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Why Do Electronics Depreciate In Value So Quickly?

broken Anyone who has ever bought a brand new car is very familiar with the phrase, “the moment you drive the car off the lot, it instantly loses 30% of its value”. Is this true? For the most part, yes. And the auto industry will continue to do this as long as they can because they know people always need new cars.

Electronics of just about any kind can lose anywhere from 30% to 70% (or even greater) of their value in less than a year. But why is this? What’s the deal here? How can electronics drop like a brick in value so fast?

First I’ll tell you who’s not at fault here.

The consumer (you). You buy electronics, that being computers, cell phones, digital cameras and so on the same way you always have.

The manufacturers. These companies aren’t to blame because all they’re doing is building the stuff we want, and we almost never deal with them directly.

The retailers. Whether traditional brick-and-mortar or online storefronts, these businesses aren’t to blame either. Their job is to sell us stuff and they do so as best they can with what they’re given.

Who is to blame then?

The finger can be pointed at the companies themselves. No, not the retailers and certainly not the manufacturers. I’m talking about the companies whose logos are on the stuff you bought; they’re to blame.

The omnipresent problem that’s existed for several decades now is that companies are releasing new electronics products way, way, way too fast. When this happens, the market gets saturated quickly and the value of the products drops like a brick.

“Well, that’s good, right? Cheaper stuff for me!”

No, not good. In the fight to be #1 in electronics sales, companies will cut corners just to stay on top of the market. Sure, the price you get is cheaper, but the quality of what you get takes a nosedive. What good is a cheaper price if you have to keep replacing what you bought?

In addition, resale value for any electronic – and I mean anything – is abysmal at best.

My favorite statistic to point out is what Apple users say. “I spent $2,000 on my Mac, and it’s still worth $1,000 a year later!” Well, a $500 PC is worth $250 a year later. Do the math. 50% of the value was still lost and the downward curve is the same. Electronics are electronics, and no matter how much you spend on them, you’re still going to lose in the end.

Consumer confidence is completely shot at this point

This is the worst thing that happens to any market. When consumers get a bunch of crap thrown at them, and that crap plummets in value to the bottom faster than a lead zeppelin, ultimately they stop buying.

Then the consumer utters the words that make businesses tremble in fear, “I don’t need this.” Uh-oh. Panic time.

What can companies do to gain consumer confidence back?

1. Throw that release-early/release-often nonsense out the window

Whoever thought this up should be tarred and feathered several times. Regardless of what age you are, people don’t like new stuff being thrown at them constantly because that makes consumers nervous, as in, “Gee.. I really don’t know if I should buy this. Why should I if the stupid thing will be obsolete in less than 6 months?”

2. Stop releasing half-assed products that obviously weren’t ready to be released

Nothing is worse than spending a good chunk of money on an electronic under the assumption it all works, then shortly find out it doesn’t work. Consumers hate companies for life when that happens and it’s just bad for business. Being first with newer technologies in the electronics industry is rarely the best choice.

Ask some gamers if they’ve ever bought super-expensive video cards with bleeding-edge tech, only to install them and find out the drivers don’t work because they weren’t tested properly by the OEM, and several of their favorite games are now unplayable. This happens a lot.

3. Stop ignoring the customer

Ever notice that not too many people are complaining about Microsoft these days? Want to know the reason why? They finally started listening to us, the users. In the late 2000s, they finally got on Twitter, finally got on forums, finally give the users a voice and (gasp!) actually listened. The end result was better products that made just about everyone happy.

Companies who ignore customers ultimately “get theirs”, so to speak. Unfortunately there’s a ton of electronics companies who absolutely could not care less about their customers as long as they’re making money. This may last for a while, but at some point the customers do the one thing that hurts a company the most – they stop buying their products.

Your wallet is the loudest voice you have as a consumer. Everything you need to say without uttering a word can be done by not buying.

And no, I’m not saying to stop buying electronics altogether. What I’m saying is to become a smarter consumer. Research the items you want to buy more before buying. Read customer reviews. If you buy something that turned out to be junk, go to a site that allows you to rate the product, give it a poor rating and explain why you did.

What could electronics companies do to gain your confidence back that I didn’t mention?

You have a voice here. Post a comment or two with your opinions.