The American Society of Appraisers‘ Valuing Machinery and Equipment textbook defines discount for ownership as
The loss in value of a property that occurs directly after a product is purchased, therefore going from a condition of “new” to that of “used.” In some cases, the product might not even have been used; the fact that it is being sold by a secondary owner is sufficient for such a discount to apply, even if the product is still new and in its original condition. This discount is commonly seen in the depreciation of new cars.
Many of us are familiar with what is sometimes referred to as the “drive off the lot” depreciation. It is the principle that the second you drive a new car off the dealership’s lot, it immediately loses 10% (or more) of its value. The car itself is almost new, and only has a very slight difference in condition because of your minute of driving, but since you are not the new car dealer, it has a lower perceived value. Why would someone pay as much for the car from you, when they could go back to the dealer and buy the same vehicle, know that it was definitely in new condition, know that it had the full warranty, and know that the dealer backed the purchase.
The same theory applies to many types of equipment. A few years ago at the team at Federal Equipment in Cleveland gave a tour during the Equipment Valuation Conference held by the American Society of Appraisers. One of the discussion points for stainless steel pharmaceutical equipment was related to what is now referred to as a discount for ownership. The president of Federal Equipment explained a secondary buyer would be concerned about how the original buyer might have treated a piece of equipment. Maybe it was dropped during delivery or may it sat too long outside in bad weather. Consequently, even though the item was supposedly brand new, and might still be in the original shrinkwrap and on the original delivery pallet, the secondary buyer would expect a discount as high as 50% off of the new price.
Similar discounts are seen in most equipment, although the amount of the “discount” can vary from category to category.
If you need help to determine the value of a piece of pharmaceutical equipment, construction equipment, healthcare equipment, or equipment from many other industries, fill out our contact form or call our office at 888-473-6237.
Just a sample of some the many types of equipment from the many industries that we regularly appraise:
We appraise the machinery that plants, harvests, processes, and moves what farms produce, including growing operations of every kind. Our farm equipment appraisals page covers the full range, along with our work with cannabis cultivation equipment and coffee cultivation and harvesting equipment.
We appraise the machines that build and move: earthmoving, lifting, paving, drilling, and the fleets behind them. See our heavy and construction equipment appraisals page for the equipment we cover and how these assignments work.
Hospitals, surgery centers, imaging suites, and private practices all rely on complex specialized equipment. See our hospital and medical equipment appraisals page, along with our related pages for dental equipment appraisals and clinical and diagnostic laboratory equipment appraisals.
Truck tractors, trailers, vocational trucks, buses, municipal and emergency fleets, port and terminal equipment, and airport ground support equipment. See our Commercial Truck, Trailer, and Fleet Appraisals page.
From single production lines to entire plants, we value the equipment that processes, packages, and moves food and beverages. Learn more on our food processing equipment appraisals page, including our related work with cannabis processing equipment and coffee roasting and packaging equipment.
Front of house or back, we value what keeps a food business running, from the cooking line to the dining room. Start with our restaurant equipment appraisals page, which also connects to our work with coffee brewing and espresso equipment.
From a single CNC machine to a complete machine shop, we value the equipment that cuts, forms, and finishes metal. Visit our machine shop and metalworking equipment appraisals page to learn more.
We also appraise woodworking equipment, from cabinet shops and timber processing to full millwork operations, manual tools to CNC equipment. Learn more on our woodworking and wood products equipment appraisals page.
We appraise laboratory and scientific equipment in research, testing, and production settings, and our clinical and diagnostic laboratory equipment appraisals page covers our medical laboratory work in depth.
The equipment and office furnishings & fixtures (FF&E) supporting a wide range of businesses, including professional offices and retail services, fitness centers, hotels and country clubs, landscaping and groundskeeping, government offices, and arenas, fairgrounds, and event venues, are all within our practice. Learn more on our business equipment appraisals page.
We appraise dry cleaning plants, commercial laundries, and coin-operated operations of every size. Contact us to discuss your equipment.
We regularly value the equipment that moves, lifts, and stores product in warehouses and plants. Contact us to discuss yours.
General industrial and manufacturing equipment is the core of our practice: production machinery, plant support equipment, and everything in between. See our industrial and manufacturing equipment appraisals page.
We value processing equipment across the chemical, plastic, and rubber industries. Contact us to discuss your operation.
We value the equipment in repair shops, body shops, and dealership sales and service departments. Learn more in the automotive service sections of our business equipment appraisals page.
We appraise high-tech manufacturing equipment, from electronics assembly to precision production lines. Contact us to discuss your equipment.
Projects are managed from our offices in Chadds Ford, Pennsylvania, and Oakland, California, supported by our network of expert associates.
We serve industry and offices across the Northeast, including Delaware, Maryland, New Jersey, New York, Pennsylvania, and Virginia, along with Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, West Virginia, and the District of Columbia.
We appraise equipment throughout the Southeast, including Florida, Georgia, North Carolina, South Carolina, Tennessee, Alabama, Mississippi, Kentucky, Louisiana, and Arkansas.
Our Southwestern work covers Texas, Arizona, New Mexico, Oklahoma, and Colorado, with appraisals performed on-site or on an uninspected desktop basis.