When I tell people how much something I own costs, or that I just bought something new, they often give me shocked looks. In the past year I’ve purchased three laptops. I’ve also bought five or more lenses, five or six cameras, and a car that I later sold. What’s the deal. Am I really horrible with money? Am I going broke? No.
The true cost of something is completely unrelated to what you pay for it. This sounds like some terrible aphorism. It’s not, and I’m not going to try to convince you that money isn’t meaningful.
Here’s the trick: If you buy things that don’t depreciate, or buy things that you know you’ll use for a long time, then they sometimes don’t cost much more than buying cheap stuff. Often things are cheaper to rent than to buy, but often they’re cheaper to buy and resell than to rent. Here are some examples:
- I could buy a $100 lens and put it on my camera and sell it in a year for $90 after eBay or Amazon fees. Or I could buy a $1,000 lens and sell it in a year for $900 after sales fees. This works because lenses rarely depreciate, and the difference in cost between the two lenses isn’t $900 — it’s $90. In fact earlier this year I bought a lens for $900 in Japan and sold it in New York for $1,100. From my experience a $1,000 lens is often worth it, but much over $1,000 lenses get too heavy to be useful.
- I just bought a new laptop in Japan to try out. I’m now fairly sure that I’m not going to keep it. Why am I not concerned? Because although the laptop sells for $1,800 new in Japan, it only costs $1,550 after the discounts given to an American passport holder, and it sells similarly specced for $2,800 on Dynamism. I made the decision to buy the laptop after careful research. As I see it I basically bought a laptop with the option to make money on it if I don’t like it. I expect that after eBay fees and shipping I’ll earn maybe $200 on the transaction.
- Film cameras are dirt cheap now, especially medium format ones. Good quality film cameras like a Hasselblad 500CM have leveled out at around $800-$1,000 and are probably never going to depreciate again. These cameras cost around $5,000 when they were new, and back then $5,000 behaved a lot more like $15,000 did today. They are wonderful machines. A Hasselblad feels amazing in your hands. So I bought a Hasselblad 500CM from Australia for about $800, shot a few dozen rolls of film through it, and sold it for $850 a few months later on eBay. In this deal I actually lost a bit of money — about $10 after eBay fees and shipping — but I got to shoot one of the best camera designs ever made for $10.
- For years I paid close attention to the Mac Buyers Guide to see when Apple would release new hardware. I’d buy Apple hardware that I wanted as soon as it was released then resell it a few months before a new design came out. Apple hardware barely depreciates as the item you’re selling is still the current generation. For example I might buy a used iMac, use it for nine months, and resell it for a $50 loss. I used to do this frequently. My worst deal overall was buying a Thunderbolt display in 2011 for $850 and selling it, used, for $640 cash in 2014. I paid $210 minus lost interest to own a monitor for two years that actually still retails for $1,000 today. This is far less than you might think when you initially see the $1,000 sticker price on a new Apple screen.
My method for this is almost subconscious, but here’s how it works. First, I do careful research to find products that everyone knows about, that everyone loves, and that people will almost always want to buy. I try to find the classic designs in each category. You can generally find these by searching for “best X” where X is whatever you’re looking for — “best camera”, “best monitor” etc. Then I try to buy that classic design either used or at as low of a cost as possible. I try to resell it before any major events happen that would cause it to depreciate. If a new laptop or camera is rumored that might cause something in my collection to depreciate I’ll unload it as soon as I can for a reasonable price on eBay or Amazon.
Some technologies depreciate slowly, others depreciate quickly. Apple produts do well used because only one company makes them and a new model comes out at most once per year. Lots of people in the world want an Apple product and there will always be a deep market. No name or very obscure electronics won’t do nearly as well, and any time you buy something above the minimum cost you can find it for — like buying on the street at full retail price — you’ve lost that money forever.
A lot of people are lazy and don’t want to sell their stuff. This drives me nuts. Right now I’m running heavy on gear: three laptops, two cameras, and two phones. In a few weeks I’ll own one camera, one laptop, and one phone. I’ll go through the steps necessary to sell these things as soon as I can. If you just let these electronics rot and depreciate in your house they’ll someday be worth nothing, but if you sell them quickly it’s more like renting than owning.
One more thing: I would not recommend buying and reselling things as a way to make money. The risk is high and the earnings are unpredictable. But buying things to try them out and selling them if you don’t like them is a totally appropriate action. Your true cost of ownership isn’t what you paid for something — it’s what you paid minus what you get back after selling, plus lost interest. Compare that to the enjoyment and fulfillment you get out of something and decide if it’s worth it.