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I was walking along 57th Avenue in New York late one recent evening, two days before the release of both the Nintendo Wii and the Sony Playstation 3. I saw a huge line of people camped out, and my first thought was, "there isn't a Star Wars movie due soon, is there?" A few moments later I realized it was a line for a Playstation 3.
It's certain that many of those faithful campers would later sell their Playstation 3 on eBay; same with the Wii. According to the Wall Street Journal [subscription required], nearly 15,000 of Sony Corporation (ADR) (NYSE:SNE)'s new game console have been sold, for around $1200 each, on eBay since the release last Friday. (Which is, if you're counting, some $500k straight to eBay, Inc. (NASDAQ:EBAY)'s bottom line) Those who sold, made about a $500-$600 profit. The way I calculate? It's so not worth it.
It's not just that you won't make money. No, you will make money. But one of my cardinal rules of time investment is (a) is it fun? and then (b) is this sustainable? In other words, can I repeat this for future success? And can I repeat it enough so that it was actually worth my time?
I've tried to sell things on eBay for profit a lot, it's been an ongoing hobby. And sometimes, I did make money. I made a lot selling things like CDs and DVDs. I made a little selling niche items, like Barbies (just for a lark, I swear) or Saveur magazines. But when I looked at the time invested vs. the profit realized -- even though sometimes it was a huge percentage profit! -- it wasn't ever worth it. Although it certainly was fun scouring garage sales for bargains.
Generally, if you enjoy your time spent standing in line enough for it to hold up on its own, great. Stand in line, get the goodies, sell them. But don't expect it to pay your rent. Let's examine the numbers:
The unit's retail price is around $599, plus tax and whatever other peripherals and extras you pick up in the store. Say, $650. You must, of course, pay this upfront. Add in listing fees, Paypal fees, and final value fees and you've knocked another $50 or $60 off your income.
If you sold at the average selling price, $1,186, you've made around $475. Not a bad profit, right?
But let's examine this. You had to wait in line for two days if you bought the Playstation the day it came out (and scored that higher sale price; if you waited in line on Black Friday, your Playstation 3 is only worth about $1040 or so thanks to the declining market value).
Even if you don't make Wall Street money, say, $100 a day, you've lost two or more days of work -- that's $200. Plus costs of waiting in line; snacks, and extra cell phone minutes (you're bored, after all), a new sleeping bag. $50 or so.
Now you've only made $225. Not terrible, not great.
And then let's look at reality. You're just going to turn around and invest that $225 (or so) in another Playstation 3! If you waited in line so long, I know as well as you do that you can't wait to play the darned thing.
Sure, you've gotten yourself a handy 30% discount on a game console. Brilliant. But now you can't get your hands on one 'til after Christmas.
Hmm... I think someone said they were selling on eBay...
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Reader Comments (Page 2 of 2)
11-30-2006 @ 12:04PM
D LOCKWOOD said...
To All of you: Does it really matter if people stood in line or not for the PS3? I did not, but if people want to stand in line, who cares. If people are stupid enough to pay over $1000, who cares. It is their money, their time. I still have not bought a Xbox 360 because I think the price is still too high. That is me. On the other hand, I just last week I remember me and friends waiting in line for 1 hour for dinner at a local over priced resturant...With food, drinks, and TIME (total of about 5 hours) if you added up ALL the expenses...How much did we SPEND???. 8 people x 5 hours x drinks x food = ALOT...Did we enjoy it, sure. Was IT A WASTE of time and money...SOME would say that is WAS. Who gives a crap if someone wants to WAIT for 1-2 days for something. I have CHOOSE to wait over a year for the Xbox 360. CHOICE....
11-30-2006 @ 12:29PM
Sammy said...
To think if Sony made more ps3's avaliable to us so that everyone could have one people would buy them and still pay $600.00 for them and sony would still make money. I don't understand why a company each year makes short supplies of things knowing the mess they will cause for everyone. For all those who waited in line so that you could give the ps3 to your kid bless your heart.
11-30-2006 @ 1:58PM
maripe said...
MY KID LOVES VIDEO GAMES CONSOLES HE WOULD LIKE TO HAVE THEM ALL EVERY SINGLE NEW ONE BUT I DO NOT BELIEVE HE SHOULD THEM RIGHT AFTER THEY COME OUT IN THE MARKET. PART OF THE EXCITMENT IS THE DESIRE TO OWN IT OR PLAY IT. I KNOW BECAUSE EVERY TIME HE GETS A NEW ONE HE TIRES OF IT VERY SOON. SINCE I CANNOT KEEP UP WITH THE NEW GAMES, I TELL HIM YOU HAVE TO EARN THEM SHOW ME IMPROVEMENT IN SCHOOL. PLACING NEW CONSOLE GAMES AT THE TOP WICH MEAN HE HAS TO ACE HIS GRADES OR SETTLE FOR SOMETHING CHEAPER
12-21-2006 @ 10:14PM
Victor Alvarez said...
I don't see what's wrong with buying and selling consoles no matter which company makes them. I did it with Xbox 360. Why do you think the companies come out with it right before christmass for rediculous prices, so they can make their money. seriosly 600 bucks for a console. We're just making our money back.Even if I only make 600 bucks thats $600 I didn't have.It's beating the system. Nothing wrong with expanding your buisness sense. At least they're not selling drugs out on the street.
12-03-2006 @ 2:01PM
Steve said...
Standing in line waiting for a console is absolutely not worth it in an economic sense -- most people do it for the social atmosphere.
As you say, once Paypal etc. take their cut, not much is left over (in a relative sense). Plus, although I have never sold anything on eBay and am not an expert on taxes, I would imagine there is the possibility that income tax would have to be paid on the winfall. (I have to wonder if the collectors keep track of eBay activity, I'm assuming they do.)
Here's the really big question...
If, as some people claim, doing this shows incredibly smart capitalistic tendencies on the part of the enterprising youth who stand in line, why wouldn't they simply go the easy route and buy shares in ATVI, ERTS, and/or THQI?