Selling your iPhone for fun and profit

You' ve gotten up before sunrise, waited in line at the Apple Store, and have finally been rewarded. You are now the proud owner of a new iPhone 3G. You also happen to be the owner of an original iPhone that you now no longer need. What do you do with it?

If you're like me, you pass it on to a family member (my wife, in my case), adding yet another member to the International Order of iPhone Owners. If that doesn't suit you, you can sell your iPhone -- and do quite well.

I recently checked eBay and found that 8GB original iPhones were selling for anywhere from about $200 to $350. 16GB iPhones were going for as much as $430. In other words, you can sell a used original iPhone for almost what it cost to buy a new one back in June.

If you've never used eBay and don't want to bother setting up an account, or if you just have a reluctance to use sites such as eBay or craigslist, you have another alternative. You can sell it to a company such as Rapid Repair. Rapid Repair will pay you $100 (for a 4GB original iPhone) all the up to to $200 (for a 16GB iPhone).

Clearly, Rapid Repair would not be a top choice if your goal is to make the maximum possible on your sale. The Rapid Repair price will likely work out to be around $100 or so less than you would make from a similar sale on eBay. In addition, you have to pay your own shipping costs to Rapid Repair [Correction: Rapid Repair does pays shipping for your iPhone; however, if they decline to accept your phone (because it turns out to be defective), you'll have to pay to have it sent back to you]; with eBay you can pass on shipping costs to the buyer. Finally, with Rapid Repair, you have to send them your iPhone before you get paid; with eBay, you get paid (such as via PayPal) before you ship out your iPhone.

Still, by all accounts, Rapid Repair is a reliable outfit. And they informed me that you can expect to have your check within less than a week from when the iPhone arrives at their doorstep.

The main advantage of RapidRepair is simplicity. You know exactly what you are going to get and when you are going to get it -- all with a minimum of fuss. Plus, you know where to find the company if something doesn't work out as expected.

What does Rapid Repair do with the iPhones it buys? It turns around and sells them. In fact, they often sell them on eBay, making the extra bucks that you turned down by selling your phone to them instead.

Who's buying these phones?

Who exactly are buying these iPhones? Why would anyone pay $400 for used original 16GB iPhone when they can get a new iPhone 3G for $300? Even considering the added cost of an AT&T contract for a 3G iPhone vs. an original iPhone, it doesn't really seem worth it.

One obvious answer is that people want the original iPhone because they intend to unlock it and use it with a carrier other than the ones sanctioned by Apple (in the U.S., this would mean a carrier other than AT&T). Currently, unlocking a 3G iPhone is much more difficult (some may say nearly impossible) to do. For such users, the original iPhone is an attractive alternative.

Aaron Vronko, of Rapid Repair, suggested another alternative: With a jailbroken original iPhone and fring, you can make phone calls without signing up for any phone contract. Instead, using your Skype account, you can call landlines or other mobile phones via VoIP -- from EDGE or WiFi. A Macworld review of this setup suggests it still leaves a lot to be desired, but it works. To the extent that it does work, it makes an original iPhone much like an iPod touch with the bonus of phone capability.

Sell an iPhone 3G?

When I was checking eBay for original iPhones sales, I noticed that iPhone 3Gs were also for sale. In my most recent check, I found them going for as much as $880 (for a 16GB 3G)! The average price across all 3Gs, however, seemed closer to around $600. This is the same price ($599) as getting an 8GB iPhone 3G from AT&T without a contract (it's $699 for a 16GB 3G). So where is the money to be made in this exchange? Aaron Vronko again had the potential answer:

Some users may buy the iPhone with the two year AT&T contract and cancel the contract after 30 days. Let's add up the cost here: $199 for an 8GB 3G, $69 for one month of phone minutes, $30 for the data plan, $175 for the early termination fee. Total cost = $473 plus taxes. If you can sell the phone for $625, you are probably making about $100 on the phone. Personally, I can't see going through all this hassle just to make $100. But if you somehow manage to do this repeatedly, I can see where it would add up. I guess some people are always looking for a way to game the system.