Evaluating an item’s worth is a multifaceted process that considers several factors, chief of which is what it took to acquire it. While sentimental value and historical value contribute to the final calculation of a commodity’s worth, there are basic steps you can follow in ascertaining the value an item.
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1. Compare with Similar Goods
Perhaps the simplest way of getting an accurate estimate of an item’s value is to check up the retail value of similar goods. Even in the scenario that you can’t get an exact match of the item you are looking up, checking up close substitutes should give you a fair value of the item’s worth. The Internet is a useful tool for such comparisons.
2. Calculate Depreciation/Appreciation Costs
After getting an initial value, you can now start estimating depreciation or appreciation costs to get an idea of what the item might be worth today. However, note that different commodities have different yearly depreciation/appreciation rates. Typically, automobiles and IT products have the highest variation. However, if you want to know the exact benchmark rate, you can find the information on government or industry statistics sites (for average depreciation rates for different categories of products) or visit an expert. After that, compound the given rate over the age of the commodity and subtract from your initial estimate. In case the item appreciates, add the appreciation value.
3. Discount Repair Costs to the Final Value
Supposing the item in question is one that has suffered damage, estimate the value of what it would cost to repair it. Since this cost is an added expense to whoever chooses to fix it, we subtract it from the value gotten after adjusting it for depreciation or appreciation. Take care when estimating this cost, especially if spare parts have to be acquired in effecting the repair.
4. Add Value Improvement Costs
Any value improvement added to a commodity raises its value, especially for customizable items. A good example of this is the decoration of mobile phones and electronic gadgets with precious stones, engravings or valuable plating. You then add these costs to the value you get after adjusting for depreciation or appreciation, and any applicable repair costs. However, take precautionary measures to avoid exaggerating the value of the improvement costs; otherwise, the final value might be inflated.
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In today’s market, experts believe that the value of any item is what somebody else would be willing to pay for. It is, therefore, important to note that the calculation above should act as a guide to what an item may be worth in the marketplace, which is the real determinant of any commodity’s value. Consult an expert where other aspects such as historical value may affect an item’s value.