What do phone companies/retailers do with their trade-in phones?

In My Humble Opinion
1

I’ve been noticing a trend lately of very generous trade-in credit deals on new phones and tablets. For instance, the google store offered me $250 for my old Pixel 3 on a new pixel 7, which is almost half off. It’s a 3 year old phone, I’m not sure what components in there would be useful. I guess you could sell the whole thing again, but you’re not going to get $250 for it. Samsung offered me a $550 trade-in on my shattered screen galaxy tab S6 towards a galaxy tab s8 ultra. The shattered screen part was a limited time promo offer.

Those are substantial fractions of the value of the new products. Apparently the google store was offering $950 of trade-in credit on the S22 ultra.

What do they do with these trade-ins? Google cannot possibly get $250 worth of value out of my old Pixel 3 - I bought it last year for half that price. Sure, maybe they sell them to a retailer that sells “renewed” phones, but they generally won’t even retail for the price some of the trade-ins are offered. Do they sell them in third world countries where they’re happy to get last year’s (or 3 year’s ago’s) phones? Still, they would never get anywhere near the value of the trade-in back.

Is it a marketing tactic that somehow works better than a sale? Obviously there is a promotional consideration involved, because, for example, Samsung offered me a $250 trade-in for the same tablet on the S8+ tab, but $550 for the S8 ultra - so the value of my trade-in was not fixed in that case, but changed according to whatever their promotional goals were.

Amazon offered me something like $15 for my phone in a trade-in, so clearly the massively generous trade-in was a strategy by the google store rather than the general worth of the phone, but I’ve also seen such good offers with Samsung too, so it’s not strictly a google thing.

I guess this is 2 questions: What do they actually do with the phones you send them, and what’s their strategy in giving such generous trade-in values?

2

WAG - recycling the rare earth minerals out of old phones is less expensive than mining them, and lets them claim they’re being environmentally friendly.

3

I can see the value in recycling old phones, but certainly you’re not going to recover anywhere near several hundred dollars in trade in value that way.

It occured to me now that I can see the logic in offering a high trade-in value for iphones or samsung phones - google is a small time player in the phone market trying to grow, and by offering generous trade-ins for an iphone or galaxy phone, they might switch people from being an apple/samsung customer to a google one. But they’re offering those great values on their own brand, too, which kind of shoots that theory in the foot. And so does Samsung offering great values for other android trade-ins - they’re already top dog.

4

I always just assumed it reflected the enormous markup of the devices themselves.

And each new generation seems (in part) aimed at extracting more and more $ from the buyers in terms of additional services and the like, that is is worth taking a bit of a hit up front, to get greater income over the long run.

5

I think one reason for the trade-in offers is getting the old phone out of the marketplace. So they’d rather have to deal with recycling the phone than have you sell it to another company that will offer it for sale, or give it to a friend or relative.

6

That’s possible. Apple holds a 60/40 lead in the US market but, globally, it’s Android 70%, Apple 25% and others in the missing 5%. I assume a lot of that 70% is older and used phones. I agree that they’re probably not getting their $300 trade-in value back but it might help mitigate the losses from the trade-in promotion.

7

Actually, I’ll bet that a lot of the Android phones sold throughout the world are just cheaper new ones, rather than top-of-the-line Samsung Galaxy models.

8

By the time they’re getting traded in, they’re not top of the line models but models from three years ago. If someone does trade in last year’s model then, sure, resell it in the US. If someone is trading in an older phone, sell it overseas where there’s more of a market for “outdated” phones.

I really meant to say that I assume many/most of the trade-ins wind up overseas instead of that many/most of phones overseas are trade-ins. I doubt there’s enough trade-ins to support a global overseas market and, yes, most phones sold overseas in less wealthy nations are likely just very basic models.

9

In America, until recently Samsung Galaxy meant the S line (or the discounued J line for people on a strict budget) but in large parts of the world the A and M lines are the top sellers.

10

So, in my experience as a former T-Mobile Service rep, it’s a couple of things.

First - for the Carrier, it’s a retention strategy. In 90%+ of the cases with most carriers, they are giving you a small trade in credit for part, and a substantial per-bill trade in credit… which you FORFEIT if you pay it off early or leave the carrier. So it’s an incentive to stay until the whole ‘new’ phone is paid off (generally in 2 years), by which point they hook you into a new promotion.

Meanwhile, they eat a small part of the costs, but end up keeping a returning monthly bill, where it keeps the profits up (generally 1+ year was the sweet spot).

Second, many of the refurbished phones end up on the secondary market, because while they may be ‘worth’ $50-100 as a trade it, they can be resold for more. But far more end up in the chain of companies that handle insurance for the carriers. IE that long term customer who carries insurance on their flagship phone for over 2 years and doesn’t trade it (at insane premiums IMHO) and breaks/loses said phone. Many of those last gen trade-in’s are what are then sent out as replacement phones, or ones that fail under the extended warrantees that come with that coverage.

[ before you get worried, normally during the first 6 months or so, you’re likely, but not promised an actual new phone, but past that, you’re almost certainly getting a ‘gently used one’. You also have different options under a manufacturer’s coverage, but that generally ends within a year, while the extended coverage can be maintained as long as you keep the insurance on the phone, for literally years. ]

Lastly, the manufacturers are giving deals to the carriers to pump up the sales of the latest brands, which makes them look good as well. Selling new phone x for 100k units on presale sure makes it look like the hottest thing, and if they have a smaller margin per unit profit, they’re making it up in publicity. :man_shrugging:

11

For newer iPhone trade-ins, Apple will refurbish it and resell it. For older iPhones, they recycle the materials.

12

I’m sure that’s the deal with my latest phone. I wanted the largest Samsung phone, which would have been something like 1400 bucks retail, and they gave me a huge trade-in on the old one - and the rest is paid monthly over 3 years (ouch).

I haven’t checked to see what happens if I were to decide to pay it off early. I would think that if they say “then your trade-in value goes away” I could demand they return my old phone :smiley: but I’m sure it wouldn’t work that way.

Bottom line though: they’ve now got me essentially locked in as a customer for 3 years. Not that huge a deal, as we’d just upgraded 2 other phones a month before.

13

its sorta like the isp gift card rebate deal /debacle of years ago

what that was is you could go to various stores and get a gift card of 200-300 (or more before the end)to spend in the store … initially places like best buy circuit city but by the end, even k and Walmart were doing it also
the catch was you signed up for the service at premium pricing for 2 years but what made it a mess is people had like 8 different subs and no way to pay for them and the like… I knew someone from aol and he said the way the stores and isps had it arranged any actual money they received from it was just gravy

14

I know signing a contract for a bonus is definitely something that happens in the phone industry, but this isn’t that. Google is offering all sorts of deals on the pixel 7 directly from their store with an unlocked phone and no contract of any sort. The $550 I got off my Samsung tablet came with no further commitment. It’s more like a promotional discount with specific trade-in targets to qualify rather than a sign up bonus for a contract.