Set the price of a used machine

price machineIt is very difficult to determine the price of a second hand machine. There isn’t any guide for a majority of sectors but a few rules could be considered when helping to set the best price. Do not hesitate to ask the initial purchasing price.

Immediate devaluation (-20/-30%), as for the cars, machine loses its value when purchased; new machine loses about 20% when bought, 30% during its first year.

Ex: a client purchases a CNC lathe in 2002, installs it in his place, the machine will be resold by 80% max of its value during the first days. After one year, if the warranty is over, its value will decrease by 30% of the original price.

Machine’s rarity (+20/-10%) – a rare machine (manufacturer, type, options…) gains or loses value. If it is too specific it will be more difficult to find a buyer. On the other hand a very common machine will lose its value faster (too many offers available).

Tools and options (+20/-10%) – some options can double the machine’s price. It is important to distinguish them to find the exact value of the specific machine. On the contrary, the price of the machine can be pulled down by the lack of the specific tools inevitable for machine´s proper working. Indeed, it is a risk to buy a machine whose components are hard to find and to be replaced.

Ex: A client installed a special CNC which increases a machine´s value by 20%. All the tools are included which greatly increases the machine´s price. However a special chuck that comes with the machine is irreplaceable and difficult to find. All the risks are on the buyer.

Number of years and working hours (-50%) – probably one of the most relevant criterion. Some types will devaluate faster with time (advanced and light technologies); others will keep their value (heavy technologies). The number of working hours is often the best way to express a real condition of considered machine (like the Km counter in a car). Otherwise, try to find out how many 8 hours shifts the machine has been running.

Ex: The lathe´s CNC is likely to be outdated in 10/15 years (recent technology). However the traditional vertical lathe will keep its value longer (heavy technology).

Maintenance, renewing, standards (+40%-30%) – Well maintained machine can keep its essential value. Managing a maintenance book, reparations or even revisions and renovations will have a great impact on machine´s final price. Finally, all the machines working in France must follow the French standards. But unfortunately it is not always the case when dealing with second hand machines. Companies demand machines following the standards but as well as some resellers upgrade their machines others keep them in its actual state.

Acquisition costs, renewing and selling conditions. (-15%) – Each sale has a natural associated cost (dismantling, loading, shipping, installation). If the proportion of these costs is substantial, then they will have a greater impact on the buyer’s decision who considers the final price only. If the fees are too high, try to work with the seller to share the costs, or facilitate the dismantling and loading.

Ex: CNC lathe needs a special intervention from a specialized company including dismantling, loading with 40T crane, special convoy and proper arrangements in factory.

Accounting depreciation (-5%) – One of the weak arguments about a machine’s price. A machine is purchased and paid off during the following years. When this period is over, the machine doesn’t have any accounting value anymore, but it keeps a production value.

Ex: After 5 years the CNC lathe has been paid off due to the number of products made and it doesn´t have any accounting value anymore.

Sale’s costs (-5%) – Selling a machine has a promotion cost (ad, intermediate as Exapro). In this case, the seller should try to pay off a part of this cost by reducing his own price.

**Here is a simple example of the calculation**

Purchase cost in 2002 – CNC Lathe: 60 000€ with VAT

Special CN option 5 000€

Tools 5 000€

——————-

Initial value (without transport, installation…) 70 000€

Immediate depreciation -30%

Rarity (CN) +5%

Years (7 years, outdated technology) -20%

Maintenance, standards +5%

Sale conditions (dismantling charges…) -5%

Sale cost -5%

TOTAL: -55%

SECOND HAND PRICE: 31 500€

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