Price vs. Value: the Economics of Used Equipment

The amateur radio used equipment market is changing. It's changing because we're changing and the technology is changing. So-called "boat anchors" are increasingly becoming junk. However many seem not to have noticed. The matter is worth a deeper look.

Nostalgia

Many of the premium tube rigs of decades past have maintained high prices on the used market. This is primarily driven by nostalgia. As we grow older (and the ham population is old!) we grow nostalgic about our youth and we have the money to relive those early experiences. 

 

It has become quite common to find some of these boat anchors alongside state-of-the-art equipment in our shacks. Whether the equipment is lovingly restored or left to look its age it is rarely used on air. It is there for the memories it elicits. Often it is equipment we never owned before because in our youth when we had little money. Now we can afford it and so we accumulate rigs we once admired from afar.

Nostalgia dies when the nostalgic ham dies. With the baby boomers aging out the demand for boat anchors is in decline. Estates are clearing out this equipment as are elderly hams compelled to clear out their homes for reasons of age and infirmity. We've arrived at the point when supply exceeds demand. As any economist will tell you that drives down prices.

Radio museums and public displays are no panacea. This is a small market itself destined to decline. Indeed many of these museums are owned and operated by older hams and they, too, have to clear the inventory. Soon the prices commanded by once top-of-the-line equipment from Drake, Collins and other revered names will enter their final decline and fall to zero.

The message is that if you own these boat anchors you should not long delay selling them. It is understandably difficult to let go but let go you must, willingly or unwillingly. At least if you sell now there will more funds to bequeath to your family. Don't bequeath the equipment because soon enough no one will want it and it will end up in the dumpster.

Nostalgia has a best before date so you should sell before the aroma grows too strong. Even $10 for a Heathkit HD1410 keyer is absurd. In 2020 its value beyond a lingering nostalgia is close to zero. Soon it will be zero.

Equipment of the previous generation

More pertinent to less aged hams is equipment one or two generations removed from current products. As each new generation of equipment arrives on the scene the value of older equipment declines. Again, not everyone seems to notice it happening. It has been the subject of conversations I've had with my contemporaries.

 

A good example of a generational discontinuity was the Icom IC7300. It's not the best rig on the market but for the price new it was exceptional value. Consequently the value of 10+ year old transceivers fell. Why buy a used FT2000 when you could buy a new IC7300 for about the same amount? The value falls as technology evolve and so must the price of older equipment. 

 

The market value of my FT950 dropped 20% almost overnight and it will continue to fall. It is interesting that the reason I traded a FT1000MP for the FT950 was to get 6 meters and the DSP. Prices for crystal filters for those old rigs are high and the value of the rig is low. It made no sense to spend $300+ on narrow CW filters that DSP does better at zero additional cost in more modern rigs. It was time to dispose of the 1000 while it still had a reasonably high market value.

Despite these generational effects it is common to see older generation rigs with high prices on the used market. Some hams fail to smell the coffee. When they don't lower the price the listings linger. There are few buyers at the high prices they commanded in the past.

 

Premium priced equipment

 

You will have noticed advertisements for equipment that is extremely expensive. However you rarely if ever see them in ham shacks. There are $10,000 transceivers and amplifiers, $3000 full globe wall displays, among other examples. These remind me of the old rule of buying new cars: the price drops 30% when you drive it off the dealer's lot. For these amateur radio products the depreciation can be far worse.

Premium products may have additional features and look impressive. What they typically don't do is outperform the second tier of equipment that is widely owned. Sticking with Yaesu for the moment consider the FTdx9000 versus the FTdx5000. I've heard of people owning the former but the latter is an excellent rig and widely owned and used, and is itself very expensive when new. I would never have purchased the 5000 new and the 9000 price was absurd. Some set a premium price for both these rigs on the used market and that is a mistake.

A common reason why those high priced premium product are bought is simply because the purchaser can afford it. The baby boom generation is the wealthiest in history and many of them have money to burn. So they burn it. The same mindset drives sales of gold-encrusted face masks. These hams build impressive looking shacks that would perform just as well or perhaps better for half or a third the price. If it makes them happy and it's their money that's their business and I wish them well.

The trouble comes when it comes time to sell. Buyers of a similar mindset buy new not used: the purchases are driven by status and emotion, not function. Everyone else assigns a low to middling value and are only willing to pay a fraction of the new price. You cannot justify a high price on the used market just because you paid a high price. You must price to value.

For a related and more common story consider Hy-Gain rotators. True, they're not premium products but they are priced that way. I've had several over the years and not one of them was purchased new. Their value is far less than the manufacturer's price. On the used market the price is usually less than half the new price. That is better aligned with the value.

Price vs. value: a lesson in economics

Price and value are distinct though related concepts. A transaction can occur when the price does not exceed the value of a product. Which brings us to an important rule:

The seller sets the price and the buyer sets the value.

Too many sellers believe that they set the value of used equipment. It is (or was) of high value to them so the resale price is set high. Buyers with the same history as the seller and, perhaps, the same sense of nostalgia may similarly value the equipment and proceed with the purchase. 

 

As I said earlier, that market is declining. Fewer and fewer buyers are of that ilk. Due to market forces the value of boat anchors and equipment of more recent though older generations is in a secular decline. Prices will only go lower; they will not bounce back.

Should you keep the old equipment simply because you like having it around and it later becomes part of your estate you ought to understand that it is more likely to end up in the dumpster than generate cash for your next of kin. The old stuff that comes up in the increasingly frequent estate sales is nearly without value. Sometimes you can't even give it away!

Many won't learn this lesson. They will be disappointed when there are no callers for that pristine set of Drake C-line equipment they value so highly. Yet they will not lower the price. Few others share their opinion of the value. 

 

Face facts: in 2020 it is little more than nostalgia fodder. By 2030 it will quite literally be trash.