But only if you count with a linear mindset.
The usual calculation is simple:
A refurbished product sells for less than a new one.
Sometimes much less.
So why bother?
Let’s change the calculation.
Don’t compare the margin on one refurbished unit with the margin on one new unit.
Compare the lifecycle economics.
A refurbished product can be more than a lower-priced transaction.
It can be an entry point to a customer relationship:
- Consumables
- Spare parts
- Maintenance
- Services
- Upgrades
- The next purchase
- Recommendations
- And sometimes, the lower price opens the door to customers who wouldn’t have bought the new product in the first place.
That’s where the economics can start to look very different.
The real question isn’t:
“How much margin do we make on this refurbished unit?”
It’s:
“What value can this circular business model create, and how much of that value can we capture over the customer lifecycle?”
That’s a very different calculation.
And it can completely change the answer to:
“Is refurbishment worth it?”
So before writing off refurbished as a low-margin business:
Run the numbers again.
Not per unit.
Per customer. Over the lifecycle.
Have you ever compared refurbishment with new sales that way?
That’s exactly the kind of comparison I’m building into MIDORI360.
If you’re curious what happens when you actually run the two scenarios side by side, have a look at the demo simulation on my homepage.