The Secondary Marketplace

What price is the right price?

By Jeff Hilliard – President - Compudigital Industries

The question "What price is the right price?" has been bantered around for years, especially when talking about excess and obsolete products. Some sellers of this material have a set percentage reduced from the list price, some use a percentage of the manufacturing cost, and still others start with a percentage above the "scrap recovery value". In all cases, the actual value of a product is what the buyer will pay for it.

Current Street Price - A good indicator of the value of your product

The "street value" of a product is generally described as the best price that it can be found for that product on any specific day. These prices are set by retailers, on the WEB and within stores around the country. Street prices change continually as retailers agree to accept lower margins in order to sell slow moving products. The street price is considered the price for the purchase of a single unit. For electronic products, street prices can be determined on WEBsites like www.epinions.com www.pricewatch.com , or  www.pricegrabber.com .

As an industry, the street price is commonly used to determine the price that a broker is willing to pay for the product. A standard "Broker Cost" in high volume for a consumer product could typically range from 20% to 40% less than the street price. 

Refurbished Products

Product refurbishment is being seriously reviewed by some of the largest manufacturing companies as a source of additional revenue to reduce costs. For many years, while times were good and when sales were strong, excess and obsolete products were destroyed in order to protect the "primary market" from competition. As money has become tighter and as the bottom line gets slimmer, manufacturers are looking for ways to shore up their net profit. 

Refurbished products are normally defined as products that have been tested, cleaned, and repackaged by the manufacturer to bring them back to "like new" condition. This refurbishment normally includes a retail box, and all of the originally included accessory items, software, etc. Refurbished products normally have a label on the outside of the box indicating that the product has been "reconditioned" or "refurbished". Refurbished products normally return about 20% less than New boxed product (A Goods) to the manufacturer.

Pricing research is the key

Buying very large volumes increases the risk to the buyer and consequently, lowers the price.

 Jeff Hilliard can be reached at (916) 315-9800 Ext 101