If you've been thinking about trading in an older Samsung Galaxy S device, now is the time to lock in your price.
According to the trade-in site Nextworth, older Samsung Galaxy smartphones are at their peak. But prices are likely to start dropping in the coming weeks. In this edition of Ask Maggie, I talk to a NextWorth executive who explains why the company increased the value it has been paying consumers who trade in older Galaxy S series devices. I also help another reader figure out the best place for trading in her old devices.
Older Galaxy S smartphones increase in value
I'm considering upgrading to the Samsung Galaxy S5. I've been using a Galaxy S3 for the past couple of years. I've heard that it's a good idea to sell old devices before the new one goes on sale. But I wasn't quite ready to commit to the Galaxy S5. Is it too late to sell my Galaxy S3? Will I still get a good price?
Dear Galaxy Lover,
I've got some good news for you. It's not too late to sell your old Galaxy S3 and in fact, you'll probably get top dollar for it if you lock in your price as soon as you can.
Jeff Trachsel, chief marketing officer for Nextworth, said that in the week or so before the launch of the new Samsung S5, his trade-in Web site actually raised the prices they were paying for older Samsung Galaxy S devices by about 15 percent. He said strong demand for these older models and low inventory of trade-ins on these devices is what has driven the increase in value.
But he warned that the high prices won't last long.
"We're already starting to see demand soften," he said. "And since the release of the Galaxy S5 on April 11, we've seen a big uptick in people coming to the Nextworth site to get quotes on older Galaxy S phones."
What this means for you and the other Galaxy S2, S3, and S4 owners is that you should lock in your quotes as soon as you can before the values start dropping.
So what's going on?
Conventional wisdom suggests that if you're trading in old gadgets it's better to sell sooner rather than later. Just like cars, old gadgets start depreciating almost the moment you take them for a spin around the block. And in general, Trachsel says that still holds true.
"Over time the value of all devices goes down. That is just a function of depreciation," he said. "So holding on to an older device and hoping for an uptick in the price is generally not a good strategy."
He added that what he has seen recently with the older Galaxy S phones is not a common occurrence when it comes to gadget trade-ins.
"I've been at Nextworth for three years," he said. "And I can tell you that it's very rare that prices ever increase."
Indeed, when Nextworth analyzed pricing information over the past couple of years, the company saw some consistent trends. In the four to five months leading up to and following the launch of the Galaxy S3 and the Galaxy S4, prices on the older Galaxy S phones declined about 25 percent to 30 percent.
In general, the decline is steepest when a new generation of device is first announced and right after it goes on sale. The same pattern holds true for the Apple iPhone, which is also released on a yearly basis like the Galaxy S series.
Trachsel said the reason why Nextworth decided to raise the price it pays on Galaxy S trade-ins is because the company was seeing higher demand for these devices. At the same time, the inventory was relatively low. He explained that demand isn't just coming from overseas. There has also been strong demand domestically.
"We couldn't keep them in stock," he said. "I think the lower price point of older Galaxy phones is really attractive. People know the Samsung Galaxy brand, but they may not be able to afford a newer model. So they get an older version, much like we've seen people do with the iPhone."
Indeed, Samsung has built a successful brand in the Galaxy S series. Trachsel said Google Android smartphones from other manufacturers do not have the same resale and trade-in value that Samsung Galaxy products get. Samsung has essentially copied Apple's playbook from the yearly product release cycle to the consistent release and branding across carriers. And it's worked. This strategy coupled with an aggressive and expensive marketing campaign has made the Galaxy brand a household name.
All this awareness is good news for Galaxy users who are looking to resell their older phones.
The Bottom Line:
Nextworth's Trachsel says now is the time to sell your old Galaxy S devices. Prices are likely at their peak, and they'll soon start declining in the coming weeks as the market gets flooded with older devices from people trading them in for the new Galaxy S5. There are also some good promotions out there that sweeten the deal further. For instance, Nextworth is offering an extra 10 percent on top of the trade in value. So my advice to you is that if you really want the Galaxy S5, lock in your price today on your old Galaxy S3.
Trade-in sites vs. retailers?
I've been seeing deals in stores like Target and Best Buy to trade in old smartphones. Is this the way to go these days when trading in devices? Or is it better to use one of those trade-in Websites?
There are pros and cons to trading a device in online as well as trading it in at a retail store.
Pros of in-store trade-ins
- Convenience: If you're a regular shopper at Target or there's a Best Buy in your neighborhood, simply taking your device into the store is probably the easiest and most convenient way to trade it in.
- Better offer: Retailers tend to offer higher values for some phones, depending on the promotions they're running. For instance, Target is running a promotion right now that guarantees customers get at least $100 on their old devices to put toward the cost of a new Samsung Galaxy S5. The discount coupons must be used the same day to buy the new Galaxy S5, and it can only be used for devices on a two-year contract.
Cons of in-store trade-ins
- Payment comes in store credit: Often the payment method for trade-in programs at retailers is store-credit. This is why retailers are often able to offer higher values for certain devices. And the trade-in value may come with strings attached, such as the Target promotion I just mentioned, which requires you use a coupon from your trade-in to buy a new device with a two-year contract.
Pros of online trade-in sites
- Cold hard cash: Online sites like Gazelle and Nextworth offer customers cash. And as they say, "Cash is king."
- Easy to comparison shop: If you're planning to trade-in your old device online, it's easy to get quotes from multiple Web sites and see which one offers you the best deal. You should always make sure, the trade-in site you're dealing with is reputable. There are lots of sites out there that have gotten poor customers reviews and have been cited by the Better Business Bureau.
Cons of online trade-in sites:
- Bait and switch: Sometimes when device owners send in their devices, the price they were quoted online is not the actual price that they will fetch for their device. Even the most reputable firms reserve the right to alter the price they pay for devices if they appear more damaged than what was reported online as part of the price quote process.
- Can be less convenient: Sending in a device by mail takes a little bit more effort than going to a store and trading it in. You need to contact the company and wait for an envelope or box to arrive that you can use to send your device to the trade-in company. And then you have to wait for them to receive the package and assess the phone. After all that, they will finally cut you a check.
- Lower value: Because online companies offer cash for the device that's traded-in, you may get a lower offer than what's offered in a store. Online trade-in sites don't have the luxury of selling you a another device or some other in-store products. That said, as I mentioned above. You will be getting cash for your old device. And some people may view this as a primary benefit.
The Bottom Line:
At the end of the day, whether you trade-in your old device at a retailer or online depends on the type of consumer you are. If you shop at Target a lot or you're planning to turn around and upgrade to a newer device, an in-store trade-in program may be the way to go. In that instance, store credit is as good as cash. But if you'd rather pocket the cash you earn from the sale of your old devices, then go with an online trade-in site.
I hope this advice was helpful. And good luck!
Ask Maggie is an advice column that answers readers' wireless and broadband questions. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.