context omitted.

Garbage comment; garbage account.

The best thing you can do for comments like that (esp. when they're made by "green" accounts) is to just downvote and ignore. They'll be downvoted to grey, then deleted. The accounts will be hellbanned in time (comments autmotically deleted, posts only visible to poster). Replying only clutters the discussion.

For some users, you can click on the permalink to the comment to see a "flag" option.

"Please don't submit comments complaining that a submission is inappropriate for the site. If you think something is spam or offtopic, flag it by going to its page and clicking on the "flag" link. (Not all users will see this; there is a karma threshold.) If you flag something, please don't also comment that you did." - http://ycombinator.com/newsguidelines.html

Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#23

Post by dkokelley »

An interesting discussion on risk. Here's another consideration, you can self-insure to an extent by changing processes to minimize risks. If you must charge $10 to wash a Ferrari because your risk model says that it will cost you $5 in mistakes, use a different process to lower mistakes. Let's say that instead of the standard wash process you use for regular cars, you take extra time on the Ferrari, using your best washers and new materials. Now, the risk goes down from 1 in 2,000, your risk is 1 in 10,000. Now you can charge more for the special, risk-averse treatment and only a $1 risk surcharge on top of that.

Effective risk management doesn't just mean that you protect yourself against "bad things". The ability to manage risks better than your competitors is a competitive advantage. I heard it best described as the brakes on a sports car. Good brakes let you take corners faster.

Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#25

Post by mcherm »

pacaro wrote: post #24

To the list of industries where there is a built in x10 on all quotes add Weddings...

But that is for a different reason... it's not increased pricing because of increased risk, it's increased pricing because of increased willingness to pay combined with a sense of "more costly must be more valuable".

Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#26

Post by noonespecial »

I always figured this was one of the "grey" advantages startups have. For a very short time, a startup has so few assets that an entire class of risks exist that will simply put it out of business. When you're brand new, it doesn't matter if you damage a Honda or a Ferrari, either way, you're done. This gives you a slightly evil and transient advantage that let's you temporarily undercut the established players by just ignoring those risks altogether.

Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#27

Post by turbulents »

Last weekend, I was a little irritated when Southwest Airlines charged me an extra $5 to get a glass jar in my luggage bubble-wrapped when I would have preferred to save the $5 and take the risk of it breaking/leaking. The Southwest agent's explanation boiled down to more or less the same point as this article's. Kudos to her.

Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#28

Post by monochromatic »

ComputerGuru wrote: post #14
monochromatic wrote: post #13

Earlier quoted context omitted.

Garbage comment; garbage account.

The best thing you can do for comments like that (esp. when they're made by "green" accounts) is to just downvote and ignore. They'll be downvoted to grey, then deleted. The accounts will be hellbanned in time (comments autmotically deleted, posts only visible to poster). Replying only clutters the discussion.

Never heard of hellbanning, but I'll keep that in mind. Cheers

Re: The "Wash my Ferrari" Problem: A Meditation on Risk

#29

Post by sopooneo »

noonespecial wrote: post #26

I always figured this was one of the "grey" advantages startups have. For a very short time, a startup has so few assets that an entire class of risks exist that will simply put it out of business. When you're brand new, it doesn't matter if you damage a Honda or a Ferrari, either way, you're done. This gives you a slightly evil and transient advantage that let's you temporarily undercut the established players by ju…

But couldn't knowledge of this fact by your potential customers make them wary of giving you much business, thus canceling out your advantage?
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