Best Buy’s genius gimmick: Buy Back trade-in program is a total ripoff

February 28, 2011 By Jeffrey Van Camp

Frustrated with instantly outdated gadgets? Best Buy's new Buy Back trade-in program sells consumers on the convenience of always having the latest and greatest, but the numbers just don't add up.

At the Super Bowl this year, Best Buy announced its brand new Buy Back Program with an odd and confusing commercial featuring Justin Bieber and Ozzy Osbourne. Basically, for a fee, Best Buy will now make a pact with you to buy back your gadgets for 10 to 50 percent of their original retail price if you decide you’re ready for an early upgrade. But is the service really worth its price tag? Find out below.

The costs and savings of the Buy Back Program

Here’s how it works. Much like Best Buy’s Warranty program, when you purchase an item from Best Buy, the cashier will ask if you’d like to enroll that item in the Buy Back Program — there is a fee to join it. If you return your product in 100-percent good condition — working order with the receipt, all the original parts, and proper documentation — Best Buy will give you money back for your item, depending on how old it is. Laptops, netbooks, tablets, and phones are only returnable within two years. TVs can be returned for a very low rate for up to four years. Assuming all of your paperwork checks out and the item is in good condition, Best Buy will give you a gift card for the amount it owes you. You must spend that gift card in Best Buy.

Cost to purchase the Buy Back Program for an item:

Laptops and Netbooks – $69.99
Tablets – $69.99
Mobile Phones ($349.99 or less) – $39.99
Mobile Phones ($350 and more) – $59.99
TVs ($499.99 or less) – $59.99
TVs ($500-$1,199.99) – $99.99
TVs ($1,200-$2,499.99) – $179.99
TVs ($2,500-$4,999.99) – $299.99

Amount of money you’ll get back (based on product age):

50% back – up to 6 months old
40% back – 6-12 months old
30% back – 12-18 months old
20% back – 18-24 months old
10% back – 24-48 months old (TVs only!)

Still don’t understand? Watch Best Buy’s super-informative video:

Test products

To see if Best Buy’s new program is a good deal, we thought we’d test a few common products. There are an endless number of combinations of products and age we could have chosen, but we chose a few new and old common items: an iPhone 3GS, a Samsung Galaxy Tab, and a Samsung 52″ television from 2008. We calculated the price Best Buy pays back based on the age and type of product and compared it to current used prices of each product online. The results are not favorable for Best Buy.

Apple iPhone 3GS 16GB (AT&T)

Age: 20 months

Buy Back Price: $120

Buy Back Program cost: $60

Avg. used price online: $275

Original price (no contract): $600

Potential cash lost through Buy Back: $215

Though Best Buy uses the actual price of phones to calculate its Buy Back prices, users hoping to upgrade from the iPhone 3GS would not have been a good deal after any length of time due to Best Buy’s low payback rates, which top out at 50 percent and dip down to 20 percent as users approach their two year contract renewal. We estimate you could make $200 more from your iPhone 3GS by putting it on eBay or selling it online. However, if you’re content with a $60 payout or don’t want to put in the effort, Best Buy’s plan might be good for you. Just make sure you have all of the parts and your phone isn’t damaged.

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Showing 15 comments

Joe Sumfin at 4:39pm 1st March 2011 Sounds like someone has cash to spare Trip. How very corporate.
Trip Affleck at 9:49am 1st March 2011 the story says it's a rip-off COMPARED to reselling your old item yourself online; you know how many electronic items i've ever bothered to resell, ever? zero. just like most peple. this option isn't so bad for someone like me who has no interest in hawking my old gear through virtual yard sales.
Scott Aron Bloom at 1:20am 1st March 2011 Also. I belive it has to be in working order
Tom Pajak at 1:18am 1st March 2011 $5-$10 PER MONTH??....LOL...SUCKERS!!!
Digital Trends at 1:10am 1st March 2011 @tom Probably the fact that you will have to shell out $60 to be part of the Buy Back program, as well as $5-$10 per month for the Best Buy extended warranty coverage... It makes it a little less cost effective for you.
Corey Docken at 3:27pm 28th February 2011 In Best Buy's defense, I think they are really selling convenience to their customers. The program targets people who are "too lazy" to sell their slightly used products, and for those people, getting a fraction of their money back is a "good deal" for them.
1. Jeffrey Van Camp at 3:22am 1st March 2011 This is true. But it takes an odd combination of laziness, new gadget addiction, and frugality to consider Best Buy's program. You have to be too obsessed with new gadgets to stop getting them every six months, concerned enough about money that you want some back, but too lazy to actually learn how to sell anything online and truly support your gadget habits. There are many people who are obsessed with the latest and greatest but a good portion of them either don't care about cost or have learned how to resell their old crap fairly quickly to make bank and space for new.
  1. Will S at 1:27pm 1st March 2011 As someone who worked in BB corporate for 4 years (and I really don't have a personal issue with them--but this is the truth about how their business operates)..most everything about BB can be considered a ripoff- the margins they charge are ridiculous (making as much as 70%+), the terms they stipulate for vendors who don't control them (IE Apple/Sony) is ridiculous (90 day+ payment terms, open ended return policies, ad and merchandising fees regardless of if they advertise a brand) --in far too many instances they make it where only the large brands have a shot at being on their shelves-in short they do very little, if anything, to support many high-quality brands that customers want to see more of. They, like most all mass market stores have a formula they jam down the throats of buyers (and yes I was a buyer for them and have been for 2 other large mass retailers). We buyers are conditioned to nearly act as robots-and it's funny to see how many buyers believe they are brilliant because they have the power to veto whomever they want--but many times it's not buyers making the decisions go/no go decisions, it's our bosses. But I digress--point is, this buyback program isn't in the best interest of the customer it's in the best interest of Best Buy--they make killer margins on the original sale (again as much as 70%) then they buy it back from you lower than their original cost and then resell it for more margin (20%-40%) and at the time you are selling this back they are probably upselling you to something where they are again making another 20%-70%. Corey, I don't understand how this is more convenient than simply selling an item on ebay or 1000 other sites--I don't think the cost of this justifies the perceived convenience and from being on the other side of this Oz curtain, it is a rip-off. but to each his own.
    
    rob at 10:39am 2nd March 2011 You must have worked for best buy 5 plus years ago, because the avg margin rate is below 20% now. The program is not for everyone, so if you don't see value you in it don't buy it. Of course best buy is going to make some profit... otherwise how do they stay in business and continue to grow? If your not the type of consumer that stays up with the latest and greatest then its not for you..
Tom Pajak at 7:25pm 28th February 2011 so whats to stop me from buying a 3gs and breaking it towards the end of my contract and getting a brand new one in exchange and using that to trade in??
Kidd Kosmonaut at 6:20pm 28th February 2011 @Lm took the words right outta my mouth :]
Marc Morrell at 5:40pm 28th February 2011 Two words: No duh!
Lm Denham at 5:35pm 28th February 2011 Get real. What company offers any program to benefit its customers? The idea is to make it look like the customer is benefitting. You would have to buy something lame for this to benefit you but if it was that lame then you probably didnt get it from the store. For those afraid or apprehensive to sell online, this is a better option than loosing the total value. The biggest rip-off is convincing people that all these upgrades are necessary in the first place. Not too many people use half the potential of most electronics they own and probably not many have gained anything from an upgrade other than the right to boast about having the latest.
Scott Aron Bloom at 5:32pm 28th February 2011 Its marketed to the same people who by extended warentees..
Chris Johnson at 5:14pm 28th February 2011 Does this surprise anyone? Buyback programs are never that great of a deal. Even going into Game Stop and trading in a bunch of old games yields in small returns. I worked there for three years and unless a person was getting rid of nothing but new games (which yielded, at best, a 50% return) or games that were super rare (Dragon Ball GT: Final Bout often sold for $100+) you got about 5% of your initial investment back. The more "generic" the game (i.e. sports), the less you'd get back. Did people think they would be able to take a phone, computer or TV that they spent a good amount of money back and “sell it back” for 50%+? "Yeah, take me five year old TV that I bought for $500 (that's a 32inch flat screen) and give me $350 for it so I can buy a LCD!" I’m not sure I’d call this program a rip-off; it’s just the reality of the situation.