Buying used test equipment can provide you with quick solutions to your testing needs and capacity peaks. The advantages are clear and simple. And by understanding the market and its players, you can benefit from this option with little risk.
First, there are cost savings. With used test equipment, you can reap savings of typically 40% to 60% of new list price. A one-year old tester may be discounted only 20% of the new list price while an older piece of equipment in large supply may offer 60% to 70% savings.
Quick delivery is another advantage. While lead times for new equipment continue to stretch out, used equipment can be available in two to four weeks. By adding to an existing test line, there is no need for retraining and reprogramming that can delay the integration of new test equipment.
Sometimes, the used-equipment marketplace is the only place you can find what you need. The demand on original equipment manufacturers to provide state-of-the-art test equipment by obsoleting the older models only makes good business sense.
Once an original equipment manufacturer discontinues a test line, users either replace these systems with newer test equipment or buy more of the original systems to support their commitment to these testers. For example, sometimes government agencies have 20-year projects that require testers that can only be found in the used-equipment marketplace.
Your company can be more competitive in your industry by buying used test equipment. With the cost savings and quick delivery, you can be more flexible and react to peaks in your capacities. Capital costs remain at a minimum.
Another option is to rent or lease the equipment. Most used-equipment dealers work with leasing companies. Some leasing companies have divisions that sell their equipment at the end of a lease. Some used-equipment dealers who carry inventory offer short-term rentals of equipment in stock.
Know the Risks
Pick a used-equipment vender to fit your needs. The spectrum ranges from brokers who sell equipment as-is/where-is to venders that sell refurbished equipment configured to a desired specification with warranties and long-term support. Or you can buy direct from the original owner. This option is usually lower cost but higher risk.
Does your company have the capability, time and resources to refurbish the equipment? Initially this may be the least expensive method, but in the long run it could cost you more. Buying equipment that is only one or two years old from a broker makes sense because there probably is no refurbishment necessary.
Does the used-equipment vender offer a trade-in program? Perhaps you can trade in unneeded equipment toward the purchase of equipment you now want, furthering your cost savings.
Once you narrow your resources to the venders that fit your needs, partner with them. Share information with them about upcoming needs so they can be on the lookout for this equipment. Giving more time for a vender to source equipment and negotiate better prices ultimately means a better price for you.
Costs and Pricing
The used-equipment marketplace is driven by supply and demand. Unlike a manufacturing organization, when the demand is high, a used-equipment vender cannot ramp-up the production line to meet these demands. There is a finite amount of equipment available at any time. When the demand is high and supply is low, the prices are higher; when the supply is high and the demand is low, the prices go down.
Broadcasting your equipment needs to everyone in the marketplace can directly impact the price. You can drive prices up by creating a “false” market. For instance, if several used-equipment dealers are bidding for equipment for you, it may appear to sellers that there are many buyers when there may only be one—you.
When evaluating a used-equipment purchase, consider the hidden or extra costs involved with the equipment purchase price. Here is a checklist of potential additional costs to evaluate:
Inspection travel expenses.
Software license fees.
Crating.
Shipping.
Insurance.
Export/customs expenses.
Upgrades.
Deinstallation and reinstallation.
Spares.
Additional power needs.
Extended warranty.
When used equipment changes ownership, some original equipment manufacturers charge a software-license transfer fee. These costs can be high, as much as $150,000 in some cases, and often come as a surprise. Check with your used-equipment vendor or the original equipment manufacturer to see if such a fee applies and what it will provide. Usually the fee allows you to use the software and any new revisions and to get spares and warranty support from the manufacturer.
If you do not need this support from the original equipment manufacturer, you may not have to pay the fee. Some original equipment manufacturers do not charge their customers such fees because they see long-term benefits by not having such a policy.
The best way to lower your risk is to inspect the equipment before you take delivery. This eliminates miscommunications about the condition or configuration of the equipment. If nothing else, inspection before shipment should be a standard policy.
Conclusion
The used-equipment marketplace is an expanding resource that can provide you with quick solutions at reasonable prices. By learning about the market and knowing the company and individuals who offer this equipment, you can take advantage of this option with little risk.
About the Author
Lisa Bruhn is vice president of North American sales and marketing at GlobeTech International. Before joining GlobeTech 10 years ago, she was employed by National Semiconductor. Ms. Bruhn received a B.S. degree in business administration from the University of Phoenix. GlobeTech International, 1684 S. Research Loop, Tucson, AZ 85710, (602) 298-6900.
Copyright 1997 Nelson Publishing Inc.
February 1997