Oftentimes, business owners in the manufacturing and production sector feel the frustration of needing new machines but being unable to meet exorbitant price points, the sting of depreciation or the overall lack of a return on investment in purchasing brand new machinery. Thankfully, machines can be resold as used and despite the mileage, customers tend to see more money back buying used and well maintained than they would buying brand new machines from the manufacturer.
The old school of thought was “runs like new, must be perfect”, but industry statistics from the U.S. Bureau Of The Census has proven otherwise, with an explosion in the purchase of used metalworking and industrial machinery since the early 1990’s. Why is used machinery working so well?
Customers Prefer Not To Break The Bank
This can be one of the biggest pros for Revelation Machinery in reselling used metalworking or industrial machinery. As one of the four factors of production, hard capital like machinery can make or break time to market deadlines and overall production to meet customer demand or deadlines. While brand new machinery may work just as well, it will be a really long time before the customer sees that money back, high price points considered. By selling your used metalworking or industrial machines, you are enabling customers who have to meet lower price points to have market access; as well as a bigger return on initial investment. Less money spent to produce equals a wider profit margin, and you, the seller of used machines, can be competitive in the market, especially for buy-in-bulk customers and customers on a budget.
New equipment depreciates, or loses value, fast. In fact, within the first year, depreciation rates can be as high as 40%. For a one hundred and thousand dollar piece of equipment, that looks like: $100,000-$40,000, giving an end worth of only $60,000 after that first year, and even more money lost as depreciation continues to trend down until the price point stabilizes. Odds are, if you are selling used machinery, the price is already stable and you are giving the customer a more profitable option versus new machinery. Even if your machine sells at a fraction of the theoretical price mentioned, it is very unlikely that that value will go very much lower. This can be very appealing for customers in evolving mass production industries who may need to sell machinery themselves when better techniques and machines are developed.
Returns to Your Wallet
This should come off as slightly obvious, but selling your old machinery will put some of the money that you spent back into your pocket. Also if your machinery is older, selling it can enable your business to improve the manufacturing process with updated machinery, even if it is not brand new.
Downed machinery can be disastrous for customers with already constrained manufacturing abilities, significantly slowing time to market ratios and forcing them to fail customer deadlines. Selling your used machinery enables your customer, and potentially you, the seller, if you’ve played your money right, to have functional machinery that will still produce to meet business needs in the event that something expensive breaks and cannot be immediately fixed.
By marketing your used machinery correctly, you can be a competitive force in the market versus brand new name brand dealers, meet customer needs, grow your profit margins and increase your own capital.