That $1,000 new iPhone could be 57% cheaper if you buy it used next year.
That new iPhone won’t be worth $1,000 for long.
Buyers balking at the rumored four-figure price tag for Apple’s 10th anniversary iPhone, which will probably be revealed on Tuesday, shouldn’t bank on getting much of that cash back if they take the plunge.
The $649 iPhone 7 lost 34% of its value – or about $221 – after just one month of use, according to a recent report from tech resale site Decluttr.com. It compared the prices of new smartphones to their resale values, and found that your smartphone’s worth plummets even faster than your car’s.
U.S. vehicles are notorious for losing between 15% and 20% of their value the moment they’re driven off the lot. But at least the car generally hovers at that 20% depreciation price for the first year after purchase. Decluttr reveals that smartphones, in comparison, drop between 57% to 72% in resale value over the course of a year – because 12 months later, everyone is already looking toward the shiny new upgrade.
“When people buy phones, they want the latest technology. People want to be early adopters,” Consumer Reports tech writer Bree Fowler told Moneyish. “So if you try selling last year’s model, you’re going to get a fraction of what you paid.”
Decluttr noted that iPhones depreciate more slowly than other smartphones, with pre-owned models dropping 57% over 12 months, compared to Samsung and HTC phones losing 72% of their value, and LG and HTC losing 84% and 85% of their value on average. But that still means your $1,000 iPhone will be worth less than $500 on the resale market a year from now – just as the next iPhone is probably being rolled out.
Talk about a buy cycle.
Smartphones also go through a lot more daily wear and tear than many other expensive tech products do, because we take them with us everywhere, which drives down their resale value.
“Phones take a lot more abuse, honestly, than cars,” Stephen Baker, a tech industry analyst for the NPD Group, told Moneyish. “And a traditional piece of consumer electronics [like a computer or a bigscreen TV] isn’t carried around, dropped, spilled on and abused the way a phone is.”
Which is why buyers are more skittish about buying used phones. “There’s no way to really quantify whether the hardware of your phone is in great shape, the way you can get a used car checked out, or a home inspected,” said Fowler. “So unless the phone is still in the box, still shrinkwrapped and in pristine condition, you don’t know whether someone’s toddler has actually chucked it across the kitchen a couple of times.”
If you are one of the many Americans holding onto their old phones longer and longer (almost two and a half years on average as of late 2016), Fowler suggests hanging onto your iPhone 6 or 7, and waiting for the next (free) iOS update.
“A lot of the fun stuff that’s going to be in these new iPhones, like the AR (augmented reality) features, will probably come as part of the iOS 11 update,” she noted. “So you can update your operating system, and still get a lot of the benefits.”
If your old phone lasts that long, anyway. After all, Apple itself admits that its new phones are only expected to last three years. And some users would argue that’s a generous self-assessment.
“I feel like my phone starts to self-destruct around this time [when a new phone drops] every year,” said Fowler.
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