Negotiations tip: what is the real bottom line value of a piece of equipment?

This comes from a very recent experience. We all do (fingers crossed) proper homework when buying an expensive piece of equipment. However, sometimes, since it usually is a very ad-hoc unit, finding reference points is difficult.

What I have learnt recently – the supplier himself can be a very good reference point. Very short and simple tip: while negotiating, discuss a “buy-back” price. Ask them: if the product is not successful in the market and we would need to sell the kit, would you be interested in buying it back? For how much? Their answer is your benchmark. Everything else – “expected monetary value” – is a profit that a business could have if they would use the piece of equipment and all other supply chain parts would work well (incoming goods, operations, sales).

Hope you can use this! This definitely goes on my future question list for Capex negotiations.

Advertisements
Negotiations tip: what is the real bottom line value of a piece of equipment?

One thought on “Negotiations tip: what is the real bottom line value of a piece of equipment?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s