The size of any possible profit margin is a critical factor in any business venture. Also the most appealing markets, where sales volumes and profits tend to be high, will fail the profit margin test on occasion.
There are a variety of reasons why the demand for used cell phones has begun to eat into the growth of the new smartphone industry in recent years. The fact that used cell phones are so much cheaper, despite the fact that new handset RRPs have continued to rise, has prompted an increasing number of customers to search for better value in used mobile phones. As a result, more retailers have entered what is by all accounts a burgeoning industry.
However, an equally critical piece of the puzzle is the fact that selling used phones generate a higher profit margin than selling new phones. Vendors are fortunate to get margins of more than 3-5 percent on new cell phone sales due to high RRPs and strong control of the wholesale phones and retail markets by big-name manufacturers. Despite used phone retail prices being 65-75 percent lower than fresh, retailers can easily make margins of 10% or more due to the greater freedom and low wholesale prices of used phones.
The right phone, with the right margin
In fact, putting a ballpark figure on margins across the entire used phone trade is somewhat misleading because there are so many variables at play. Even if we ignore a company’s running costs and focus solely on the smartphones, the amount of money you will earn from buying and selling a used phone can differ significantly depending on factors such as brand, model, features, case color, and the accessories you ship with it.
Also Read: Tips for Buying Used Wholesale iPhones
Used phone dealers, on average, will make a higher profit margin on higher-value, higher-spec handsets. Let’s say you purchase a mid-range smartphone in average condition for $70 and can resell it for $120. The 100 percent mark-up seems to be rather appealing. However, if you have to spend $25 on refurbishment, plus another $10 on publicity and running expenses, it’s not a good deal. Your gross profit is just $15, representing a 15% margin.
When you purchase a much higher-spec used phone in better condition for $350, you can sell it for $450. This time, the mark-up is just 66 percent. However, you only spend $10 on marketing and maintenance expenses per unit sold as a counterbalance. As a result, the gross profit is $90, a far stronger margin of 26%.
Buying and selling used cellphones
When you purchase devices from JNA Dealer, our trade team has decades of experience in the used phone industry and can advise you on competitive resale rates. On both the normal and marginal VAT schemes, we stock all devices from grade A pristine to C. For more details and a current inventory list, please contact us today.
You can shop with confidence knowing that your first order is covered by our 100 percent satisfaction guarantee, and all subsequent orders are protected by our industry-leading return policy.
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