Trade-ins can be used as a revenue management device by a firm to price discriminate between new and replacement buyers of durable goods. It creates market segmentation effect by offering different prices to different groups of customers. This study deals with such an effect by considering trade-ins and certified pre-own options facing a durable goods firm, where CPO is the used goods market generated from the return flow of trade-in transactions. This study determines the optimal pricing and/or trade-in rebate, and examines the strategic choice of the two options. We develop an analytic model that incorporates key features of durable goods into model formulation, namely the deterioration rate (or durability in a reversed measure) and the quality variation of the used goods. Our research findings include (i) the magnitude of trade-in rebates increases in deterioration rate and quality variation, (ii) the segment effect outweighs the cannibalization effect when the deterioration rate is moderately high, (iii) the strategic choice of trade-ins and CPO options depends critically on the two features, and (iv) the majority of profit improvement is generated from trades-in provision, yet CPO option can serve as a second profit boost device.