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How Quickly Does The Value Of Your iPhone Depreciate?

It will be financially prudent to use your smartphone for at least 2 years before changing it.

 

The value of most things that we purchase suffers depreciation. Depreciation refers to the loss of value that an asset suffers over time.

Depreciation could be caused by a variety of reasons. For some items, it is caused by wear and tear. These include your furniture at home and the car that you are driving.

Others could be due to technologic advancements. For example, an iPhone 4 becomes worthless today (at least in Singapore) when we are all anticipating the iPhone 7 to arrive.

How Depreciation Works For the iPhone

What our parents used to tell us about spending wasting thousands of dollars on something we just bought isn’t exactly true.

When you buy a $1,218 iPhone, you did not just spend $1,218. Okay… technically you did, but not in the way your parents were trying to make it out to be. $1,218 does not vanish away the second you purchase the iPhone. It’s still around, unlike your California Fitness Lifetime Membership.

Read Also: Lessons Singaporeans Can Learn From California Fitness Closing Down

The phone you now own holds the value, at least for the time being. In fact, if you sell it fast enough, you might even get more than what you originally paid for.

Depreciation sets in right after you start using the phone. Actually, that isn’t totally true as well. Depreciation, at least for Apple products such as the iPhone, starts from the day it launches. Pre-order the iPhone 7 today and you might be able to sell it at the same price ($1,218) or more when it arrives. Buy the same phone one year later and you would certainly not be able to get as much for it.

So if you were to buy an iPhone today, how quickly would you expect its value to depreciate?

How Much Does A New iPhone Cost?

The iPhone 7 (128GB) is selling at a price of $1,218. It’s predecessor, the iPhone 6S, was launched about the same time a year ago for $1,388 (128GB).

MODEL Lower Option Middle Option

Higher Option

Price

$1,048

$1,218

$1,388

iPhone 6S

16 GB

64 GB

128 GB

iPhone 7

32 GB 128 GB

256 GB

 

As you can see, Apple hardly ever reduces their price for the new iPhones. Rather, they make a phone better (or appear to look better) and keep to their original pricing strategy.

How Much Does An iPhone Depreciate Over 1 Year?

The first comparison would be to look at the existing prices of a brand new iPhone 6S one year after it’s launch.

In 2015, a 128 GB iPhone 6S would have cost $1,388. Today, a brand new one costs $1,048. That means the very same product has lost a value of $340 over a one-year period, according to its own manufacturer.

We then take a look at how much mobile phone shops in Singapore are willing to pay for a used iPhone 6S.

On both Mobile8 and Mobile Square, the advertised price for a used 128 GB iPhone 6S is $650. That equates to a depreciation of about 53% after one year, or a loss of $738 for that one-year of usage.

What Happens To An iPhone’s Value After 2 Years? 

To find out what happens to the depreciation of the iPhone after two years of usage, we look at the iPhone 6.

The iPhone 6 was launched about 2 years ago with a retail price of $1,288 for a 128 GB model. If you were to sell it today, you would be able to get about $450 based on the online price offered. That means your depreciation over 2 years would have been $838, or about 33% per year. It’s still a lot, but not as much compared to the iPhone 6S after one year.

Depreciation Of Other Smartphones

Here is how the iPhone compares with other smartphones.

Samsung Galaxy S6 Edge (64 GB): Launched at a price of $1,298 in May 2015. Sales value today at $480. Depreciation of about 47% after one year.

HTC One M9: Launched at a price of $1,008 in April 2015. Sales value today at $220. Depreciation of about 58% after one year.

LG G4: Launched at a price of $998 in May 2015. Sales value today at $200. Depreciation of about 60% after one year.

Phone Model

Original Launch Price

Price Today

Depreciation Rate Per Annum

Galaxy S6 Edge

(64 GB)

$1,298

(May 2015)

$480

(September 2016)

47%

HTC One M9

$1,008

(April 2015)

$220

(September 2016)

58%

LG G4

$998

(May 2015)

$200

(September 2016)

60%

 

With the possible exception of Samsung, it appears that smartphones from other brands have an even harder time retaining their value. For both the HTC One M9 and the LG G4, both the phones appear to be quite close to their respective residual value despite just being launched slightly more than a year ago.

What Should We Do?

The thing to know is that changing your phone to the latest model offered is an expensive hobby.

Most smartphones, regardless of whether it is an Apple iPhone or some other brand, would lose a large chunk of its value after its first year. Technological advancement is so quick these days that what is cool and trendy (and thus, expensive) today would be common tomorrow.

Secondly, the phone that launched at the lowest price today may not necessarily be the cheapest phone to purchase once you take into consideration its future resale value.

Last but not least, the best way for you to stretch the money already spent on a phone would be to use it for a long time before changing it.

Read Also: 8 Alternatives To Consider Getting Instead Of The iPhone 6S

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