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Design Education

Formulating Second-Hand Market Value as a Function of Product Specifications, Age, and Conditions

[+] Author and Article Information
Minjung Kwak

Department of Industrial and Enterprise Systems Engineering,  University of Illinois at Urbana-Champaign, Urbana 61801, ILkwak14@illinois.edu

Harrison Kim1

Department of Industrial and Enterprise Systems Engineering,  University of Illinois at Urbana-Champaign, Urbana 61801, ILhmkim@illinois.edu

Deborah Thurston

Department of Industrial and Enterprise Systems Engineering,  University of Illinois at Urbana-Champaign, Urbana 61801, ILthurston@illinois.edu

1

Corresponding author.

J. Mech. Des 134(3), 032001 (Mar 06, 2012) (11 pages) doi:10.1115/1.4005858 History: Received July 19, 2010; Revised January 12, 2012; Published March 02, 2012; Online March 06, 2012

Second-hand market value is important for manufacturers in that it affects the profitability of both new product sales and end-of-life recovery. To gain a better understanding of second-hand market value, this paper presents an empirical study of buy-back price using laptop computers and mobile phones as examples. A thousand items that were on the market in recent years were examined, and their current buy-back prices were estimated using the pricing engine of a real buy-back company. The statistical analysis provided a model that could assess the value of used products. The model links a product’s specifications to its second-hand market value. It also incorporates the impacts of product age and cosmetic and hardware conditions. Based on the results of the analysis, the design implications for improving the value of used products were discussed.

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Copyright © 2012 by American Society of Mechanical Engineers
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Figures

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Figure 1

Design trends in laptop specifications

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Figure 2

Design trends in cell phone specifications

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Figure 3

Buy-back prices with excellent cosmetic condition and no hardware failure

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Figure 4

Correlation between original price and buy-back price

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Figure 5

Effect of cosmetic condition on buy-back price

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Figure 6

Effect of cosmetic condition on residual value ratio

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Figure 7

Effect of cosmetic and hardware conditions on buy-back price

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Figure 8

Effect of cosmetic and hardware conditions on residual value ratio

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