A recurring theme we see at REfficient is that selling price expectations are sometimes out of line with the market. It is hard to fault people – you buy it at one price at a point in time, so why wouldn’t you be able to sell it as such? There are actually several reasons.
Here are some pointers to consider when thinking about the selling price.
Technology depreciates too
There are many factors which go into technology depreciation. Certainly an obvious factor is the age of the equipment. The older a piece of equipment is, generally the less it is worth.
There are other factors that figure into depreciation too. The type of technology and the direction that technology has taken overall can affect the selling price. The legacy value of the brand and the demand for use are other important factors.
The bottom line is to expect technology to depreciate, just as you would your own car over time.
Buying price ≠ selling price
Just because you bought something for a certain price a couple years ago, or even yesterday, does not mean that you can fetch the same price selling it today. Likewise, you know that when you drive your new car off the lot, the value automatically depreciates.
Companies buying and selling equipment have to make money too. These businesses often have to invest resources into the item in order to test, refurbish and/or package it. It costs money to do these things, so expect to sell your products for lower than you bought it.
Think you’ll get more in future? Think again
People sometimes hold out on selling something because they think it is worth more. But given most equipment’s value goes down – not up – over time, these people are usually selling themselves short.
Moreover, consider the cost to continue to store the equipment and keep it on your books. Think of what you could do with the space and resources if you put it to more productive use. Usually it is worth it to get rid of surplus inventory as soon as possible.
The market value is what someone will pay for it
Like real estate, the ultimate market value is what someone will pay for it.
We encourage companies to start considering their base expectations – the minimum you would be willing to accept and work up from there. That way, you have room to come down and if you get more, it feels like a bonus.