Used Machinery Value Decline Model
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  1. #1
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    Default Used Machinery Value Decline Model

    I am looking to purchase some used CNC equipment from 2016. Are there any models for the average value decline of equipment? For example, say the equipment costs $600,000 new.

    Drive it off the lot, price goes down 15%. ($600,000*.85=$510,000)
    End of year 1 down 25%
    End of year 2 down 35%
    End of year 3 down 40%

    I know every piece of equipment is different but just looking to see if there are any models or rules of thumb people use.

    Thanks!
    Dan

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    I will be curious as to the responses. I just think there are way too many variables.

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    Quote Originally Posted by Dualkit View Post
    I will be curious as to the responses. I just think there are way too many variables.
    Me too, I have seen CNC equipment that looked and operated brand new after 4 years of usage and then there's equipment that looks like it was shit off a Clift at 2 years of usage. just like Dualkit states far too many variables.

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    At the very least use run-time hours instead of date of manufacture.

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    Use work trucks as a starting point. Farm tractors would also work. There is much more information available. If you break down the reduction in value, there is a component for age, and another component for usage, and another for general appearance. Then there is the occasional significant technological improvement that renders previous models significantly cheaper. For example, the lower operating cost of fiber lasers made older beam path lasers near worthless. A look at used car prices will show, even with large data sets, there is a large price range.

    Your best model will start with the price of a new machine. Use the installed cost, not the purchase price. Now put a value on the things you get with a new machine but won't get with a used machine. Things like warranty, factory support, factory training, possibly guaranteed uptime, parts availability, latest technology, and a few others. The used machine will offer immediate availability. Is there a new machine also immediately available, or is there a long wait?

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    Quote Originally Posted by EmanuelGoldstein View Post
    At the very least use run-time hours instead of date of manufacture.
    Many sellers use these screens of Run Time and Parts Count and so on when selling machines. I take them with a grain of salt as most if not all can be changed. At least on older Fanucs. I know because I've done it both on purpose and by accident.

    Have an OM that the total hours has been changed multiple times by accident. I still don't know what I punch in MDI to do it, but something I do during setup and tool measurement, meaning hitting an improper key or two by accident and not watching resets the hours. Pisses me off actually.

    On machines I've totally rebuilt I reset all the counters I can in the parameters. Not something I would hide from buyers when I sell them either.

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    Quote Originally Posted by danvoell View Post
    Are there any models for the average value decline of equipment?
    No.

    Hope you know what you're looking at and make good decisions.

    There's way too many variables.

    The more production oriented the higher the loss of value- A twin spindle live tooled lathe or an HMC with a pallet pool take huge hits in value as they age.

    The more a machines technology is changing the more it loses- For example lasers are crazy expensive new, but 10 years old are dirt cheap. In contrast many presses like press brakes and high speed precision presses lose little value at all as they age.

    I find the biggest factor in price is who I'm buying from. A dealer is usually highest for a given machine. They have to make their big cut off the top. A small company or individual is often second highest because that machine is/was a significant investment for them. Big companies are usually the best deals if you can deal with them directly. They normally won't work with john Q. Dumbstick off the street though.

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    Thanks for all the responses. I think I am going to revert to car/truck value modeling since there is much more data. Again just for general modeling, I know specific cases will have much more variation.

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    As others have said there are far too many variables. One of the shops I used to work at had a lot of CNC lathes. This was a precision tool room. They had an old dinosaur QT15 and a newer. . . Something or other Mazak. I’d take the old QT15, that had to be 30 plus years old over the newer one.

    Old one had had darn near every part that mattered replaced over the years. Some multiple times.

    Newer one had an idiot on 3rd that crashed it damn near every night. The turret wouldn’t quite indicate back in no matter what you did. Other goofy issues that I guess Mazak has incorporated in their new machines.

    No formula is going to tell you that.

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    Quote Originally Posted by Fal Grunt View Post
    No formula is going to tell you that.
    The value of a machine tool is what it is worth in the hands of the guy buying it. The most expensive high-end machine is worthless if run by an idiot; a smart guy can adapt an old clunker and earn a million with it.

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    And all of these things can be multiplied by market circumstance. Coronavirus recession hitting hard? New machines will go on sale and used machines may go on sale by an even larger fraction. So new-to-old value ratio can change. Likewise, sudden boom in economy, or big ramp-up for war-time or virus-time reasons, may make already existing near at hand used machines much more valuable.

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    Pre or post Covid 19?

    In all things, supply and demand levels determine where price sit on the curve......there just might be a few more auctions in the coming months. My current business goal is to avoid being one.

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    I think the best way to value a machine is to look at the current "Market" value. Compare asking and
    selling prices for equivalent or similar machines. Developing some sort of table or model to evaluate
    prices sounds like too much of a "bean counter" approach which my arrive at an unrealistic value.

    The other way to look at it is to determine what the machine is worth to you and your business. If you've
    done your homework you'll know what products you intend to make on it and what your maximum cost
    per part can be. In other words, how much can you afford to spend on a machine and still make money?

  19. #14
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    Quote Originally Posted by EmanuelGoldstein View Post
    At the very least use run-time hours instead of date of manufacture.
    Run hours make sense to a degree, but here's the rub there, we had two Bridgeports purchased new and the same time.
    One spent it's life in Aluminum only, the other Carbon steel. Both were traded after about 7 years with somewhat close running hours, Steel only machine looked great but was ready for a spindle rebuild, the Aluminum only would have probably kept going a few more years easy.


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