Dealer Markup

gac · Aug 24, 2010

Hello Everyone. Any thoughts on how much dealers like to mark-up used equipment? I am looking at trading round balers and trying to place a value on my trade. They seem to go for $3000-$4000 on lots, but is there any rule of thumb to know around how much of mark-up would be included in this? 20%, 30%, 50%?

Thanks Guys,

bison · Aug 24, 2010

you can be sure of one thing,they wont be losing any.

Tx Jim · Aug 25, 2010

Back when I worked for a JD dealer he made more money on used equip. trade-ins than he did on new equip. sales per unit. Markup on used units was based on required repairs and how good used unit looked. Better looking units were marked up more.

showcrop · Aug 25, 2010

Now wait a minute here, does he go to a used equipment warehouse to get this stuff on his lot? Or does he have to buy it at sales and here and there from many different people in many different situations? Does what he pays establish the value? Of course not. the market establishes the value, and he has to be constantly aware of the market. My experience with selling used stuff has been, here and there you can buy well and make a good profit, Sometimes you get taken, or there turns out to be a big problem that you have to spend more than you can make on a piece to fix. Most of the time you are trying to just make a fair mark-up to keep the lights on. I think it best to rely on the guy's rep and your relationship with him and your awareness of the market and you make or keep a friend and you both prosper.

gac · Aug 25, 2010

Showcrop, I haven't been dealing with equipment a lot. So that is my questions, what is considered fair mark-up?
Thanks,

showcrop · Aug 25, 2010

For me, I needed 100% to take care of any problems down the road. and it will vary a lot with potential for problems. You might say number of moving parts. look at it from how much he stands to loose if it is something unseen that is about to break and then it did, and how his rep would suffer. If you buy completely as is you can probably get more reduction.

showcrop · Aug 25, 2010

For me, I needed 100% to take care of any problems down the road. and it will vary a lot with potential for problems. You might say number of moving parts. look at it from how much he stands to loose if it is something unseen that is about to break and then it did, and how his rep would suffer. If you buy completely as is you can probably get more reduction.

kyhayman · Aug 25, 2010

New equipment 20-30 pct, parts 20-50 pct, used equip at least 50 pct up to 100 pct seems to be the very broad rules of thumb I've heard. Most of the variablity be in used stuff and trade ins. A couple of places I deal with I've heard them say on used stuff that they've got to make a thosand bucks on every used item they sale. To figure trade in they take low estimates sale price minus estimated repairs times 2 minus carrying charge for 2 years on the lot, minus 2 years depreciation, minus the 1000 they want to make and thats what they can give on trade in.

rustyfarmall · Aug 25, 2010

The percentage of mark-up on used equipment is totally irrelevant. If you don't like the asking price, make an offer that you think is fair. If the dealer can sell it at the offered price, he will, but only the dealer knows how much he has invested in that particular piece of equipment, and the whole idea of being the dealer in the first place is to make a profit because he has to eat also.

kyplowboy · Aug 25, 2010

Most of the things I see go at auction then end up in Fastline/USFarmer/Tractorhouse are marked 50 to 100% if they are bought for less than $10,000. One local jockey won't buy a tractor under around $12,000 to $15,000 if he can't put new tires on it and double the price.

As for tradeins, the only one I have any idea about is the local NH dealer. Often times he will have hay equipment marked up only 10% or a little more (depends on what it is) because he makes his money on new stuff and gives good money for trades. I know my grandfather traded disk mowers with him a year and a half ago, he gave $3,000 for the used one and had it on the lot ask'n $3,500 for it. I am sure he would have sold it for less.

Dave

Goose · Aug 25, 2010

There are too many variables involved to assume a set percentage of markup. If a dealer acquires a highly desirable piece of equipment for a low price, he may mark it up 100% and be justified in doing so if that's what the market dictates. On the other hand, he might have another piece of equipment that required unexpected repairs and he's simply trying to get his investment back out of it. Most stuff is somewhere in between. It's not like the parts counter where a set markup applies to everything.

When he was at his peak in racing stock cars, Bobby Allison had a sign over the work bench in his shop, "No amount of human endeavor will ever replace dumb luck". That applies equally to other ventures, including used farm machinery, used cars, et.

Anonymous-0 · Aug 25, 2010

The only rule of thumb is if you are willing to pay the price for the particular machine. Like was said, if it's a desirable machine, markup could be over 100%. Look at land for sale. It's the same way. If a bunch of people all want it, it can sell for quite a bit more than the original asking price. Dave

Ray · Aug 25, 2010

Rule of thumb,no way on used equipment,it might be 500% or whatever they feel like asking that day,or if your a whiner or complainer,or if they think you have deep pockets.Good luck.

GRJ · Aug 25, 2010

Whoa there Red Rider. Are you a dealer? If not, go to the dealership and do your deal. If they don't give you enough on yours,walk.There is no set amount for mark up.What ever the market will bear.Not sure I would want to deal with you if I were a dealer.

Dealer Markup

gac

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bison

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Tx Jim

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showcrop

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gac

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showcrop

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showcrop

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kyhayman

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rustyfarmall

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kyplowboy

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Goose

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Anonymous-0

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Ray

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GRJ

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