Having the right used equipment strategy can absolutely help your dealership reap greater profits. Whether you are going to use it to penetrate into new accounts or as a path to upgrade your customers into new equipment, dealers that are incorporating used equipment into their business plans are watching their profits soar.
Every dealer handles used equipment, but not all are maximizing the profits that this hardware provides. That’s right. I’m talking about profits from hardware. And not just small profits. Dealers are enjoying 40-70% profits on selling used equipment to their customers.
As dealers focus more on selling services and being flexible to customer needs, used equipment can play a key role in adding profitability. The bottom line is that you are really not selling hardware. You are selling yourself and your dealership. Won’t you stand behind anything you sell with the same guarantee whether it is new or used?
Used equipment sales vary among dealers. Some see it as managing lease returns while others have it as a key strategy to obtain new customers. It can be a small percentage of sales or up to 80% or more. I was asked by a dealer at a recent industry show, “Why don’t more dealers do this? It works.”
3 Ways to Maximize your Profits with Used Equipment
- Use pre-owned equipment in your MPS program
- Create a rental pool and loaner pool
- Mix used and new equipment to win more bids
Used Equipment in your MPS Program
Consider your MPS offering. The customer is paying you a blended CPP and you are managing their print environment. If the customer needs toner, you replace it. If a machine goes down you repair or replace it. Very rarely do we see a requirement for new equipment in MPS bids. In fact, new equipment in many engagements is never even discussed. Used equipment will get you to a more aggressive overall CPP and increase the GP of your agreement.
When I talk about used equipment, I am including copiers and laser printers and any manufacturer brand. The combination of used equipment and MPS will maximize your profit and win more deals.
Create a Rental Pool and Loaner Pool
How often are your customers requiring flexibility? You see it all the time. They want a short term rental. They want a loaner if a machine goes down. They want to upgrade or downgrade at any time. They want to cancel for convenience. They won’t sign a lease.
These requirements are all too common and, to some, can be showstoppers in a deal. Used equipment is not only a viable solution, it becomes a differentiator. Dealers can offer as much flexibility as they want with used equipment. Creating a rental pool and loaner pool with used equipment will take your MPS offerings to the next level.
Mix Used and New Equipment to Win
How many deals are you losing on price? Let’s face it. Not as many deals as we’d like are won on salesmanship, loyalty or incumbency. Especially in schools and government deals, it’s all about price. Let’s say you are in a 10 machine deal. You go to your manufacturer and get the most price support you can, but you know that it is not enough to win the deal. And a win would count toward your manufacturer quota. What do you do?
If you bid only new equipment you know you’ll lose. Why not mix in some used equipment and re-price your deal. Assuming there is no provision against used equipment, you have now lowered your price, increased your chance of winning and you can still earn quota credit with your manufacturer.
What to Look For
You want to look at the meter read, the accessories included, the condition (any codes) and the overall appearance of the machines (no stickers or cracked panels). Customers expect that they appear “like new.” You also want to look at the packaging. Used machines are usually shrink-wrapped. Some companies also will bubble wrap and corner board their machines.
The Right Partner
Partner with a reputable wholesaler. All have warehouse guys who know how to turn a machine on and make copies. The difference is what they do beyond that. The best companies will provide turnkey programs, money back guarantees, on-site pickup and delivery, sales of used and off-lease assets, purchase of trade-ins and excess new and used inventory, shipping and storage services and hard drive data security.
The most profitable dealers have a used equipment strategy. Follow the strategies above and watch your profits soar.
