Don’t use gadget buyback programs

MSNBC consumer reporter Bob Sullivan does a thorough analysis of how gadget buy-back programs work, and why you shouldn’t use them.

There’s no need for me to rehash everything that’s wrong with them, because Bob covered all those bases admirably. I’ll just run through his hypothetical scenario and tell you what you should do instead.

Let’s say you go and buy a $1,000 laptop. The sales clerk offers you a guaranteed buyback. For $70 now, you have the right to sell the laptop back within a year for $400.

Bob goes into the problems with that. Among other things, you get a gift card, not cash, so you’ll be buying the replacement at that store. The money you get back could be taxable, and you’ll pay sales tax on the two purchases and, in some states, you’ll be on the hook for sales tax on the money you get back, too.

There’s another problem, too. Effectively, when you pay $70 for the right to resell the laptop, you’re really only getting $330 for a year-old laptop. Computers depreciate rapidly, but they don’t depreciate THAT rapidly.

You’d be able to re-sell a year-old laptop yourself, very easily, for more than $400 if the need arose. Post the thing on Craigslist and I’d be surprised if it lasted a day. Just make a system recovery disk when you get the laptop. When you’re ready to sell, run Darik’s Boot and Nuke on the drive to annihilate your data, then run the system recovery disk on it to return it to factory configuration. Now your data is safe, and the next owner is getting the machine in the same state it came from the factory. To determine a fair (to you) price, search eBay for the same machine to see what it’s been going for during the past month. Keep in mind eBay charges roughly 15% in fees. Split the difference. Then you and the buyer both benefit, and the buyer saves shipping costs.

My other question is why you’d sell a laptop after only a year. You’d be much better off upgrading the laptop as needed, rather than replacing the thing every year. Rather than selling the laptop for $400 and buying another $1,000 laptop, you’re much better off putting as much memory and solid-state storage in it as $600 would buy.

For example, at this moment a Dell Inspiron 17r costs $999.99 at that blue place. It ships with 6 GB of memory. What’s $600 worth of upgrades look like? $50 will upgrade it to its maximum 8 GB of RAM. (You shouldn’t have much trouble flipping the old memory module you replaced on Craigslist for 10 or 20 bucks.) $550 will replace the hard drive with a 300 GB SSD. Keep in mind that’s all May 2011 prices. In May 2012, the memory price may or may not be lower, but you’ll be able to get more SSD for the money then. Either way, you’re looking at a 4-core, 2.5 GHz machine with 8 GB of RAM and a minimum of 300 gigs of solid state storage. Would I still be getting use out of that machine in 2016 if I owned it? Probably.

And if not, that machine would still be worth more than $100 to somebody in the 2015-2016 timeframe. It’s not like its value is going to run to zero by then.

If you think you’d break the laptop within a year, you need to strike up a relationship with a decent computer technician. You’d have to break a laptop really badly to do $600 worth of damage to it in just a year. I’ve had to do some $300 labor-only repairs before, but those are rare, and extreme–definitely cases of people doing just about everything wrong that I could think of. Treat the machine with the same respect you’d treat anything else that cost $1,000. Get a laptop bag with a lot of padding, and when it’s not in the bag, treat the machine like you would a $1,000 briefcase. Install Windows updates in a timely fashion, keep the virus definitions up to date, don’t pirate software or music or movies, and don’t install free software unless you know how to tell if it has spyware or not. Those simple practices will keep the laptop working fine for years, unless it’s a really big piece of junk.

What’s a really big piece of junk? Well, in recent years there have been some big problems, specifically, with cheap capacitors failing spectacularly, and Nvidia video chips overheating so badly that they melted the solder joints holding them to the system board. (Yes, that’s as bad as it sounds.) The companies responsible for those fiascoes have learned their lessons. Expensive, painful lessons. I’m more confident of machines made today than of machines made in, say, 2008 or 2009.

And keep in mind that if a machine fails that spectacularly within 12 months, it’s still under warranty. There’s no reason at all that you need to pay for the privilege to sell back a lemon within 12 months.

So if you’re buying a laptop, rather than participating in a buyback program, your best bet is to treat it well, upgrade it when the need arises, and if and when the time comes, sell it yourself without involving middle men. You’ll save a lot more money and be a lot happier with your purchase that way.

With other gadgets, you have fewer upgrade options, but you’ll do better to sell them yourself than to sell them back to the store. The only reason they’re willing to buy them from you is to turn them around for a profit; if they can sell them for more than they pay you, then you can too.

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