Many folks are curious about how much a laptop depreciates over time. Laptops often lose 2% of their worth every week the moment you open the package since they rely on computer technology, which rapidly changes with each new year, thus PCs and laptop hardware will be outdated every two years. Improvement in silicon chips makes laptops and smartphones depreciate faster as new integrated circuits emerge for higher performance and better value than last year’s chips, hence laptops and smartphones are poor for long-term investments.
In our research, we discovered the depreciation rate for computers is 25%. This indicates that the value of your pricey laptop computer will decrease by 25% every year, plus or minus wear and tear. That implies your laptop paid for itself in four years. This means that if you purchased a laptop for $2,500, it would be worth roughly $600 after three years of use, depending on physical health, maintenance, and so on. That being said, laptops lose value over time due to fast technological developments.
Factors that Cause Laptop Computers to Loose Value Over Time
The pace at which laptops lose value depends on a variety of factors, including the location in which you reside, the brand, the quality, and the hardware.
1- Location: If you live in a place where people rapidly embrace new technologies, you are likely to have a high deprecation rate. However, developing areas such as Asian countries and Japan have the lowest depreciation rate for computer equipment, which is less than 10% per year. So where you live and how technology advances matters.
2- Brand: Expensive laptop brands have lower depreciation rates since customers realize they are expensive and well-known. It is also the cause for reliability; a premium laptop will survive longer than the cheapest product of the same brand. Examples include Apple and well-known manufacturers of flagship series computers.
3- Quality: Similarly, a laptop’s life depends on quality construction, plastic or metal. Plastic laptops could break easily, and show age when the hinge got broken, while metal builds laptops like aluminum last longer and only show age when it loses the finish.
4- Hardware: Laptops with top-of-the-line hardware are more costly for the price, and since not everyone can afford an expensive laptop, you will discover greater value than inexpensive laptops. So high-end laptops are worth the investment, and they have a higher value around two years since there is no new hardware coming out, so you can resale and get a good return.
How To Calculate Depreciation On a Laptop?
When you purchase a laptop, the cost of the hardware is only one part of the expense. In addition to the purchase price, you must also account for the depreciation of the laptop over its useful life.
The IRS allows taxpayers to deduct depreciation expenses as business expenses. To calculate depreciation on a laptop, you will need to know the purchase price of the hardware, the estimated useful life of the laptop, and the applicable depreciation method.
The most common methods for calculating depreciation are straight-line depreciation and accelerated depreciation. Straight-line depreciation is calculated by dividing the purchase price of the asset by its estimated useful life.
This gives you an annual depreciation amount that can be deducted from your income each year. Accelerated depreciation methods are more complex, but allow you to write off a greater percentage of the asset’s value in the early years of its life.