Resale Value vs. Scrap Value: What Is Your Broken Item Really Worth?

That old phone with a cracked screen. The laptop that will not switch on. The generator that stopped starting last year. Most of us say the same thing about items like these: “It is spoilt, it is worth nothing.”

Usually, that is not true. A broken item is rarely worth what a working one is worth, but “not worth full price” and “worth nothing” are very different. The gap between them is where people lose money without knowing it.

To see why, you need to understand that one item can carry three different kinds of value.

The Three Kinds of Value

• Resale value: what a buyer pays for the item as something that works and can be used.
• Residual value: what the item is worth when it can no longer be sold as a fully working product, but someone can still repair it or use its parts.
• Scrap value: what is left when the item has reached the end of its useful life and only its materials or recoverable components have any value.

Most everyday items, such as phones, laptops, appliances and clothes, move through these in order. They start with resale value, slide to residual value as they break down or become outdated, and end at scrap value. (Some items do not follow this slope at all. We cover those below.) Knowing where your item sits on this slope is the secret to pricing it properly.

Resale Value vs. Scrap Value: The Key Difference

Resale value is about use. It answers: “What will someone pay to use this item, or to repair it and use it?”

It answers: “What are the raw materials inside this item worth if nobody can use it anymore?”