Question: As precision farming dealers, what is your strategy for selling used precision equipment and how have these sales benefitted the dealership?
"I do a lot of reselling of precision equipment. One thing I emphasize with customers is don't put too much money into what your trading in. At that point, I get a lot of guys who might want a second lightbar or a second GPS beacon for a combine and you can help them find something for less money.
"I usually have good margins on the used. It's a win-win for everyone; for customers buying new and trading in the old as they get something out of the used. The customer buying used gets a good deal and gets started in precision (usually part-time farmers in the 300-500 acre range) and you have them hooked to buy from you the next time. I win because my margins are usually better on used than on new. Everyone has new equipment and pricing is competitive. By taking in used this can be better than a dealer who won't take trades, which helps you make the sale.
"The key is getting the used priced right. This also helps as we offer installation for something like a yield monitor and that gets us more shop work, which makes us more money as well. I am not scared of taking in used. You just have to make sure you are aware of what it's worth to you and how you can get it sold. It can be better than selling new.
"Like I said, the main thing is don't get to much money in the trade or you can really get burned. We have done well selling used and the only time I have ever gotten burned is when taking new equipment out of a tractor and setting it on the shelf. It is priced so close to new that makes it harder to sell. Usually we have to sell that through a tractor or combine deal to get it moved. I take that into consideration more today than a few years ago. The main reason being, that with tractors coming fully equipped, we have more of that technology getting traded in if a customer decides he doesn't want auto-steer for whatever reason."
- Spud Armstrong,
"Used equipment can be challenging. The thing we look for is that the equipment is in good working condition and that there are no major cosmetic issues. Used equipment is good for customers who want more than a basic lightbar, but don't have the budget for the newest equipment.
"This helps get that customer in the door and get them into precision equipment. We also use used equipment for customers who are looking for a system for a second piece of farm equipment, and want more of an economy-minded solution. The downside is you can sometimes have used equipment sitting on the shelf for a while."
- Jason Pennycook,
Johnson Tractor Inc.,
"My main strategy for selling used equipment is to make sure that there is a market for it and try to have it sold by the time I take it in or at least be sure that it is a product that I can easily move down the road. Key things I note when buying and selling used equipment is to make sure that I don't pay too much for it and can build my own margin in. However, this won't always be the case.
"Sometimes I'll hit a home run and make really good margin on it and other times it's just a step to get onto a customer's farm and start a relationship. As for the benefits, the main ones are that I can make good money on the sales if I set things up properly, and it's an opportunity to get started with a customer by providing a more reasonably priced start-up solution, not to mention the trade-in opportunity side of things.
"Used products are often traded in by a customer interested in upgrading, but doesn't want to spend more money for something he already has, with only a few benefits. As a dealer, I can give them something for that used equipment, which then lowers the cost for the customer and allows me to turn around and make money on the used equipment. It's kind of a double whammy when you look at it that way because it didn't cost me anything to trade in the product and if I have it sold right away, I just made double the sales where I may not have sold anything without working with the used product.
"Lastly, another large benefit is, even if I don't have something used, but a customer is looking for it, I at least have a reason to stay in touch with them and see how things are changing in their operation. If I have that, then who knows what can happen. I may end up selling them into something new by the time all is said and done."
- Pete Youngblut,