08 April 2011

The microeconomics of selling your stuff

In January, I sold a lot of my stuff in California because I was moving to Amsterdam.

I was reminded of a few truths:
  • The appropriate price is somewhere between what you're willing to accept and the buyer is willing to pay. It's not based on what you paid or what someone who's not there might pay.
  • More importantly, you have to consider a sale now versus a higher price later -- or keeping it.
  • I didn't sell my 1998 BMW because the Blue Book price was about $4,000. I'm willing to buy my car for $4,000, have storage at my dad's place (!), and don't have to pay much to keep it registered, so I kept it.
  • I sold some of my "art" collection. Better that it's on someone's wall than under my bed.
  • It's nice to have your stuff in one place. Reduces transaction costs (where did I leave that?), duplication (one bed is better than two) and footprint (my storage rent was $70/month!)
  • Just because it's in the "free" box doesn't mean people will take it!
Bottom Line: We have possessions for the services they provide. Try to minimize possession as a habit.

2 comments:

chris corbin said...

Ha! All true. In fact, I found if you change the free box to $0.10 the items move much faster.

CRG said...

I've thought about the "free" idea a lot. Clearly the cost of something is more than just the monetary cost. It also includes the space it will take up, the time & effort to transport it, and the time & effort to dispose of it should it not be useful. Sometimes a free item isn't worth the price.

And like Chris Corbin alluded to, sometimes a cost--any cost-- associated with an item raises its perceived value enough to make it appealing. If it's free it must not be any good. If there is a small cost to it, you're getting a bargain.