Manufactured spending is the practice of using your credit card on spending you would not otherwise be doing for the purpose of earning credit card bonuses. Manufactured spending has taken many forms over the years as a great tool to earn miles and points quickly and at little cost.
Manufactured Spending
One of the easiest ways of manufactured spending us by using Vanilla Reload cards to load your Bluebird account to pay your bills. Another easy is to use Amazon Payments to send friends/family $1,000 per month fee free (make sure you select Goods/Services instead of Cash Advances). And yet another great way is to purchase Mastercard/Visa gift cards and then use them for every day spending or use some service like Square to get the cash from them.
While those are great methods, they do either cost something or are too low yield. For example, purchasing Vanilla cards cost $3.95 each. That means to max out your Bluebird account each month ($5,000) costs $39.50. Over the course of a year, that totals $474. That will earn you a total of 60,000 miles/points if purchased using a 1 point per dollar card. While that is still cheaper than an actual airline ticket, it is not free!
My Method of Manufactured Spending
Ideally, an avenue of manufactured spending would involve no out-of-pocket cost, no risk, and high yield. Over the last several years, I have been able to generate a fair amount of miles and points through special purchases. Here is where I show you how I do that and what to look for!
Best Buy + Apple + eBay/Craigslist = Miles, Points, $
Part of buying products to resell is understanding what you can get for those products. I am not good at buying car parts/accessories to sell because I do not know the value of those things. When it comes to electronics, that is much more in line with what I know and can handle. If you wish to follow these steps and do something similar, just make sure you do your homework so you know the products.
I love dealing with Apple products for resale because Apple products are retain their value and are not normally on sale. I have dealt with other types of electronics as well, but it is not as easy to guarantee resale with PCs because of the wide variety of models available. So, for me, Apple products are the way to go.
1) Buy Apple Open-Box/Refurb
Apple open-box are available at many places, but my favorite place to purchase them are at Best Buy. The markdown price can vary by store (in fact, it can even vary based on what representative returns it). The standard markdown is 5%. My purchase point is when I find them at least 10% off. I have often seen them marked down by as much as 15% and that is a definite snap-it-up price.
Some people are scared about buying open-box/returned computers. Honestly, there is really nothing to worry about. Apple’s warranty is legendary and, even though the computer had been bought before and returned, that warranty starts the day you buy the open-box device. You have a receipt that shows a valid purchase date and that is all you need to get 1 year of warranty service. So, if you purchase it and there is something really wrong with it (like a bad battery/screen/etc), Apple will take care of it free of charge.
When you purchase the Apple device from Best Buy, make sure you ask for a gift receipt. This way you can offer that with the device when you sell it and it won’t have any of your personal information or the price on it.
2) Go to Best Buy’s Open-Box Website
I used to have to check for open-box products whenever I was in Best Buy. Now, Best Buy lists all of their open-box products on a special website so you know before heading in what is available. Go to this website and enter your zip code to search the stores nearest you. Sort the selection by Apple (on the left side of the screen) and then go through the list of available Apple products to see what is available. As a personal preference, I always sort by Price Low to High and start from the last page to see the highest items first.
Best Buy’s Open Box page
Next, make sure you check the model number and do not just rely on the original price and the current price. The reason is that Apple is currently turning out their higher end laptops at a greater frequency than they used to, which means while the price difference makes it sound like a good deal, it may not fetch as much money if it is an older model.
Check the model number to see if it is the current model and check the prices
Check the model number!
There used to be a time a couple of months ago when you could actually purchase the item you wanted from the website and then go into the store to pick it up. Best Buy has stopped that now and are back to In Store Only selection. Update 7/25 – It allows you to purchase the items online again! The problem with that is that the website is not always updated promptly. Do not ever call about the item! Always go in! Because of the various differences in models, the salesmen may make a mistake or discover what an incredibly good deal is available and set it aside for themselves or a friend.
Once you have found the items you are looking for, go ahead and buy them with your favorite miles/point earning credit card. Don’t worry about whether or not it will sell – you have 15 days to return the item without a problem (more time if you are an elite member – check the bottom for more information about that).
Bonus: Make sure you keep checking the Best Buy site (and the blog) because every few months, Best Buy releases a coupon to clean out their open-box inventory. That coupon is for another 10% off of those items making your profit range even greater!
Apple Tips:
- Always look for the highest priced items first. It is easier to generate more money on the high dollar items (think $2,000 Macbook Pro 15″ Retina) since the discounts are usually larger and they retain decent value.
- Do not ignore iPads. I have had good success buying the high-end iPads for resale. The entry level ones do not generally bring as much and it requires more purchases to equal the high-end units.
3) List on Craigslist and eBay
eBay
If the percentage off was great enough, I go right to eBay with a Buy-It-Now auction at the price I want. I check past auctions to see what things had sold for and then match that price or take it down a bit. Remember, my desire is not to make a bunch of money doing this. I am only trying to make miles and points at a cheap rate while covering my expenses. You do need to factor in the eBay fees and PayPal fees, but I am always able to still squeak out some profit even factoring those in.
If you plan on doing this for at least one large ticket item per month, you will want to pay for an eBay Basic Store. That costs $20 per month (if paid month-to-month) but you will get that money back in one auction when you consider the cost savings. If I were to sell a $1,500 Macbook without a store, it would cost me $150 in final value fees. If I have the Basic Store, I would only be charged $60! Even counting the $20 store fee, I am still saving $70 from that one auction! Here is the link for information about eBay Stores. Here is the link for the Final Value Fee Calculator so you can see what you will have to pay. Then, of course, you have the PayPal fee of 2.9% and $.30 to take into account as well.
Final Value Fee with a Basic Store Subscription
Final Value Fee with no store
In our example of a $1,500 Macbook sale, you would have a total bill of $103.80 (add $20 for the store fee if that is the only thing you are selling that month). That means, in order to break even, you would need to have paid $1,396.20 for the laptop from Best Buy. This is an example that was a true transaction for me – except I only paid $1,250 for that laptop from Best Buy – netting me a profit of $146 plus 1,250 miles/points.
Note: If you do not have Best Buy elite status, make sure you list your auction for 5 days or less so you have time to return the item if it doesn’t sell!
Craigslist
I have had tremendous success on Craigslist with my Apple transactions as well. I normally list whatever Apple device I have on Craigslist as well as eBay (while putting a line in the eBay auction that I have the item listed locally and reserve the right to end the auction should it sell there first). The great thing about Craigslist is the no fee system. The bad thing is that you may have many people that are just going to make you feel bad that you have the item listed at the price you do. I once had someone insist that I was never going to sell the laptop for what I was offering and he would take it off my hands “today for cash!” I was thinking, no kidding you would give me cash and no way I am selling for $200 less than I paid! I normally just tell those types of people that I can still return it and there is no way I am taking less than I paid.
Some tips for Craigslist:
- Mark the price about 3 – 5% less than you have it for on eBay. Remember, no fees and the lower price will attract more buyers. If you list it at the same price as on eBay, most people will just buy from eBay to be able to use a credit card and get the PayPal Buyer Protection.
- Put as many photos and details as possible. On big ticket items like Apple products, people want to know what they are looking at before they contact you. Make sure you list every defect, no matter how small. It will make for an instant transaction later if the buyer already knows everything and won’t be surprised. This includes taking a photo of the warranty information on the system information page of the computer.
- Meet at a bank. The bank has become my newest favorite place for Craigslist transactions. I have sold Macbooks for over $2,000 on Craigslist and that is a lot of money to have for a transaction before two strangers. I prefer to meet in a public place anyway, but a bank makes a great place because there are video cameras and it becomes a federal crime if someone robs a bank. Pulling a gun at a bank is something no one would do just to rip someone off for a couple thousand. One more bank tip – get there before the agreed meeting time to ensure that someone does not try something wrong on you on your way in.
4) Ship Promptly and Build Feedback
One of the most important things when selling high ticket items like Apple products is to maintain a good seller reputation. Buyers on eBay get nervous about buying a $2,000 laptop from someone who has only ever sold fabric or stamps. If you can keep your good feedback flowing in for those higher dollar items, it will make more people feel comfortable. Also, shipping is important. I normally put my shipping estimate at 2 business days before shipping. Whenever possible, I normally ship it out the same day as received payment. That way, the buyer actually gets the item before it was even supposed to ship! It beats stated expectations and gets them happy about the purchase.
BUT THAT’S NOT ALL!
Make sure you sign-up for Best Buy’s Reward Zone program! As frequent travelers, we love elite programs and this is one more you can add in your wallet! They even have an elite plus!
In addition to manufacturing points and making a little bit of money, you can also earn Best Buy points that you can use on future purchases as well as increase your return time. For the highest point, Elite Plus, you get 45 days to return items! That is huge! It gives you plenty of time to get that item sold! In addition, as a Reward Zone member, you will earn those points and receive bonuses depending on what tier you are. As an Elite Plus, that means a 25% bonus on earned points. For every 250 points, you get a $5 certificate. That works out to being a 2% bonus towards future purchases. With the elite bonus, it works out to being a 2.5% bonus. Not bad!
Best Buy’s Reward Zone Program
Really nice article. Dumb query: Wouldn’t buying best buy gift cards at office supply stores make this even more lucrative? Any specific reason you would avoid doing that?
Not dumb at all! The only reason I had not mentioned that was because it has been a long time since I have seen Best Buy gift cards at office stores. Maybe it is just a regional thing and someone else has had a different experience with them. If you can find them, by all means do it that way! Just don’t get too ahead of yourself – meaning, don’t buy $5,000 worth without getting into it a bit.
The only downside of using BB GC to purchase is you will not earn any BB Reward Points.
I recommend to use Shopkick acct on each purchase to earn 1250 kicks (=$5 BB GC) for purchases above $200.
You could also use the US Cash+ which gets 5% on electronic purchases.
Great Post. I flipped about 50K worth of watches last year on ebay and made 4K plus a ton of miles thanks to shopping portals also.
Awesome! I did watches one time when Amazon had a lot of $300-400 watches for 80% off. I listed them on eBay and then ordered them from amazon to be shipped to the winners when they sold 🙂
Question, when you are listing these on ebay do you mention the open box item or just simply list it as new with a receipt?
I do say that they were open box and that I got a good deal on them so am selling them at a lower price to pass on the savings a bit as well. I always mention the warranty as well (which will have just about a year available on it).
How about Uncle Sam? Have you figured that into the equation? Sounds like you’re running a business and should be paying taxes…
I do put the profits on my taxes.
That seems like an enormous amount of work for $3,000 in a year, which becomes around $1,800 after taxes (less than $5/day). How many hours does this take you per year and how much do you value one hour of your time?
That was just one year and it wasn’t a lot of time, once you get it down. With a lot of transactions taking place on Craigslist, I was able to do several transactions one right after another. Then for others, I had friends who I would sell to at my cost. Remember, my goal was for the miles, not necessarily as a money making venture.
Yes the goal might be miles, but miles are just a currency used to buy airline services, just like cash (except that cash has a huge advantage due to its liquidity)
Coordinating transactions on craigslist are notoriously tedious. I’m still wondering what the math looks like. How much time do you think doing this takes per year? Just 10 minutes per day adds up to 60 hours per year.
I honestly cannot remember how much time was spent that year. It was less time than a lunch break was, I knew that!
There are a couple of ways to look at it – this is a hobby and time spent on pursuing the hobby could just be classified as “fun” or that I was doing my own version of mileage running. Let’s take your example of 60 hours – to earn 40,000 miles, I would have had to fly round-trip to Singapore (with status that would allow me to earn 100% bonus miles) and that would have taken a bit over 50 hours. Instead, I got to be home and wasn’t taking valuable time away to be on the road in one stretch. Everyone’s situation will be different, though, and people need to gauge what is best for them in order for them to meet their goals.
Well there are plenty of other ways of earning 40,000 miles than a RT to Singapore! 40k miles is worth around $500 so that’s $1.37 per day. You could probably find more change lying around on the street!
It must be human psychology that makes 40,000 miles earned in a year so much more appealing than getting $1.37 per day!
It definitely is some human mind game! lol The bad part is that it is actually quite hard to find that much money where I am now (Greece). Trust me, I needed 1 euro one day (which is just about $1.37) and could not find it no matter where I looked (no ATM, place wouldn’t take credit card, needed one more euro to get the item). I know, sad but true! 🙂
Do you list these items as new or open box items?
I list them as open-box
Nice post. Besides buying Best Buy gift cards at office supply cards, which I see someone else mentioned in an earlier comment, you could also buy Best Buy gift cards at Best Buy through a cash back or miles earning shopping portal, then use those Best Buy gift cards to buy the items.
Same caveat about not buying too many of course applies
Good point!
Since when do best buy gift cards earn rewards on a shopping portal? Discover and Upromise’s 5% rewards specifically exclude gift cards at best buy. Very few stores offer points on gift cards through portals. Besides you lose credit card protections when using gift cards for purchases, so I avoid using them on electronics purchases.
Very interesting. So when you go to the bank. What do you tell them? What are you here for and how long are you going to stay? People always ask you: may I help you? What do you tell them?
I knew them well enough and would just tell them I was waiting for someone. Once I was paid, I put the money into my account. Saved me an extra trip that way. 🙂
Maybe I missed it, but are you paying sales tax on the open box BB items? Are you in a sales tax free state? At 7.5% in my home state, plus the paypal fee, plus Ebay fees, I’d be hard pressed to make this work. I’d like to, though, so just hoping for clarification.
Have you ever ran into people wanting to return items on craigslist or ebay? Returning a computer on ebay seems like a big hassle.
Actually, I have never had a problem with Apple products. The only time someone wanted to return a computer on eBay was an older model that they claimed was broken (it wasn’t – they claimed it wouldn’t access the internet, but when they returned it, I saw their eBay page that they had accessed. That included the other laptop they had just bought which must have prompted the return!).
One time, I had someone want to return a $2,100 MacBook from a craigslist deal but that was only because I had told them that if they had any problems at all to let me know. It turns out, they bought it without even doing an ounce of research and didn’t realize they could not switch the SSD out. Oops! Normally, no problems!
No mention of sales tax? That can really eat into the discount of an open box item! It runs 7-8% in my area so that has to be added in!
Checking my local best buy I didn’t see anything today that would break even much less profit. I will keep checking because I like the sound of this idea but so far the math doesn’t work.
Do you reside in a no sales tax area?
Sorry, I didn’t mention the sales tax because it does vary for everyone. My out-the-door prices did include the sales tax (I am also at 8%). That is why the coupon can be such a huge deal. Be on the lookout for the somewhat “damaged” items in store for even greater discounts. I bought one 15″ Macbook Pro Retina for $1,300 (down from $1,999) – out the door for $1,400 – because it had a small scratch on the bottom. No problem for me or for a friend who gladly bought it (and gave me a bit more for my trouble).
There is another vendor who sells Apple whose gift cards are often discounted because that vendor is not so popular. This provides yet another way to play this game.
I also buy and sell from Best Buy and others. I do try to maximize by earnings by using Best Buy gift cards searching through Gift Card Granny. Best Buy gift cards are selling at 8 percent discount so your example would yield $3200 more dollars with only slightly less miles earned.
I like your blog, but is there a way you can make the word color back instead of light gray? I have a hard time it on my IPad.
* hard time reading it.
* should be “black”. (Having a hard time also reading what I type on my ipad)
It’s essentially a part-time business, and the rate of return seems dubious. If you see it as a hobby and love it, that’s awesome. To me it doesn’t look like fun at all, but lots of logistics and record keeping have never been something I do for fun. Others will feel differently. Interesting stuff, but not for me.
For me it’s a combination of hobby and part time job. I stay home with the kids, who are almost school age now. So, sometimes I have free time, but it’s not in a very regular pattern. This kind of MS stuff can be done if and when I want. Also, for me, I use it to meet spend for signup bonuses mostly and also the floating bonuses that seem to come around fairly often. That said, sometimes I do look back at a particular deal or MS scheme and think, That was definitely not worth my time. Sometimes you just don’t know how easy or how much trouble it’s going to be until you get into it.
I loved this article! It’s great to hear about new ideas for buy/sell and MS.
Since it appears you’re all about minimizing fees I assume you don’t do Fulfilled By Amazon (FBA)?
I have not done it yet, but just because I am currently out of the US. Just before I was to leave, I was going to try to start, but I had not invested the time to check it out to see how well it would work for me. Do you do it? How are your experiences?
I’m not an accomplished reseller so I don’t have much to compare it to, but I’ve found the fees to be high and the generous Amazon Return policy has already come around to bite me. I’m going to explore Ebay and CL. Any general guidelines on what the total fees for selling on Ebay can be?
I sell concert tickets for fun on CL, I’m used to people emailing with low-ball offers!
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