One Start-Up’s Adventure in Figuring Out the Price of a Used Chair
Priceonomics, a small company that aspires to be the Kelley Blue Book for everything, tells the tale of how it sold four used Aeron chairs to another tech start-up, for a profit of $300.
The Priceonomics Web site, which officially launched on Dec. 21, is aimed at helping sellers and buyers determine the best price for used bikes, cars, phones, TVs and other items, so no one gets ripped off.
But rather than explaining what it does in a press release, Priceonomics wrote an entertaining blog post, entitled “Adventures in Aeron Chair Arbitrage,” detailing its experiments with selling the expensive Herman Miller office furniture in San Francisco.
Trials included finding buyers among its start-up incubator classmates, finding the chairs on Craigslist, borrowing a girlfriend’s car to get them, negotiating a lower price, lugging the chairs back to the office, and then almost losing the sale in the end, when the seller’s $1,800 check didn’t go through.
Priceonomics concludes that a business based on hauling used furniture around won’t scale but that there is a need for a centralized location for pricing information.
From its blog post:
“It’s unlikely Priceonomics could build a massively successful business arbitraging used goods if we have to take possession of them. However, it was clear that having our price guides were really helpful for identifying what were the good deals on Craigslist and how much to pay for them. So for now, we’ll just stick to building better price guides to help other people buy things on Craiglist, eBay, and other emerging marketplaces like Zaarly and TaskRabbit.”
Priceonomics may be on to something here.
Not too long ago, one way to determine the fair value of an item on the Internet was through an online auction. EBay became wildly popular as an easy way for total strangers to agree on a price for an item. More recently, auctions have become less relevant, and even eBay is decreasing the alliance of used items on its site.
That’s due in large part to today’s free flow of information on the Internet, which makes pricing more transparent. After all, you can just Google it.
Still, determining the price of an item can be time-consuming. To get a good sense of the fair value, you have to cross-check prices on a handful of sites — if not a dozen.
Priceonomics’ price guide promises to help users easily find out if they are getting a good deal, by comparing items across eBay, Craigslist and even full-priced retailers that might be offering a deal.
So, how much is a second-hand Aeron chair worth?
In the end, Priceonomics says, the chairs resell for $400 to $600 in San Francisco. The company was able to acquire four, for $375 each; it then turned around and unloaded them for $1,800, representing a $300 profit.