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Buying and Reselling Used Machines offers Profit Potential

10 Jan, 2006 By: Rob Blais imageSource

Buying and Reselling Used Machines offers Profit Potential

If that question makes you a
little uncomfortable, maybe you’re missing out on some of the more profitable
opportunities that exist in our industry today, namely, buying used machines for

If you are not currently purchasing cast-off machines for resale and you are
interested in doing so, you should consider who you want to be:

A. The Cherry Picker: You buy only the low mileage, current model
creampuffs. You will need to pay top dollar and selection will be limited, but
the sellers will come to you first if you are an active buyer. But don’t expect
the cherries if you want to haggle over price or if you only buy occasionally.

B. The Technical Genius: As long as it is good cosmetically, you don’t
care how many miles are on it or if it even works. You are going to strip it
down to the bone, replace every moving part, and even place in some
modifications that you invented yourself. You pride yourself on technical
expertise and stand behind anything you sell. Sellers will love the fact that
you’re not too particular, giving you an ample amount of choices.

C. Mr. Middle of the Road: Your machines have to look good and be in
decent shape with reasonable meters. You don’t want to spend a fortune on a
“cherry” machine, but you’re not building a jet engine either. There are plenty
of machines out there for you. Make sure you find two or three sources you can

D. Willy Windex: Your main concern is price. You roll up, give it a quick
wipe down, and deliver it. Replacing parts is strictly optional. As long as it’s
cheap and can squeeze out a decent copy, you’ll take it. But remember, you get
what you pay for…and so does your customer.

What and how many models you are
going to adopt?

It’s tempting to go out and buy one machine for a particular sale, but this can
create headaches. You don’t want to get in a situation where you have to stock
parts and develop service expertise for one or two units of a particular model,
especially on refurbished machines.

If you use re-manned machines to supplement your new equipment sales, you need
to be selective. Pick one model in the segments that you perceive a viable
market. Buy them fully configured and keep them in stock.

If used is your primary focus, in that case, you need a more expansive
selection. Pick a model in each segment you are willing to service. Stick with
the models you select for as long as possible, even after you adopt more current

Remember, you have developed a high level of expertise on the models you have
been selling for the past months or years. As the models get older, you may have
to reduce price and limit their application, but these will be profitable models
for you. When you first put a model into your line, service costs tend to be
higher as after market parts and supplies may not be readily available.

Alright, how do you
sell this stuff?

I know you sell copiers for a living. You don’t need me to tell you how to do
it, but let me just give you some of my ideas.

When you sell used equipment, you are selling value—more features, greater
productivity and less expensive. You are giving your customer more for less. And
let’s face it, even a new machine is going to be used six months from now.

Promote the speed, volume capability, options, and price of your machine
compared to new products. Also, go up one segment. If you are competing with a
new Segment 3 machine, offer a Segment 4 used model. You will still be less
expensive and you will blow the other machine away on features and productivity.

Lastly, include at least a 90-day warranty, if possible one year, into the price
of the machine. This will help suppress any concerns about the fact that the
machine is used.

Inventory and financing

How much do you stock and how do you pay for it?

You can’t sell what you don’t have. Therefore, you should have a least one
month’s worth of sales in inventory or at least one model in each segment you
carry. It’s much easier to close a deal when you have a machine worked up and

Trying to close a sale and get the customer to wait for the machine is iffy at
best. They could change their mind or someone else could get in on the deal.

Now, how do you afford all this equipment? If you’re one of those dealers who
can afford to stock as much as needed, you can stop reading now. If you’re like
the rest of us, read on.

Maybe you have a supplier who offers you payment terms. That’s great, but it is
only good as long as you turn over the equipment within the length of those
terms. If you own your own home, you should consider a home equity line of
credit. If you are a little bit bigger dealer, your local bank may be willing to
offer a line of credit without tapping into your home equity.

In either case, the key is to use the line of credit strictly to purchase
equipment. Don’t pay bills, don’t buy a 42” Plasma, and don’t go to Las Vegas
(unless it’s for ITEX). When you sell a machine, pay back the cost of that
equipment to the line of credit.

For example, if you acquire a line of credit for $5,000, buy $5,000 worth of
equipment. If you sell one machine for $3,000 that machine costs you $1,000. Put
that $1,000 back into the line of credit. If you stick to this you will always
have some combination of $5,000 in credit and equipment.

As your business grows, you increase the line of credit. If you don’t sell
anything for a month or two, all you will have to pay is the monthly interest

These are the basics—learn them, use them and succeed.

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