How to Price Phone Trade-Ins and Buybacks

Start from the resale price

Work backwards. Begin with what you realistically expect to sell this phone for once it is ready, in the condition you will sell it, with the warranty you will give. Not what a new one costs, and not the highest price you have ever seen for that model.

To find it, look at what you have recently sold the same model for in your own shop, and what similar phones are actually selling for locally and online, not what they are listed for. Your own sales history is the strongest evidence you have. If you do not have any yet, be cautious and expect to adjust.

Prices move, especially when a new model is launched and the previous one gets cheaper. Review the resale prices you use for your most common models on a regular schedule, and use the lower end of the range for models that sell slowly.

Condition and what it costs to fix

Condition decides the resale price and the repair bill. Use a short list of conditions that everyone on the team applies in the same way, and say what each one means, for example whether a cracked screen, a worn battery or a dented frame moves a phone from one condition to the next.

For each fault, know what it costs you to put right. That means the part and your time. If you repair in-house, you know both. If you send repairs out, use the price you actually pay. Include the cost of cleaning, a new case or screen protector if you sell it with one. These are the numbers that come off the resale price.

Margin and risk

A trade-in has to leave a margin that pays for the shop, and an extra amount for the things that can go wrong: a fault you did not spot, a phone that takes longer to sell than you hoped, or a price that falls while the phone sits on the shelf. Decide on a margin you need and an allowance for risk, and apply them consistently, so that you are not negotiating from scratch with every customer.

The risk allowance is higher when:

• the model is older, or sells slowly in your shop;
• you cannot fully test the phone at the counter;
• the condition is borderline between two grades;
• the phone has to be sent out for repair before you can sell it.

You may choose to pay more when the customer is trading in against a new phone from you, because you also make the sale. If so, decide that in advance and treat it as a sales cost, not as a mistake.

Worked example (made-up numbers, labelled as such)

This example uses invented figures to show the method. It is an illustration, not market data, and the prices you see for any real phone will be different.

Each line is a decision you can look at and change. If the screen is not cracked, the repair line drops out and the offer goes up. If a model is slow to sell, increase the risk allowance. The offer comes out of the same method every time, which is what you want when several staff are taking trade-ins.

Checks before you pay

Check the phone before you agree a price, and check the customer is entitled to sell it. Gadgets POS does not carry out these checks, so do them with the tools and services you choose to use.

• Power it on and test the screen, touch, buttons, cameras, speakers, charging and SIM tray.
• Check that it is not still locked to the previous owner's account, such as an Apple ID or Google account, and that the customer signs out and removes it in front of you.
• Check the IMEI against a blacklist and lock checking service.
• Compare the IMEI on the phone, the box and the settings. A mismatch is a warning sign.
• Decide what identification and paperwork you will ask of anyone selling to you, and write it down so every member of staff does the same. For what the law needs of you, ask a qualified adviser.
• Ask the customer to back up and wipe the phone, or wipe it yourself with their agreement.

Recording the trade-in

Record the trade-in at the moment it happens: the IMEI, the make and model, the condition you agreed, what you paid and who you bought it from. Put the amount you paid as the cost of that unit, so that the profit on the later sale is worked out from it.

• The IMEI or serial number, and the make, model, storage and colour.
• The condition you agreed, in your shop's standard words.
• What you paid, and how: cash, bank transfer, voucher or part exchange.
• Who you bought it from, and the date.

Check afterwards. A shop that reads its trade-in reports every month, by model and by condition, quickly sees where it is overpaying. In Gadgets POS the trade-in is recorded on the same order as the sale, the traded-in IMEI goes into stock with its cost, and trade-in reports are available by order, product and category. See trade-in software and POS for second hand phones.