To test our suspicions that something was amiss in the used television market, we compared used TV prices
to the prices of buying them new instead. We looked at the discount for
"buying used" for televisions versus headphones and phones (categories
we've previously studied):
People offer to sell their used televisions on Craigslist at a 14%
discount to buying the same TV new. On the other hand, used headphones
and phones are sold at a ~30% discount to new. A 30% discount for
buying used feels relatively fair, but 14% barely seems worth it. Taking
a deeper looker at specific used TV models:
It turns out, people have very inflated expectations for how much they
call sell their used TV. Only 3 of the 26 televisions we analyzed were
discounted more than 30% versus a new TV. Insanely, for some TV models,
the median used price is higher than the new market price.
Would a 14% discount entice you to buy a used television that might be a
dud? Even if the average used TV seller offers this measly discount,
plenty of people are out there trying to sell their TVs for a price
higher than the new price on Amazon. What gives?
THE INCREDIBLE SHRINKING PRICE OF TVs
The typical Craigslist TV ad reads like this: "55 inch Samsung HD TV - $1000 . . . We bought this TV in August 2011 at the beginning of the school year for $1500."
The seller thinks: "I bought it for $1500, I'm being very fair
discounting it 33% for the next owner." Unfortunately, the seller does
not realize that during the 9 months they've been using the TV, it no
longer costs $1500 new. Most likely you can buy that TV new today for
$1000 or less.
People appear to be anchored to the price they originally paid for the
television, not the current market price. This leaves them blind to the
fact that the price of a new TV is always dropping precipitously. CNN illustrates:
Alas, even the writer of this article is
vulnerable to used television pricing blindness. Having bought a TV for
$900 last year, $600 seems like it would should be a fair price to list
it for resale. In reality, the new price has fallen tremendously
according Amazon Price Tracker Camel:
Ouch, it's a bitter pill to swallow that the TV dropped in price so
steeply. When people (this author included) try to sell their
televisions, they seem to be anchored on the price they originally paid.
What they fail to realize is that the price of a new television is
falling faster than their internal expectation for how much the item
WHAT'S IN A NAME: THE "LG-47LK520" PROBLEM
Another terrible characteristic of the used television market is that
practically no one properly identifies the product they are selling.
Television manufacturers have developed an arcane product naming system
where products are called things like LG-47LK520. The result is that no
one actually knows what their television is called so they list it as a
"LG 47 Inch LCD TV". Unfortunately, there are many possible products
that meet this description.