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When 'Used' Makes Economic Sense

(July 2008) posted on Tue Jul 01, 2008

The upsides and downsides of the used-equipment market.


By Jonathan Zinsmeyer

From time to time, all of us either expand or reduce our machinery inventory. The question is: What options are out there for us?

Each and every vendor is knocking on our doors, sending e-mails, and trying to sell us their newest and greatest machine. But you may not want to be the first to adopt it, can't currently afford it, or simply aren't sure if your throughput can support the machinery.

On the other hand, what if you have hardware sitting idle? Or have cash-flow issues and need to liquidate assets to stay afloat or acquire a different machine or new technology?

The answer to all these situations might be used equipment. I was intrigued when The Big Picture covered this topic a few months ago (April, page 62), since I've had first-hand experience: in the past year, I bought or sold six pieces of wide-format machinery. Some of it was sold in order to purchase other machinery; some because I wanted to change to a different equipment manufacturer; and some I sold because it was sitting idle and just taking up space. All of these situations are common in the marketplace right now. In fact, the broker who helped me with the sale of my machinery says there are more used machines available now then there ever have been.

But what are the upsides and downsides of the used-equipment market? Below are items to consider, as well as tips on selling and buying used equipment.

Selling it
First thing first: If you are going to sell a unit, consider how you paid for it. If there is a lease, what is your termination fee and can you negotiate a lower early-termination payment? If you paid cash for the machine or if it is paid off, do you really want to sell it? If you have to sell it, what are you willing to sell it for-what is you bottom line? You know how much you paid for it, it has made you money (hopefully), and you have depreciated it on your books-but its value may not be as much as you expect.


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