Wednesday, October 7, 2009

Consider The Resale Value

Saving Money Tip #195 - Consider the Resale Value. It used to be back in the day, people would consider the resale value on their car but not much else. After all, there weren’t that many avenues to resell your stuff. You could put an ad in the classifieds for your used sewing machine and hope that someone found it who was looking for one. Or you could try to sell your old lawnmower by word of mouth. But when people bought something, most of them did not take resale value into consideration unless t was a big item like a car. Nowadays, however, with the plethora of reselling avenues out there – Craigslist, eBay, and other online auction sites, this is no longer the case. Now when buying purchases, you should consider the resale value. Because chances are, when you outgrow the need for this item, you can resell it – sometimes for almost as much as you paid for it.

In general, “better” brands hold their value than lesser brands. This is almost universally the case across all types of items – cars, toys, electronic equipment, and clothes, among other things. So next time you are buying something think about what it will sell for when you no longer need or want it. Let’s look at some examples. My daughter loves American Girl dolls (and I must admit, so do I). But at $95 a pop, they are not cheap toys. However, in the past 20-plus years that this company has been in business, these toys have held more than 50% of its value. That means, if I bought a doll seven years ago for the then-price of a doll at $87, I could probably turn around and sell a used, played with and loved doll that my daughter enjoyed for several years for about $45. So really, that doll wasn’t too big of an expense. For seven years’ worth of play, it cost us about $6 per year. On the other hand, I could have bought my daughter a knock-off 18-inch doll for $40. It maybe would last seven years if the quality holds up. The resell value would be next to nothing costing me nearly $7 per year as well. Wouldn’t you rather enjoy the real thing for about the same price? This is the case not just for collector-type dolls.

Let’s consider things like designer jeans. Now I am not one drop over $100 on a pair of jeans. But let’s say I do. There is a brand of jeans called 7 for all mankind that sells for over $100. If your teen convinces you that she absolutely needs this brand of jeans (with her chipping in some of the money, of course), don’t be discouraged. She can likely sell them on eBay when she outgrows them a couple of years later for half her purchase price. Of course things like electronics, where technology goes out of date quickly might not hold the same retail value as other things do – think vacuum tube televisions or film-type cameras. Then again, many items that aren’t available anymore can become valuable again.

The point is, in this day and age of reselling on the Internet, many things you have laying around the house might have some value. And in five years, some of the things you are buying today will have value. Of course, not everything will retain value, but generally, the better quality stuff you buy, the more value it retains.

In Real Life (IRL) – Growing up we were never the family with the cool designer jeans (Toughskins for us!). Nor were we the ones with the brand name clothes or other quality things that other families in our neighborhood had. I remember distinctly owning imitation Dr. Scholl’s sandals and other off-brand merchandise. But as I got older, I recognized that it was sometimes worth it to buy brand names that were of good quality. About 15 years ago I bought a Sony brand Walkman headset. I’ve carried it around with me and moved it all of these years, because it was a good quality purchase, and I figured maybe one of these days I’d get back into running (ha!). Well today my two-year old picked them up and wanted to wear them when it occurred to me, “hey these might be worth something.” So I checked eBay and sure enough, the model I own routinely sells between $30 and $60. Not bad for something I paid about $40 for many years ago. Now I’m sure the Sanyo brand or other lesser-name brand are not commanding the same type of prices.

Today when I buy things I realize that better quality brands may not only last longer for me, but hold its resale value for when I turn around and sell it on Craigslist or eBay. This applies to strollers, dolls, toys, and clothes. By buying good quality brands and reselling them, I can often enjoy a higher quality product for the same price as a cheaper brand. (Unfortunately, it doesn't always hold true and doesn’t help me with the 35mm film camera I still own.)

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