Managing an industrial business is a tough activity.
High volume with low margins, long-term investments in fast-shifting markets, adapting production plans to clients’ needs…
Most of our partners and clients are always trying to optimize their production costs and capacities. with concepts such as “Just in time”, “Lean management”. subcontracting, predictive maintenance or flexible warehouses…
At Exapro, we know how difficult it is to manage a machinery fleet today. Plant Managers try to upgrade their production, and resell some machines according to market needs.
Industrial Managers have move their production tools in and out at a fast-growing pace. They can order new ones but the costs and delays can become prohibitive for their business activity. They quite often consider the second-hand market to become agile in the process.
Here is a quick guide to help them to sell their used machines. To illustrate each step, we will follow Martin’s journey through the sale of his laser cutting machine.
Martin is the proud owner and Director of a factory producing metal parts for the automobile industry. As he managed to avoid pitfalls and successfully faced most challenges so far, he is now managing about 80 employees operating on two dozens of machines.
Martin also owns a small warehouse used to store finished goods before getting palletized and sent to his partners. He does not have a lot of free space while applying the Lean manufacturing in as many aspects as possible of his activity.
He wishes to sell his Trumpf Trumatic laser cutting machine from 2004 now obsolete for his production needs.
Reasons to sell a machine
There can be several reasons pushing you to sell a machine. Let’s see which ones.
1. The machine is already amortized
What is the amortization or depreciation of a machine?
Let us start with the difference between amortization and depreciation. Depreciation is used in order to compute the value loss of a tangible asset while amortization is used for intangible assets.
Computing depreciation is simple, it is an accounting term defining the value loss of an immovable asset. This loss cannot be avoided, it is due to wear and tear, time or obsolescence, nothing can be done against with.
And there is the formula:
Monthly depreciation = Depreciation factor * 1/Lifespan * Remaining book value / 12
You will obtain some ideas of the actual value of the machine. What you still need to “pay” or even when the machine will be 100% amortized?
After knowing if your machine has been fully amortized (if the machine still costs you something). You will be able to know if you want to continue to make profits with or buy another one.
Even if an industrial machine does not have much more value after long years of service. It can be interesting to take into account the fact that the machine is still producing value. As a part of a production line, the value brought by the machine must be seen as a part of the net value of the machine. To use a simple metaphor, an old basic car with 200.000 kms on the clock will not have much value. A very little demand, but it is still useful if you want to go chop some woods around the corner.
With an accounting value near to 0 and a production value soaring down, Martin is pretty sure that it would be better for him and his factory to change the machine for a more modern one.
2. Feeling that the market is in a good shape
After knowing that you do not have anything to pay anymore for the machine. A second reason to study in order to decide what could be the state of the market at a given time.
For example, selling a machine in the middle of the past Covid 19 crisis was not a good idea at all. The price was at its minimum due to the really low demand during this kind of bad period.
Analyzing the state of the market can also help understand a bit better how to fix a price, it is always an offer/demand question. It is all about finding the good time and the good place. As illustrated on the following graph, it is not difficult to guess that the worst time to sell a machine was two years ago.
According to Martin’s studies, the market for his laser cutting machine is quite active. He could get a good price, generate some revenue and make some space for his future projects.
3. The Lean’s manufacturing decade
Not everybody knows what lean manufacturing is, here is a little reminder. Lean manufacturing method is a production process firstly focusing on reducing the wastes. It can be a waste of time, waste of money, waste of energy… In some words reduce and take care of any wastes that entrepreneurs can avoid during the manufacturing process.
We have already entered the decade of lean manufacturing. We can see that most of the factories are joining this production process, no matter the sector.
Lean manufacturing is a good reason to change machines, as it is targeting the wastes such as time waste. Lean manufacturing promotes efficient machinery sales. . But in the same time, Lean manufacturing method is also focused on the fact of not wasting money. No need to be a genius to understand that if you put your old machine unplugged in a corner of your factory, you will lose money. Even more if the machine is still in a good global state of use.
Martin already amortized his machine, Martin knows that the industrial market is not that bad at the moment. He used the summer to deepen his knowledge on“Lean manufacturing” confirming he would need to get rid of obsolete equipment
4. Contractors arising
And finally, the last main important reason could be the increase of “contractors” demands. More and more industries are using contractors, for some basic steps of production or even for the whole manufacturing process.
As we can see on the Eurostat graphic below, most European manufacturers are sourcing the basic pieces. Even the raw materials, or even every step from abroad:
Sourcing materials needed in order to produce an end product can by some point be a good idea. There are also bad points in such an idea, but this is not the topic of this guide. The relocation of an activity, will make you end up with hands full of unused machinery.
As said at the beginning of this article, Martin works with subcontractors when producing some complex parts. It is nothing new to him and he accepted the thought a while back. It is interesting for him to continue the collaboration with them while optimizing his margins. This confirms further the need to get rid of his used Trumpf.
An important choice
After this whole initial process Martin is now convinced he should sell his machine and start browsing the Web. He sees a few possible alternatives to find a buyer for it
1. Scrap the machine
One of the first thoughts when wanting to leave a machine would be a solution as scrap yards. They are still the most known way to get rid of used machinery, still working or not. It is not necessarily the best solution for this issue, scrapyards are the easiest way. They accept most of the things that are made of metal, but as nothing is perfect, they have cons.
The operation process of scrap metal dealers is short and easy to explain. You arrive with your machine to their facility, the machine is weighted, an estimation of the price is done according to the weight of the machine and the trade market value for the metal that constitutes the machine. For example, steel can go from 350 to 750€ per ton according to the last 52 weeks figures.
In addition to this low price, you will have to consider the costs of such an action. Most scrappers are not used to taking care of dismantling, craning and transportation. By these three expenses, you will find that it will not be a big revenue after selling the machine. You can now choose to sell or not. Maybe you should consider another way to sell the machine.
Martin decides to consider other alternatives before accepting that minimum revenue. His bottom price is set…
2. Reach out to your own network
Another solution, depending on a lot of different factors, could be the fact of calling his own network. Historically, this is the most used way to sell a machine someone has no more uses from.
Most of our partners explained to us that their first go was this way. This way to sell machines has some pros and cons, as depicted below:
- No commission taken
- It can go fast
- Negotiation should not be that hard
- It shows that the company is well behaving (need better machines)
- No need to work a lot on advertisements
- Risk of sharing a bad picture of the company (in need of money)
- obviously not the best price you can get
- It can be a source of tension with your network
- Your network can be short
- Most of the time you will have to take care of dismantling, transportation, loading…
Unfortunately, none of Martin’s contacts are currently on the market for such a machine. His contractors already got what they need, his fellow entrepreneurs from the Chamber of commerce currently face other challenges. And finally his contact in Trumpf could not offer more than the scrapping price.
3. The dealers/resellers approach
A majority of the sales of used equipment go through dealers or resellers. Acting as companies, they have only one goal, buying used machinery at the lowest price. Reselling them with the best possible margins.
According to the demand of a certain machine, dealers are able to buy a bit higher. If they are sure that they will succeed in reselling it fast.
You have to keep in mind that resellers are never losing money on a used machine. They always know the prices, the costs. It can be interesting to work with them if you are expecting to get more money than by scraping your machine. The inconvenience is that they are going to offer you the minimum you will ask for. In addition the bargaining process could be a bit frustrating for the seller as it can take some additional time.
Their way to operate is simple, you contact them, you send pictures and technical data of the machine. Sometimes you have to set up a visit, they send you a quotation and you decide if you continue your journey with them or not. When studying the quotation, never forget to double check if dismantlement, loading and transportation are included.
When studying the dealer’s solution, be aware of the existence of two kinds of dealers, the one stocking machines and the other operating through back-to-back sales. They are confirming a purchase only once they have a buyer for the equipment. The dealer who stocks machines in his warehouse has space and already a good amount of machines to sell. He will try reducing the price according to the probability of selling and will integrate his overall warehousing cost.
Nevertheless, the dealer who directly sells the machine after purchase will be interested mainly in machines with high selling potential. Maybe he would offer better prices as his costs of sale are limited.
A bonus point we have to give to the dealers is that most of them know how to fix a machine. It can be a good solution to bring them your machine if it has some defaults. If you have time to spare, you will earn more money than sending it to the scrapyard, they will repair it and sell it with a good margin.
Martin asked for some offers from a couple of dealers. The prices offered were too low compared to his expectations. He could sense they were offering about ¼ of the market price for the large reseller stocking. While the back-to-back dealer was trying to sell fast at a low price. Martin still has time, even considering moving the laser cutting machine to his warehouse for a couple of months.
4. Online or physical auctions
Some auction houses specialize in selling used machinery. They already have a big potential buyers pool which will help you sell your machinery fast. Even if “fast” is relative and depends on the coming auctions scheduled.
Or you can choose to work with an auction website as today, the big majority of auctions are held online. You choose the ending auction date, you set a reserve price for the machine (your minimum price). The only thing remaining is crossing your fingers in order to sell it for a good price. You will also have to be sure that your auction offer is well advertised. The more people are aware of the sale, the more chance you have to see the prices increasing. For it, you can ask or pay for a premium service offered by auctions website/houses in order to see your machine on different auctions advertising websites such as Bidderlist.
Because, as nothing is perfect, you will have to be lucky and serious in your choices as once online. You cannot cancel a scheduled auction. In addition, the most important con to auction will be uncertainty about the price. Except the fact that the beginning price will be extremely low. Try to keep in mind that most of the hammer prices (prices at which the machine is sold) are 40 or 50% lower than the true market value for the machine.
In order to sum up a bit the auction’s point, we can say that it can be a good way to sell your machine, in a short period of time (1 to 3 months), prices are always tricky as nothing is sure until the last moment, you can earn a good profit but you also can feel hardly disappointed about what you got from the buyer.
Martin is not a great gambler and he is not in a rush to sell his equipment. He has no debt on it nor a concrete time limit. Auctions are spectacular and a great source of excitement for him, but he is worried about getting low bids for his machine
Market places are one of the most balanced solutions to sell your machines. You can set your price which will be the best for you. Keep in mind to have several prices in your hand, it will make your bargaining process more flexible and efficient. You can decide thanks to some platforms to buy more visibility by paying the platform to promote your machine through Newsletter. Or you can use online advertising as GoogleAds or other premium announcers.
Marketplaces are really different from one to another. Some are making the seller pay in order to list a machine. Others are applying a commission directly to the net seller price paid by the buyer. A few rare are just hosting listings and earn money through premium processes on their page advertisements.
Sounds too easy, it is normal, it can be an issue, the machine selling processes on marketplaces needs luck. You have to post your offer at the same moment as potential buyers are looking for it in order to avoid having your ad fall into oblivion. Does it remind you of something ? We already spoke about studying the market state and choosing the best time to sell. Even after studying the market state, don’t forget that it will always be a risk that your machine doesn’t find a buyer in several months. Maybe think again about your offer, the price, the pictures, the description… or if you don’t see what to do with it, try another way to sell.
In one hand you can ask the marketplace to create the offer with the details you forwarded them. In the other one you can do it yourself, create an account on the website, create an offer, put everything you know. After all, you save it and make it run online.
Martin would prefer to go this way, he appreciates that the price he could sell the machine is fair. As already said he is not in a big rush, he can wait 3 to 12 months. Which is commonly the average time for selling through this solution. In addition to that, receiving visits and answering technical questions is not an issue for him.
However there is a catch, Martin never put an offer online for this kind of good and he prefers to do it on his own.
From a machine to a perfect offer
Creating an offer for a used machine is not really a child’s play, there will be a lot of factors to take into account before beginning to write your offer, we counted 6 main factors. First of all, the price.
1. How to find the price of a used machine?
Whatever the object you are selling, the main and most common point of a successful offer would be giving . Ask for too much and people will run away from your offer, ask for less, and people will run away from your offer as it will look like a scam.
Several ways to find if you have a good price: studying the market (again, yes), going through a lot of similar offers until you have a good idea of a price, the demand and of course the offer. For it you will have to know your machine really well, is it really used, is it used for common activity or a very specialised production process…
Having a good idea of price will not be sufficient to produce a good offer, you have an idea of price for your machine, but what price are you going to put on the offer, are you sure you will find a buyer ? Is the market overcrowded ? If the market is overcrowded you will have to be competitive, maybe agreeing to earn less in order to not wait 1 year or 2 for the machine to be sold. The more attractive you are for potential buyers, the faster you will sell.
Martin knows the purchase price for his laser cutting machine and decided he would try to get 30% for it. However, he wants to position himself better with a realistic market price. He uses Valorexo to evaluate the Trumpf for him, he now has a crystal clear idea about the price, congratulations Martin.
2. Creating an efficient ad for a machinery
Writing an offer is a bit like setting up an account on a dating website. You have to take care about every detail, being attractive and of course presenting yourself well.
More seriously, having a full offer is always good in order to reduce the number of questions of potential buyers. It will help you reach the sales conditions bargaining process.
For it you will need:
a) A complete description
There’s no way you can sell a machine only by telling the manufacturer, the model and the year. You will have to talk about your description, explain what it is, what it was used for, from when, for how many hours etc.
For you to be more trustable according to potential buyers you will have to write a bit about you. And also why you are selling the machine. It can make the potential buyers feel more comfortable, more confident.
Most of the selling websites have categories, find the most accurate one for your machine, it can sound a bit stupid, but don’t put your machine made for cutting metal sheet on wood cutting machine category, it will delay a lot your selling chances.
After you choose a category, most of the websites highlight some technical data that are useful for a potential buyer. You just have to fill and tick some boxes. Technical data can go from dimensions to weight of the machine passing through motor power, table working space, number of units produced…
Another way to be sure that you missed nothing out can be to add to the offer a user manual of the machine normally it has all the important information in it, most of them are available in PDF format on manufacturer’s websites.
Don’t forget, the more you add, the better it will be. In addition it will limit the questions you will receive from potential buyers. Which means that you will be selling the machine faster.
After searching technical data, measuring the machine’s dimensions and writing a complete description for the laser cutting machine. Martin continued to think about what a buyer would like to read in order to get more interested in the machine. The condition of the machine, for sure.
b) The machine’s condition
Something which will be mandatory during your sale process, no matter which way you will use for selling will be to share anything you know regarding the machine. It will help in order to avoid as much as possible information asymmetries between buyers and you. It can be a real sales killer.
By providing as much document as you feel okay to share, you will reassure potential buyers about the maintenance state of the machine. If it was overhauled, has the manufacturer affiliated with the machine recently? Are there any spare parts to change ? If you answer those questions before someone asks them to you, you will again save a lot of time.
Another important step regarding the machine condition will be the descriptions of any changes you did to the machine. For example, if you change the work table size in order to adapt it to your production. Or maybe you ordered some options when you bought it brand new to the machine’s manufacturer. It will be important to share such details making your machine become unique.
If your machine is already a second hand machine, try to explain as much as possible the story of your machine and tell the potential buyers you are not the original owner.
The last point worth mentioning would be the verification of the norms and rules running in the destination country. For example if you sell to a European Union country member, make sure the machine has the CE logo somewhere. Most of the time, on the ID plate of the machine. Some activities will need the machine to be ISOsomething conform to run in some countries.
Congratulations Martin, you now have a complete description including the maintenance state and the machine’s wear. Martin now has a lot of words and figures, but is hardly missing pictures to share.
c) Good pictures
What would be a dating website profile without a picture ? Most of the time a bad surprise or a scam. We all know pictures are one of the main factor that can help to sell a used machine.
Having a lot of photos is a good thing, but that is not all. Indeed, you have to work on the quality of pictures, clear, bright and from every angle.
Something sellers are not usually thinking about when creating a used machinery offer is sharing videos, in production if possible. It will give a better idea of the condition of the machine, no weird sounds ? No heavy black smoke coming from it ? If there is none of it, you will have more chances to get potential buyer’s interest.
In order to upload a video, you can either upload it directly to the website you chose if possible. If not, don’t give up, upload it on YouTube, and share the link in the description of your machine. Sounds difficult, but trust me it takes a couple of minutes to do.
It is truly right when we say that quantity does not equal quality and vice versa. That is why, when uploading pictures to the offer, Martin will put as many pictures as he can. No need to put double pictures of some parts, it would just drown the fish. But the more there are, the best it will be.
3. Don’t cross the illegality line
You have the price to ask for the machine, you have the description, the pictures and the machine’s conditions. Now you will have to focus a bit on the legal part, it is not entirely mandatory. But knowing how the world works is never a bad thing isn’t it ?
You will have to provide all relevant paperwork for the machine, owner certificate, maintenance state certificate… You should be careful about what you send abroad and where.
For example, we recently learned that you not necessarily have to work for the nuclear or military industry in order to avoid some special countries. We were speaking with one of our partners and he was explaining me that he ended up on a national agency surveillance list. You know why ? For selling big industrial vacuum packing machines to some countries buying them in cash and without bargaining. He was happy with that, but some months later, he got the visit of two police inspectors asking him questions. Later on, he understood that those machines were used in order to create bombs.
Moreover, in some countries, it is forbidden to sell several categories of machine abroad. Machines have to remain in the origin country. So be careful about who you are selling sensitive machines to.
4. The bargaining process
After all these administrative activities comes the funny part, it depends on the point of view. But for sure, me and Martin we love this one. We are now dealing with the bargaining process.
In order to answer several questions we had throughout our activity. We already made a guide about buyers and sellers state of mind. You will find in it answers to all the questions you can ask yourself. Such as why a buyer would like to buy a machine, what are his motivations… And a lot of others.
What you should keep in a little corner of your memory. What can be useful even in daily life is that we are all animated by different needs and desires. A buyer does not always look for the most efficient machine. Maybe he is just looking for a machine completing a production line. Also the buyer is more interested in the fact of saving time more than money or the complete opposite…
Thanks to the guide shared above, you will be able to bargain. In some words, taking care of any details making you heading to successful deals.
And of course, during this bargaining process, even if it sounds obvious, don’t forget that not everyone is using the same currency as you do. Try to agree on that as soon as you can, it will make you able to avoid bad surprises. If you agree to sell a machine for 100.000, the outcome will not be the same in American dollars than in Indian rupees.
Martin found a good potential buyer. He currently works in the same industry as him. They agreed on a price, it will be paid in american dollars. They decided to use this currency as Martin is living in the USA and the buyer is based in the Philippines.
5. Set up visits
Any second hand stuff buyer will have to agree to buy a good that often has no warranty. Moreover, he has to trust someone he never heard about before. What to do ? Invite him to see the machine in your factory.
It is really common to set up visits when buying used machinery. Exactly like for a car and if the buyer can’t come to your plant in order to see the machine, invite him for a video tour. For it to be successful, try to clean a bit around the machine. It’s obvious again, but do not forget to explain well how to come to your factory. Be there on time and if possible prepare the machine in order for the buyer to see it when working.
Martin is satisfied. He received a lot of interest for his machine but the price seemed a little high for his prospects. He convinced the most serious one to come and confirm the good condition of the machine. The visit took place and the buyer saw the great opportunity it was. After a small negotiation, they both agreed on a price and both seemed happy with the details.
6. Transportation agreement
The last point, and not the least would be the transportation. In a sale, transportation is up to discussion. Most deals end up with the seller dismantling and loading the equipment on the buyer’s truck or in a container. However, there are no rules and it is vital to get a good idea of what machinery shipping means.
Here are the main steps while discussing shipping.
- The dismantling of the machine:
Before going for anything else regarding the transportation of your machine, you will have to think about the dismantling of the machine. Of course, if the machine does not need it, you can skip this step.
Some machines are a bit too big to be transported on regular trucks or to fit in regular containers. That is why it is important to be aware of the weight and the dimensions of the machine. And this as much for the buyer than for the seller. In the case the machine cannot fit in any of the above, even in an oversize convoy, the only solution remaining would be to dismantle it.
You will have several solutions, the buying company can do it or your company can do it. Most of the time, the seller is in charge of the dismantling. But some time, you will have to call a third part to ensure everything is done properly. For example it is less risky to dismantle by yourself a metal working machine than a pharma or food processing machinery. If something goes wrong the damages will not be the same.
That is why a lot of machinery managers are used to calling the machine’s manufacturer dismantling department, for most manufacturers it is often the best way to go. But if the manufacturer is definitely closed, what should you do ? You can call a contractor specialized in such operations, they will give you and your buyer a certificate saying that everything went right. The contractor will take responsibility for anything wrong related to their action.
No matter what, they should clearly mark each element to help with the installation. Of course, the best course would be for the same contractor or team to rebuild the equipment on the other side but this is rarely the case.
- Choice of shipping means
The destination of the machine is naturally limiting the possibilities of type of shipping.. If the transport is France/France, according to size and weight of the machine a truck might be enough. If the transportation is France/U.S.A, truck or train options will be quite compromised for the full journey. Which will bring us to the concept of multi-modal transportation, using freight transporter on land, sea or even air in a complimentary way. It will all depend on feasibility and quotation.
The choice of the company will come after asking quotations. You will have to judge their credibility, the security of the means of transportation they can offer. By studying the different opportunities, you will now have a clearer idea of your main go to. One important point is that the shipping company guarantee the date and time of removal. This can be reassuring as it can have greatly impacted the production or handling means to load the machine.
- Breakdown of costs and responsibilities:
The breakdown of costs and responsibilities can be easily done by studying the Incoterm chart below. Most of the time, our partners use either the EXW incoterm which is the simplest way of preparing the transport or even the FOB one when it comes to use a vessel for transportation.
EXW incoterm is the most used way of “sharing” responsibilities as the buyer will be the one dealing with every step of the transportation. But don’t worry for him, a part of the transportation costs are often taken into account in the price bargaining process.
Our transportation expert advices:
In addition, here are some tips from our transportation expert:
- You should ask quotations from both renown shipping and smaller local companies. Prices vary a lot according to conditions, origin and destination
- Always double check if the price the transporter is asking is for the weight or if it is a fixed price
- Make sure the machine is complete with both parts and included tools
- Beware of the shipping timeline. There are enough natural unknown in transportation
- Consider shared containers or trucks if you do not use the full capacity. This can significantly reduce the costs but can extend the timeline
Here you go Martin, you have everything you might need in order to sell your Trumpf machine from the U.S to your buyer based in the Philippines. Choosing a FOB (Free on Board) approach was a good idea, the buyer received your machine, Martin received the money, everybody is happy and Martin can now fully focus on his company management.
A last question: “Martin, which marketplace did you use for selling your machine?”
Exapro, Kitmondo, two different marketplaces
If as Martin you prefer to give a chance to the marketplace’s way of selling, we have two solutions for you, on one hand Exapro (in Europe), and on the other one Kitmondo (in Americas). They have agents speaking most of the languages of the European Union and American continent which tenfold your chances to sell.
In addition to that, you, as a seller, have nothing to pay to them. They are part of the ones adding their commission on top of the net seller price in order to have the buyer paying for it when displaying the offer.
And finally, more than offering a free solution to sell, they are non-exclusive and offer an unlimited amount of listings per account.
Be like Martin, sell your machine now on Exapro.
Illustration by Thomas Bordier, all rights reserved