Friday, January 18, 2013

Piecing Out Appliances for Money

Last year our glass oven top met an unfortunate demise at the hands of our stone cookware (serves the glasstop right for busting one on the stones when it was set on the "On" burner three years ago). So after much internet searching I found that a new glasstop for the stove would cost $425 delivered to our house. A brand spanking new stove and oven would cost only $525.

Looking over the life expectancy of stoves/ovens it is around 8-12 years. So paying 80% of the replacement cost for the repair just didn't make much sense. We ordered the new stove. In the meantime, I decided to do some more internet searching to see what the cost of some of the replacement parts that aren't broken are.

Control Panel - $381
Large Burner - $109
Small Burner - $62
Burner Switch - $45
Control knob - $15

So with a half hour, I removed all of these items from the old stove, since they were still in perfect working order. If I can just get 25% of the retail price, I have paid for half of the new stove. If I get 50%, then the new stove was free. $500 for 30 minutes of work, isn't too bad. The sad thing is, if I was really tenacious, I could have stripped the whole thing and probably had $2000 worth of parts to sell, and then sell the shell for scrap steel and get another $2.

Maybe I should go into the spare parts business. Just buy new stoves, take them apart and sell the parts. It would work with cars too. I could be a millionaire in just a matter of months. After the week of auctions, it turns out I made a total of $23.48, the market just isn't there.  So, I am not quitting my job and moving to the Bahamas.

Retrospectively, the market has got to be really slim.  Consider that there were 2 million of this model made. And they were made over a 10 year period, 200,000 a year.  Parts don't start breaking until the 8-12 years and only in 25% of them, so 50,000.  There are still 52 weeks in a year, so only 1000 potential customers at the time that I am selling the stove parts.  Only 25% of these are regularly online, and only 25% of those think to check eBay.  So, that puts me at 65 potential customers.  There are about 30 different parts on the stove that could break, I had 10 of them for sale, so now my customer base is down to 20.  It wouldn't take too many errors in my estimates to bring it down to the 1 to 3 people that were bidding on the parts.  Markets can be funny that way when you look at the variables that make up demand.

2 comments:

  1. I'm not much of an e-bayer, so maybe there are very successful businesses run on that model, but in my experience, successful businesses don't run that way.

    Auctions are how you get rid of unwanted stuff and still make the most possible money off of them, rather than ditch them for next to nothing at a yard sale or flea market.

    If you want to make money, you don't auction the items off and just hope that there will be someone available who needs your item at the exact time you're auctioning it off, you do it the more traditional way. You price the item based on what you have into it and what kind of profit you want to make, then warehouse it until someone who needs it and is willing to pay your price comes along.

    Most people these days don't fix things because they do exactly what you did...find that the parts cost so much that the savings doesn't even cover their hourly "worth" for the amount of time they'd spend fixing it. So they discard the old one and buy a new one.

    Many people would, however, be more than happy to invest the time into repairing their items if they could do so and realize a reasonable savings. If you had put up a web site listing the items you have on sale and how much you want for them and then just waited for google to work it's magic, I'd bet you could have made the type of profit you were initially contemplating. 25 to 50% of the price of a new replacement item is a reasonable expectation and one that many people would pay...if you're willing to hold off on the sale until you find a willing purchaser. You may have to hold onto the parts for a while, but eventually someone who would prefer to do the repair themselves will need those parts and, at that time, your price will be a bargain for them.

    The problem was not in your concept, just in your sales model.

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  2. The problem with the sales model I have and you elucidate will work, is I don't have the warehouse space. So, when faced with getting 3% and its gone in a week or 25% (maybe) if I hold on to it for 3 months to 2 years, I'll take the 3%. I doubt that a small time seller like me (with a few stove parts) would ever be found on the Internet. Overall, the cost to store and keep up the website for the time required more than would make up for the "premium" I could get. Which is why business works (someone else wants to specialize in stove parts and has the warehouse space for it).

    This piece was more of a tongue in cheek at the idea that some people have that it is better/cheaper to fix things than buy new. At one time in the nation's history when the distribution channels and manufacturing channels were not what they were today, this philosophy may not only have been correct, but was the only solution. The days we live in now are different. Some people would rather stick with what they learned 50 years ago. I like to take the current evidence and compare that to "common sense" and adjust my life as needed.

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