Factors to consider when approximating value
In our last entry, we talked about the role trust plays in marketplaces and the imperative for sellers to put their consumers’ trust at the forefront of their operations.
Pricing used or obsolete industrial equipment can be a confusing and sometimes overwhelming task. Often the equipment you are looking to sell may no longer be available on the market, or no longer supported by the manufacturer. Overpricing equipment may result in buyers passing over your listing- and underpricing leaves money on the table.
This entry will take you through some of the main factors that drive pricing in the secondary
While age and condition play a role when pricing used industrial parts and equipment, the most common mistake made by sellers is only considering these factors. There are a number of different factors to consider when selling, these include: market conditions, manufacturer, the seller’s reputation and more.
To determine a fair price for your used equipment, we recommend starting by searching marketplaces such as eBay, Amazon or Aucto.
Many experienced sellers and liquidators use these platforms – they're a good place to start. If most listings have similar price points, it's safe to assume that you should price your piece accordingly.
With that said, if there are few or no comparable listings, or if the price points don't seem satisfactory, here are some factors to consider when valuing your used equipment:
Normally, equipment depreciates as it ages.
This is an obvious point, but sometimes overlooked. Many sellers get caught up in the original book value of the equipment, how well it works or how reliable it has been for their operation and end up overpricing their assets.
Sellers need to be cognizant of the fact that a buyer is typically buying equipment in an “as-is, where-is” condition. This means they are assuming a fair amount of risk and will need to incur removal, transportation and reinstallation costs before they can use the
equipment for their own operation. Older equipment may also not be as efficient and have
higher operation and maintenance costs.
Sometimes identical pieces of equipment in terms of make, model and age may vary in price; but why? The equipment’s condition.
Used equipment that’s been well-maintained, regardless of age, can still sell at a fair price. That’s why Aucto allows sellers to upload (maintenance) records, when applicable, to any item they list.
As well, we always recommend cleaning or repainting equipment prior to listing –if possible. A clean piece of equipment conveys your level of care and condition to potential buyers.Related Content: 8 Simple Tips To Make Old and Used Machinery Look Great In Photos
- Market conditions
During economic booms, recessions, and recovery periods, consumers’ purchasing behaviours change. So, when pricing industrial and heavy equipment, an important factor to consider will always be economic and market conditions.
If the economy is facing uncertainty, businesses and consumers are typically more conservative in spending habits. Potential buyers may be more willing to wait to purchase to ensure they’re receiving the best value. As well, during a recession, the need for equipment will decrease; more companies will attempt to sell their surplus or under-utilized equipment, which will further drive the cost of used equipment down.Related Content: Six ways to appeal to a bidding audience during a recession
- Seasonal conditions and geography
Certain industries go through cycles or are seasonal in nature. That’s why seasonal industries are also important when determining the value of used industrial and heavy equipment.
For example, in the United States and Canada, the growing season is the time between the last frost in the spring and the first hard frost in the fall. This means that agricultural equipment will be most in demand near and during this timeframe.
An interesting case is the forestry industry. Logging is largely geographically and seasonally dependent. For instance, the winter is preferred for logging on flatlands; however, the driest
season is preferred if logging on steep ridges and hillsides. During mud season, logging will
typically come to a halt.
- Supply and demand
All markets are subject to supply and demand – used industrial and heavy equipment sales are no different. If supply is low, but the demand is high, sellers will be able to list their item at a higher than usual price and vice-versa.
When doing research on comparable price points, we recommend seeing a number of listings for similar or identical products, as well as how long each of those has been listed. This will help you determine the market's current levels of supply versus demand and subsequently inform value.
- Manufacturer, model and features
Brand loyalty is reflected in new and used equipment sales worldwide. So, if a seller has equipment from a lesser known or less expensive brand, they need to communicate as much relevant information as possible about the model and its features. Aucto allows sellers to provide users with as much information as they see fit.
Proof of an item's condition and ability to perform goes a long way in establishing trust. As such, being able to inspect equipment may make a huge difference in what a buyer is willing to pay.
Are you looking for more advice on increasing the likelihood of a sale? Read some of our past entries:
- Remember to Follow These Tips When Selling Industrial Equipment & Machinery Online
- Mastering the Sale: Top 6 Tips to Make Used Equipment Sell in Online Auctions