Where to Get the Best Price for Your iPad 2?

Amazon, but there's a catch … you won't be able to spend it on a new iPad, you'll have to spend it at the Amazon store.

Farhad Manjoo reporting … Amazon’s brilliant plan to pay you crazy money for your iPad 2:

It’s been three days since Tim Cook unveiled the new iPad, but you’re still stuck with your trusty old iPad 2. You’re keen to get rid of it so you can buy the new one, but you forgot to log in to one of those buy-back sites before Wednesday’s launch. Predictably, the announcement sent trade-in values plummeting—before the launch, some of these sites were offering close to $300 for your entry-level iPad 2 (the 16GB Wi-Fi model), provided it was in “good” condition. Now they’re willing to part with far less: As of Saturday morning, if you’ve got a well-cared-for iPad 2, NextWorth will give you $241 for it. BuyBackMac is offering $224. eBay’s Instant Sale will net you $200. And Gazelle, the most popular of the buy-back sites, will only part with $185.

Sure, if you’re hurting for cash to subsidize your early adopter lifestyle, $200 is nothing to scoff at. But if I were you, I’d skip by all of these sites and instead log in to Amazon. As of right now, its trade-in service is offering $288 for a 16GB Wi-Fi iPad 2 that has “normal wear,” and up to $320 for one in “like new” condition. Indeed, Amazon Trade-In’s lowest offer for an iPad 2 is $236, about what others are offering for “good” models. If your tablet isn’t water-damaged and is at least in working condition, you’ll get that baseline amount. (Correction: I originally, boneheadedly, quoted higher prices for the 3G model; I’ve changed all the prices and math in this piece to reflect the actual prices for the Wi-Fi model.)

What’s going on here? Considering that Apple is selling new iPad 2s for $399, how can Amazon afford to shell out up to $320 for your old one? What’s it doing with all the iPads it’s buying? Is Jeff Bezos running a charity?

Nope. There’s one catch to Amazon’s trade-in program, and it’s brilliant. While other sites will give you cash for your old goods, Amazon will only give you store credit. Thus, the “extra” money you get from Amazon compared to other trade-in services isn’t a total loss for Bezos. All that cash will be plowed back into Amazon’s own business. Depending on what you buy with your newfound wealth, the company may be making a nice profit on the deal.