After the Fall: The Economics of Shattered iPhones

The price of dropping your precious Apple productsScreen Shot 2012-03-08 at 1.28.32 PM.png"I felt my phone slip from my awkwardly positioned fingers--it hung for a moment at the end of my ear bud cord, like a bungee jumper moments before his cord snaps--and then I painfully watched as it tumbled over the curb in a sudden whirl of annihilation. The back glass panel shattered, and so did my heart." - Ryan Salerno, Gizmodo

Among the existential fears of living in the modern world, the fear of breaking your phone must rank quite high. We all know that at any given point, the glorious devices we carry in our pockets could commit seppuku. The phone walks a thin line between transcendent computing machine and pile of rubbish. An errant fumble to answer a call, a tipped glass of water, a slip from a pocket, and the phone is no more.

Our fear drives us to insane lengths to protect our devices, taking marvels of industrial design and mutilating them with rubber bumpers and dusty screen protectors. But the fear, it's always there. What if we cracked our phones the same day we bought them? Shudder. That would be the worst.

At Priceonomics, we are here to help. Let's confront your fear of breaking your phone and figure out the true cost of a broken device. Is it really the end of the world if you drop your phone and it cracks? How much will it cost you? Is it really worth humiliating your phone by dressing it up in rubber case like a dog unwillingly wearing a raincoat?

Beware of "Decent" Phones

We analyzed our database of 5 million used phones for sale to figure out why some phones are priced high and others low. Specifically, we examined the words used in post titles to see which words were associated with high prices and which with low prices. For example, a posting for the HTC EVO 4G with the word "cracked" in it was priced 50% less than the median price for a regular HTC EVO 4G; whereas one with the word "unlocked" has a price 15% above the median for that same device.

We found there are 5 major categories of words that people use to describe the phones they are selling: 1) Signals that the product is new 2) Features 3) Network 4) Vacuous marketing statements like "this phone is good!" 5) Confessions of cataclysmic events like water damage.


Basically new phones are priced 15% more than comparable used ones, features matter, network doesn't, saying your phone is "excellent" is meaningless, but please don't drop your phone in the toilet!

Let's dig a little deeper to see what are the specific words/attributes and see how they affect phone prices.


High pricing is most often accompanied by words that signal the item is new. Jailbroken, Unlocked, and White phones are also associated with higher prices. Network doesn't really affect price, except the ever-spotty AT&T and that's not statistically significant so we're only bringing it up out of spite.

Phones described as "decent" are typically priced 23% below the median. Who would describe something they're selling as "decent" and price it below market value unless something fishy was going on? Other words like "excellent, good, immaculate" are just a waste of space. Finally, bricking your phone is bad, cracking the screen is worse, but water damage is the worst.

The Economics of Cracked Screens

Cracking your screen is bad, but just how bad is it? Next, we figured out how much resale value is destroyed when your phone's screen is cracked. We looked at the median price of "cracked" phones for sale compared it to regular phones to calculate the drop in resale value associated with cracking.

On average, cracking your phone destroys 30-50% of its value instantly. Cracking your newish iPhone 4s destroys $150 in value. On one hand, that's a bummer. On the other hand, it's still worth a remarkable 73% of its previous value.

Just to be morbid, let's look at the economic value destroyed by cracking something else you love dearly - your newborn child. Just kidding, your iPad or Kindle.


Clumsiest Cities in America

Priceonomics reserves the right to do silly analyses that we perform solely for our own entertainment. This is one of analyses.

We looked at what cities in America had the most cracked phones for sale (as a % of all phones offered for sale) to determine where people were the clumsiest.

Conclusion

Things happen. Even if your brand new iPhone is all smashed up it still keeps 72% of its value. Heck, you can drop it in the toilet and it's still worth a good chunk of change. There is little need to live in fear and smother your phone with protective measures. There is entire ecosystem that takes broken phones and makes them whole again, so prices of broken phones aren't even that low. You don't walk around with a bumper case around your head and that's pretty valuable. If you're phone breaks, you can just fix it. It will be okay.

This article was originally published at Priceonomics.

Image: Patrick Hoesly/Flickr

Presented by

Rohin Dhar is the co-founder of Priceonomics.

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