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Reflection Business > Business > A Purchaser’s Guide to Buying Old Industrial Parts
Business

A Purchaser’s Guide to Buying Old Industrial Parts

AlexJames
AlexJames Published September 30, 2022
Last updated: 2022/09/30 at 5:27 AM
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Original equipment manufacturers in numerous industrial sectors face a complex and uncertain future. New equipment sales have decreased in various industries, from oil and gas to agricultural to commercial aerospace, in recent years due to falling input prices and sluggish growth in emerging countries. 

In response, the aftermarket services—the provision of parts, repair, maintenance, and digital services for the equipment they sold—are receiving more attention from CEOs of industrial equipment manufacturer parts. This tactic’s appeal is because services offer more consistent revenue and frequently larger margins than new equipment sales. So, if you are looking for industrial parts equipment, it’s better to consider the aftermarket value. 

The Value of The Aftermarket Equipment

One-time used general electric industrial parts are often in the best position to capture aftermarket value. The third-party product providers offer this equipment in the market, and they can collect proprietary data from large manufacturing companies. 

In this competitive market, you must identify the potential points before breaking into the aftermarket and finding the right equipment. And here are some measurements that you can take. 

Product Lifetime

Before buying a used product, you should always check the usage time of a piece of equipment. If you find it greater or shorter than what the manufacturer has told you, you may want to consider switching to another shop to buy the equipment. 

For example, even though gas turbines are made to last 30 years, some customers have utilized them for up to 50 years, despite their performance.

Lifetime Penetration 

During a product’s lifespan, it refers to the proportion of the installed base it serves. Two variables determine the lifetime penetration of the product: the attach rate and the share of a lifetime. 

The attach rate determines the warranty or service agreement (for instance, a parts-supply contract or a repair and maintenance contract). The attach rate generally shows how effectively an OEM markets services at the start of a product’s lifecycle.

The next factor you can consider is the lifetime share which determines the product’s warranties and the cost of the service. Industrial equipment frequently loses its strength once it is active. But most industrial equipment can work after a product’s first 10 to 15 years. For instance, several companies provide specialized, affordable maintenance contracts.

Average Annual Services Revenue

Each industrial equipment is covered in some kind of service agreement by its manufacturer. Equipment service is what enables the comparison of products with various selling prices. You can ask its manufacturer to let you know how much service and revenue it can provide you during its lifetime.

Knowing the service revenue, you can check the aftermarket lifetime value of the product. You can express it as a percentage of the product’s initial price. However, you can not consider a product’s aftermarket life value based on its profitability. It examines the comprehensive view of the finances you might and might not have to spend on the equipment. 

How to Examine The Performance Of Used Equipment? 

 Before choosing the equipment for your business, you should look at standard financial criteria, such as profitability and sales.

However, the lifetime cost of a piece of equipment might offer more information. You can compare the competitors in other industries, even ones with extremely different

average sales and product lives. It will eventually bring you more insights into the product, its lifetime, and the costs surrounding it. 

Examining the product’s performance will help you discover startling differences in the outcomes. So, you can examine the aftermarket lifetime of the industrial equipment from heavy-duty truck spare parts, and cutler hammer breakers compatible parts to the wind turbine spare parts. 

In some businesses, the price for the used equipment stays the same as the cost of the initial product, whereas, in other industries, participants can find it challenging to discover spare parts. So, make your decisions wisely. Sometimes the costs can be five times the initial price. Making your decision can be much better than jumping into the market with no knowledge at all. 

Why Are There Higher Prices for Industrial Equipment? 

While manufacturers of industrial part equipment cannot eliminate all the industry-specific constraints, they can take steps to increase annual services revenue, lifetime penetration, and product lifetime.

The cost rises during the process of making the industrial tools. The first step involves creating a comprehensive digital tool that models that analyzes individual pieces of equipment. 

The analyzing tools are necessary as they determine the quality of the equipment you are going to work with. However, it subsequently raises the prices of the product and adds up to the overall cost. 

After the model determines the product lifetime, lifetime penetration, and average annual services revenue for individual equipment, the manufacturers calculate aftermarket lifetime value and apply various improvements, and eventually, this too adds up to the price of the product. 

You can find 40 to 60 possible alternatives for the seller, no matter what type of industrial equipment they are looking for, depending on the industry. 

The further cost adds up when the manufacturers use lifetime by remarketing used equipment, re-pricing spare parts more dynamically, or offering to overhaul and modernize a customer’s existing equipment through hardware or software upgrades.

Segment Your Business Needs To Buy The Industrial Equipments 

By segmenting your needs and finding tailored spare parts for maintenance, you can effectively increase the revenue of your entire business. Sometimes the people who buy the older equipment are more cost-sensitive than those with new equipment since repairs or parts may equal or even exceed the actual value of a machine. 

You can receive the maximum lifetime penetration if the seller is offering long-term service contracts that guarantee engine uptime—a critical consideration for most of the business. To generate customer interest in such contracts, manufacturers need to make tailored offerings. 

MRM Machines is the best online seller for new and old industrial parts. So, if you are looking for authentic industrial parts at reasonable prices, you can visit their online store and find what you are looking for. 

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TAGGED: cutler hammer breakers compatible, general electric industrial parts
AlexJames September 30, 2022
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