You have just bought that shiny new smartphone. Pity that for most it is worth nothing after 12 months. Maybe you should investigate trade-in phone values before you buy.
Trade-in phone values have become big news since Apple decided to break the $1000 barrier with Samsung soon following. Both have tantalising trade-in, and trade-up offers that make updating less painful. But for the majority, these trade-ins are not applicable.
Are Trade-in phone values any good?
First, let’s look at the life of a phone. Day one, you buy it at full price (no you cannot trade-in shonky grey market phones). All is well for a year or so until you get phone envy or perhaps the battery is not lasting as long.
You begin to look around and see that Telstra is touting its smartphone trade-in program to reduce e-waste. The reality is that it is only interested in ‘selected’ late-model Apple and Samsung phones in near perfect condition. But to Telstra’s credit, its offer is often slightly better to lock you into a 12/24/36 month voice/data plan where it makes real money.
Then you see a plethora of cash-back companies including Mobile Monster, Sell Your Mobile, Mazuma Mobile, Mobile Trade, Cashaphone, and many more. Just search for ‘phone trade-in Australia’. But these offer a fraction of the Telstra, Apple and Samsung schemes. Why? Because they have to refurbish and resell your handset and there is not much money in that.
What is my phone worth as a trade-in?
Unless it is an Apple or Samsung, then the answer is nothing after 12 months. It is whatever you can get on the second-hand market.
US research shows a one-year-old flagship One Plus is worth just 18%. Similarly, Huawei – well, that name is on the US’s nose – is nil.
Then you have Google Pixel (a good choice). A one-year-old is worth 31% if you sell it second-hand.
Apple depreciates at about 4% per month – after one year it is worth 49%.
Samsung depreciates at about 5.5% per month – after one year it is worth 33%.
Why just Apple and Samsung?
Technically resale value is a function of desirability and initial cost. Users will pay more for a brand or model they want.
Apple’s AU trade-in program is here. Samsung’s is here. Both will trade each other’s brands to help users jump ship. And both have token trade-in values on some other brands like OPPO, Google and Huawei. As long as either brand gets the user to buy it is a win!
With Apple and Samsung flagships now coming naked (no charger etc.) prices have been adjusted downwards.
Where is this heading?
If a global brand like, say OPPO wants to play in the same flagship sandpit, it will need to factor in deferred revenue from trade-ins. I don’t see that as smart if 85% of all phones cost below $699 and are sold outright.
No Apple and Samsung are cannier. They want a direct relationship with the user either via their credit card finance (Apple Card) or via a recurring subscription.
This is the only way to keep users in the tent and to ensure retention times don’t blow out to over three years (as they have during COVID).
With recurring payment systems, they do not even have to reveal purchase or trade-in prices at all. It keeps you in the tent where both can earn more money from services – forever.
And the benefits for Apple and Samsung are enormous. No finance costs leaking to third parties, and only holding the manufactured value (circa A$200), not the phone’s retail value on its books. Very clever.
The two main suppliers operate trade-in programs that work for them. The rest of these second-hand cash-back schemes are marginal at best.
The raw data came from US-based Declutter that operates a large second-hand smartphone reuse, repair and recycling business. The figures are expressed as percentages to eliminate the countries’ price differences.