Bill Robertson Director, Remarketing

Q. I have a warehouse full of equipment for which my company no longer has a need. How do I determine what to refurbish and what to recycle?

A. The most efficient way to determine what equipment is refurbishable and what is recyclable can best be achieved by having a third-party expert conduct an audit. In some instances, companies will find that it does not make financial sense to repair or refurbish equipment—based on its aftermarket value. An audit provides an estimate of recoverable market value that is based on the configuration and condition of the equipment. The aftermarket value of equipment is based on a value depreciation analysis, market surveys, and independent research in the form of residual reports, international markets, leasing companies’ surveys and present market conditions of supply and demand.

The best approach is to establish business rules that automate the decision-making process and determine what equipment should be refurbished, resold, harvested for parts or recycled. This can be based upon value-appropriate thresholds, known market demand, and business needs within the organization.

Q. What sort of returns can I expect to see when I resell my used equipment?

A. Many factors can play into how much a business can expect to receive for its equipment. Typically, through a buy back or trade-in program, the vendor will provide a fixed value for the asset based on a pricing guide. Per-asset recovery charges, such as logistics and data erasure, are bundled into the list price. However, there are a few catches to this “broker” approach that can significantly impact your net value.

First, units must be complete and have reasonable wear and tear. A unit missing a part that could easily and inexpensively be replaced—even from your own inventory—could be considered incomplete. Or, if an AC adapter is not packaged with the laptop to which it belongs, the unit could be considered incomplete. And what is reasonable wear and tear is completely subjective. In these circumstances, the units may not only be discounted substantially—even reduced to zero dollars, but they may also be subject to a disposal fee, turning an anticipated residual gain into a financial loss. You must also factor in hidden costs, such as project management fees for assets processed, as well as per-asset logistic fees. Whether you are a large organization turning thousands of assets a year, or a small company turning hundreds, these penalties and per-asset charges add up and erode overall yields.

Another factor to consider is the time it takes to get equipment to market. On average, assets are depreciating in value 3 percent to 5 percent per month, so the ability to recover, process and turn equipment quickly will reduce lost value. It will also allow the company to quickly take the asset off of its books, providing tax and maintenance benefits.

Finally, marketability of the product, such as condition, quality, supply and demand, can play a significant factor in resale value. For example, repairing, reconditioning and loading an operating system may significantly increase resale value. And, as with any commodity product, growing a robust pipeline of buyers for consistent quality product will increase competitive bids and generate higher yields.

Q. Could our organization get more value for our surplus equipment by selling it ourselves?

A. One of the most common assertions is that if companies try to sell their equipment themselves they will get a higher return. However, companies often find that they struggle reselling equipment and cannot get better returns. These is either because they can’t build channels of consistent demand because of limited supplies, have a lack of understanding of true market values, are unable to control market-flooding tactics that artificially inflate demand and reduce prices, or lack the infrastructure to support the technical and administrative functions related to processing, selling and supporting the program.

Conversely, using a disposition vendor can provide added value while eliminating administrative overhead. In fact, some vendors can generate 8 percent to 14 percent higher return than fair-market value on wholesale remarketed assets, and as much as 40 percent higher return on refurbished assets. This is because of their capabilities to professionally recondition and pre-load genuine Microsoft operating systems onto desktop and laptop systems, perform advanced testing to certify the working and cosmetic condition of equipment and source, and harvest from existing systems low-cost parts to make units complete.

Used equipment is a commodity, but unlike day traders, the corporate strategy of selling it yourself is flawed because most corporate enterprises lack the necessities to succeed long-term in this business. That includes having a business and marketing plan, a sales team with a wide variety of product mix expertise in the aftermarket, and a consistent supply of quality equipment that keeps a large marketplace of buyers coming back to bid for more. Product, price, distribution, customer consignment and marketing mix strategies are developed into the competitive strategies that differentiate Redemtech in this market.

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