$ per hour rate to discount on used tractors

   / $ per hour rate to discount on used tractors #1  

orangebluegreen

Gold Member
Joined
Jun 1, 2005
Messages
336
Location
Florida
Tractor
Kubota B2410
Would be interesting the views from as many people as possible what they think is right for discounting per hour on used machines. I have seen anywhere from 12-20 dollars per hour mentioned, this is an awfully large spread. Obviously a dealer is going to have a different answer than an individual, both sides input would be good.

Perhaps this is discussed in the “Compact Tractor Guide” but I have not seen the book.

My thinking on the subject is.....
MSRP minus 15-20% original discount minus rate x hours and adjusted up/down for overall wear condition and availability of other equal machines. That leaves too much room for error.

Example:
MSRP 15,500 – 15%=13,175

800hr x $10. per hr=8000 for $5175 price. (13,175-8000)
800hr x 12=9600 for $3575
800hr x 20=16,000 THEY OWE ME haha!

You see the problem.

Obviously the adjustments would be made for implements. Curious also if there is a difference in the “rate” if the hours are lower vs. higher and where that would start to change i.e...at 100-200-300-500 etc?
What do most of you use??????
 
   / $ per hour rate to discount on used tractors #2  
This is going to vary a great deal from brand to brand. I'm familiar with Deere tractors. They don't "discount" nearly as much as most brands, regardless of price. Then, some models with-in a brand re-sell better than others, hours meaning little.

I don't see a "magic formula" on this issue.
 
   / $ per hour rate to discount on used tractors #3  
When I bought my B-7800, and was thinking about trading in my old B-7200, my dealer had a guy come out to the house and apraise it. I asked him if there was any magic formula and he said not really. The features and looks of the machine is mainly what he went by. He said hours come into play, but he had seen machines less than a year old with only 50 hours that looked like they had lost a fight with a tank and then he had seen machines with over 4,000 hours that were in great shape.
With all of that said, I don't see how you could discount per hour. It would have to be like valuing a car or truck with a lot of variables.
 
   / $ per hour rate to discount on used tractors #4  
Hi obg,
I don't think firmly basing the discount on hours is going to work out, being so many other factors to consider. But I think that any smart salesman will use this method... the discount will be in direct relation to the fool who's buying it. /forums/images/graemlins/grin.gif
Could be more truth to that than we think??? /forums/images/graemlins/grin.gif
 
   / $ per hour rate to discount on used tractors #5  
It really has nothing to do with that formula. Nearly every dealer will tell that what these units bring at auction determines the retail price on used equipment.
 
   / $ per hour rate to discount on used tractors #6  
Interesting theory, using your formula. When I bought my 8N 20 years ago, they should have paid me to take it away. They cost about $750 new and now go for around 3K
 
   / $ per hour rate to discount on used tractors
  • Thread Starter
#7  
It seems like most come at used pricing from different angles with no real set benchmark. I agree with all the comments and they all differ some. I’ve observed small brandX appears to hold better resale than small brandZ but the reverse appears true in the larger machines, at least from the ones I’ve researched, obviously depends on local needs. Some of that may be the higher initial price to begin with. I know some try to base things off auction prices and I have found a couple websites that attempt to show those, but I question the accuracy because without a registration like a car that shows sale price I’m wondering how many of the total sales actually get reported. I haven’t researched that but curious. My father bought a new tractor in 1963? and I sold it in 1988 for 2-3 times its new cost (can’t remember exact numbers but in that neighborhood). We always bought equipment at auction in the 70-80’s, used it for years then sold for the same or more than we paid even deducting for repairs and maintenance. Looking at the prices on advertised tractors these days however I highly doubt that would be the result if one were to buy used based on dealer prices. The pricing structure and amount dealers appear to be giving on trade-ins reminds me of what a friend of mine has said about a segment of his business he has since dropped. He is in the scrap metals recycling business and used to also own auto junk yards. He sent buyers to auction for late model cars for parts but new guys in the business with little experience were paying so much you would have to charge the same for a used part as what a new one would cost, so he got out of that portion of his business. I have not gone to Fl auctions because of distance (I might soon) but I’m suspecting the same thing might be going on with tractors. It looks like dealers are pricing used equipment at levels where the payment based on lower number of years at a higher rate is equal to that of new. In my opinion that is an artificial game in order to sell new equipment, but that’s my opinion. I cannot imagine actual sales vs. advertised price ratio is that good unless 3RRL is absolutely correct in saying “the discount will be in direct relation to the fool who's buying it.” The pricing on used from dealers at least makes no sense to me, and the individual with one tractor looks at the prices dealers are asking and is trying to price accordingly. The problem with that is I see many of those same machines just sitting on dealers lots. I agree with most others who say the best deals are the ones you find in local papers or driving by, used to be the same in Ohio where I’m from originally, however Fla is a different animal. I’m sure many view a tractor in pleasure or plain usefulness terms, but if viewed in dollars terms as I do everything, then like they say in real estate or anything viewed as an investment.....you make your money when you buy, not when you sell.
 
 
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