Refurbished smartphone sales are on the rise as consumers begin to recognise that the gap in performance between devices is shrinking with each passing generation.
Throw in the fact that buying a refurbished phone offers big savings on the newest phones, such as the iPhone 11 Pro, and it’s easy to see why refurbished sales are on the rise in every corner of the smartphone market.
This comes down to a simple point – everyone loves a bargain, and a smartphone bargain is the best of them all. After all, we are glued to our phones. It is estimated we spend around 3 hours and 15 minutes on them every day. That’s 48 days in a year.
Given our (some might say unhealthy) attraction to our smartphones, it makes no wonder we want the best device in our pocket. But this comes at a cost.
The false economy of pay monthly
The average price of a new smartphone today is £500.
If you want a high-end device, you will need to break £700 to get it into your pocket, assuming you buy SIM-free. This is out of the affordability bracket for most people. And even when it isn’t, people prefer to spread the cost.
Hence, the pay monthly contract.
However, there is a problem with pay monthly contracts – when you work out their cost over the lifetime of the contract, the total tends to work out to be a few hundred pounds more than the SIM-free price of the phone itself.
Now, you might assume that the extra cost pays for the data and network. You’d be right – but also wrong. The total cost of the data and network access tends to work out disproportionately high. This is when we compare a pay monthly contract with a SIM-only plan, such as those from challenger networks like giffgaff.
The simple truth of the matter is that in many cases, pay monthly phone plans give the network you buy them from a very healthy slice of the pie. This will keep money in your pocket in the short-term, but long term it will empty more money from your pocket.
Another question to ask yourself is if you want to be tied into a contract at all. Most smartphone contracts tie you in for 18 or 24-months. That’s a lot of time to pay someone a chunk of money every month.
Also, networks can raise contract prices mid-contract in line with inflation. There’s no hedge against this as a consumer. You have to suck it up.
Life is made simpler by owning your own phone
Now you know that pay monthly contracts often work out to be disproportionately high in cost over their lifetime, and networks can raise prices in line with inflation without you being able to do anything about it, you might be tempted to buy your own phone and say au revoir to pay monthly. But there’s still the issue of price.
Buying a new phone SIM-free is expensive. You’re looking at £400 to £700 for a mid to top-tier smartphone.
If you don’t have the money, you’re out of luck.
Well, not necessarily. You could buy refurbished instead.
What’s a refurbished phone?
A refurbished smartphone is a smartphone that companies like us buy from networks, official retailers and sometimes the manufacturers themselves.
There are three grades you need to know about:
- Grade A devices are usually returns that have been returned within their 14 to 30-day cooling off period. The original seller can’t sell the phone as new, so we take them off their hands and sell them on instead. The condition of Grade A devices is as new.
- Grade B devices are lightly used devices that have been looked after very well. Most will have lived in a case with a screen protector. There may be a few cosmetic scratches, but the screen will be clean, and the phone will be otherwise perfect.
- Grade C devices are more heavily used and may have scratches on the screen as well as on the sides. There will be no dents and the phone will be fully operational. Usually, these are older devices, such as an iPhone 5 or iPhone 6.
When we receive a delivery of refurbished phones, we unpack them, test them, determine if any repairs are necessary, and make any necessary repairs. The reason we are telling you this, is so you know the origin and story of any typical refurbished phone we sell.
There are some common misconceptions about refurbished phones, such as them being dangerous or abused devices. This isn’t true. The devices we sell function like new and we provide a 12-month guarantee with all of them.
How refurbished phone can save you money
On average, you will save £100 to £200 on a refurbished phone that was released in the last 12 months over buying new. Here’s why:
Newer refurbished smartphones
When a brand-new car leaves the forecourt, it loses approximately 10% of its value, and over a single year, it loses another 20%.
This is because of depreciation.
The same rings true of smartphones, except the ‘forecourt’ is the box.
When a smartphone is unboxed, it loses 10% of its value immediately and any sign of wear strips another 10% off the value.
After 6-months, a smartphone will have lost 20% of its original value, and that will be around 30% by month 12 before a successor is launched. Once a successor is launched, depreciation typically hits 40%.
This is why refurbished models of phones that are a newer model are so much cheaper than their brand-new counterparts. Depreciation.
How much you could save
Older refurbished smartphones
Older smartphones are so much cheaper than when they were new because they have depreciated to such a point that massive savings on the new price are only natural. Newer models are now out, driving the price of the old models down.
Because the differences in performance between older and newer smartphones is shrinking with every new release, people have started to recognise that an iPhone X will do just as good a job as an iPhone 11. Once you realise this, and don’t pine after the newest thing, you can save big when you purchase your new smartphone.
How much you could save
Buy a phone that was released 24 months ago (two generations old), and your savings could easily reach 50%. Buy a phone that was released more than 24-months ago, and savings of 60% to 80% on the RRP are normal. You’re talking £400 to £500 on a flagship.