A customer slides an iPhone 12 across the counter and asks what you'll give them for it. You've got about ninety seconds before the moment goes awkward. Guess too high and you've bought inventory that loses you money. Guess too low and they walk, tell their mates you lowball people, and you've lost the repair customer as well as the phone. Most shops handle this by gut feel or by checking what the big online buyback sites offer and knocking a bit off. Both approaches leak money. The fix is a phone trade-in pricing method you can run in your head — or on the back of a job sheet — that starts from the only number that actually matters: what you'll sell the device for.
Price a phone trade-in backwards from the sale
The offer isn't a valuation of the phone. It's a business decision about how much of your future sale price you're willing to hand over today, before you've done the refurb work, before you've carried the stock, and before you've taken on the warranty risk of reselling it. So the arithmetic runs backwards from the sale, not forwards from what the customer paid for it three years ago.
Start with a realistic resale figure — what a device in that model, storage and condition actually sells for in your area within a couple of weeks, not the optimistic listing prices that sit on marketplaces for months. Then strip out every cost between trade-in and sale. What's left is the most you can offer while still making the deal worth doing.
The worked numbers
Using deliberately round, hypothetical numbers — plug in your own. Say the phone in front of you would realistically sell refurbished from your counter at $450 including GST.
- Refurb parts: say it needs a battery and a good clean-up — $70 landed cost.
- Refurb labour: say 1.5 hours of tech time at an internal rate of $50/hour — $75. Yes, count it. That tech could have been doing paid repairs.
- Warranty reserve: you'll resell with consumer guarantees attached (more on that below). Set aside 5% of the sale price — $22.50 — to cover the ones that come back.
- Selling costs: payment processing, a listing fee if it goes online, packaging — call it $20.
- Your margin: the reason you're doing this at all. Say you want 25% of the sale price — $112.50.
So: $450 − $70 − $75 − $22.50 − $20 − $112.50 = $150. That's your ceiling for a cash offer on this hypothetical phone. Not $250 because the customer looked hopeful, and not $80 because you felt like squeezing. The method gives you a defensible number, and it gives your staff one too — which matters, because the person at the counter on Saturday is often not you.
Build a grading table so staff don't have to do the maths live
Run the calculation once per popular model at three condition grades — good, fair, damaged — and write the resulting offers into a table your counter staff can read straight off. Update it monthly, because used-device prices only move one direction and a stale table is how you end up paying June prices in November. Keep the table wherever your team already works; if you run your buybacks through your point of sale, the offer and the grading notes should land on the same record as the customer's details so there's a paper trail for every device you buy.
A grading rule of thumb that keeps the table short: fair knocks roughly 20% off the good-condition offer, and damaged is priced as parts value only — what the screen, housing and board are worth to your bench, minus nothing for resale because you won't be reselling it as a phone.
Cash or store credit — and why the split matters
The $150 above was a cash ceiling. Store credit is a different animal, and it's where trade-ins get genuinely good for a repair shop. Credit costs you your margin on whatever they spend it on, not face value. If your blended gross margin across repairs and accessories is around 50%, then $180 of store credit costs you roughly $90 in real terms — less than the $150 cash offer — while looking more generous to the customer.
So the standing rule worth adopting: offer store credit at 15–25% above the cash figure, always quote both, and let the customer choose. The credit option also guarantees the money comes back through your till instead of walking down the road. If you're going to run trade-ins seriously, set up proper store credit rather than scribbling IOUs on receipts — you want a balance the customer can see and your staff can't fat-finger.
The checks before any money changes hands
Buying a phone that turns out to be stolen or finance-locked doesn't just cost you the offer amount — it can put you on the wrong side of your state's second-hand dealing rules. Non-negotiable checklist, in order, before you hand over a cent:
- Check the IMEI against a blocking-status lookup. Blocked or reported lost/stolen: decline, full stop. No price makes that phone worth buying.
- Check for account locks. Activation Lock on Apple, Google account lock on Android. The customer removes it in front of you or there's no deal — a locked phone is a paperweight you paid for.
- Sight photo ID and record the details against the transaction. Several states require second-hand dealers to keep records of who they bought from, and some require a licence to trade in second-hand goods at all — check the rules for your state with the relevant fair trading body before you start buying at volume.
- Have the customer sign a declaration that they own the device and it's free of finance and encumbrances.
- Wipe it in front of them, or get written confirmation they've done it. You do not want to be the shop holding a stranger's photos on a shelf device.
Every one of those steps should live on the intake record for the device, the same way a repair job gets a ticket. Treat a bought device like inventory from the moment it lands: serial, grade, cost, refurb parts consumed, and eventual sale price all tracked in your inventory system, so at the end of the quarter you can see whether trade-ins are actually making you money or just making you busy.
GST on second-hand goods — get advice before you scale this
When you buy a device from a private individual who isn't GST-registered, there's no GST in the purchase price — but you'll still charge GST when you sell it. The ATO has specific rules for second-hand goods that can allow a notional input tax credit on the purchase, and there are record-keeping requirements attached. Getting this right meaningfully changes the margin on every trade-in you do, and getting it wrong is an audit problem. This is general information only — sit down with your accountant before you make buybacks a regular part of the business, and have them confirm how the second-hand goods rules apply to your setup.
You're reselling with consumer guarantees attached
Under Australian Consumer Law, a business selling a second-hand phone still sells it with consumer guarantees — the device has to be of acceptable quality given its age, price and condition as described. "Sold as-is, no warranty" signs don't switch those guarantees off, and telling a customer they have no rights on a used device can itself be a problem under the ACL. This is exactly why the worked numbers above included a warranty reserve: some percentage of resold devices will come back, and the ones that do should be a line item you already budgeted, not a fight at the counter.
Practical implications for how you sell:
- Describe condition honestly on the receipt — grade, battery health, any cosmetic marks. What you described is the benchmark the guarantee gets measured against.
- Offer a plain written warranty on refurbished devices — say 90 days on hardware faults, hypothetically — because a clear voluntary warranty on top of the guarantees prevents most disputes before they start.
- Keep the refurb record. If a device comes back, knowing exactly which parts you fitted and when settles the conversation quickly.
None of this is legal advice — for anything beyond the basics, check with the ACCC's published guidance or your own lawyer.
The walk-away rules
A method is only useful if it also tells you when not to do the deal. Three rules worth putting in writing for your staff:
- If the calculated offer comes out under about $40, decline politely. The admin, wiping, grading and shelf space cost the same on a $30 phone as a $300 one, and the margin isn't there.
- If the model sells slowly in your area, halve the margin of error, not the margin. Drop the resale assumption, not your profit line — slow stock ties up cash you'd rather have in fast-moving repair parts.
- If anything about ownership feels off, it is. No offer, however profitable on paper, is worth the exposure.
Run the backwards calculation on your five most commonly offered models this afternoon, print the grading table, and put it next to the till. The next person who slides a phone across the counter gets a confident number in thirty seconds — and you get a trade-in book that's actually profitable rather than merely busy. If you want the intake checks, grading notes and store credit living in one system instead of three notebooks, have a look at what RepairTree's features cover, or get in touch with questions.