Pricing Used Medical Equipment for Sale or Auction

What is the right price for used medical equipment?

Buyers looking for second-hand medical equipment don’t know how much to pay and sellers often wonder how much to quote.

Here is a quick ready-reckoner for key points for used medical equipment pricing.

From our past experiences, the following are the key factors that go into determining rough price of second hand medical equipment are:

Second hand medical equipment Price

1. The current market price of the new/original equipment:

The current market price of new medical equipment is really the starting point for any calculations. Reference point for the original equipment price can be the invoice. Sometimes manufacturer may have reduced the offer price in the market. Therefore even though the seller may have paid a higher price a few years back, the buyer is only going to consider the current market price.

2. Depreciation / Residual life:

From the accounting perspective, depreciation rates vary from 25-40% depending on items. However, depreciation assumed for most medical equipment is 40% per year. Naturally new equipment depreciates more in value in early years. The residual life of the equipment varies from item-to-item and between different makes/models. Some items are known to be sturdy and may last even 10-15 years (or more!), while some others may not be considered worth much even just after 5 years. The market value for well known, durable brands is better.

3. Current working condition:

The equipment and accessories need to be thoroughly inspected for all its functionalities. If any major repair needs to be carried out, it is saleable only as junk for the value of its ‘spares’. E.g. the tube in an X-Ray is the costliest part. If it is damaged, replacing it costs almost as much as the X-Ray itself. The value of the rest of the equipment is only for its other spares.

Cost of any major/ minor repair or potential refurbishment generally needs to be borne by the seller. So one needs to reduce the repair cost from the value of the second hand medical equipment.

It is prudent to check the service history of the equipment for any specific repairs in the past, also usage details and wear & tear to assess future repair requirements that may crop up.

4. CMC/ Warranty Cost:

New equipment comes with the warranty of at least one year or more from the manufacturer. Since used equipment would be without any warranty, buyers usually reduce their offer further by cost equivalent to Comprehensive Maintenance Contract (CMC). Some of the Original Equipment Manufacturers (OEMs) are willing to cover the equipment with CMC or AMC as long as the equipment has been maintained well and not been touched by others. Therefore, value of an equipment refurbished by the OEM is much higher than an un-refurbished equipment purchase from another user.

5. De-commissioning, transportation, and re-commissioning Cost

This additional cost of dismantling, packing, transportation and re-installation needs to be borne by the buyer hence the price offer for the second hand medical equipment on as-is basis will be lower by this amount further.

Market share and value of used medical equipment

The market price of second hand medical equipment is always based on the demand-supply gap. An item, however well-maintained, is unlikely to find a buyer, if not in demand.

Demand – The brand or model which has a larger market share in the past 10 years or so, is usually more in demand and for good reasons. E.g Olympus endoscopes has a 70% global market share.

Higher market share means that most people have used this equipment. Doctors have preference to buy the same equipment they have used earlier.
Secondly, spares availability is likely to be better.
Thirdly, third party services may be far more developed and available.

Doctors avoid buying rare and / or imported items, since after sales servicing or spare parts availability could be a challenge.

Sparingly used vs heavily used medical equipment

Often sellers argue that their equipment is ‘almost new’, ‘hardly used’ to get a better price. The fact is the buyer is interested in second hand medical equipment because it is ‘sparingly used’. If it is highly used, it is likely to be well worn-out and hence not very desirable.

The point to remember while selling pre-owned medical equipment to hospitals is that the buyers are looking for a ‘bargain’. Hence, all things considered, a good deal is what is available for at least 5-10% less. Most deals fail since the price agreement does not reach this “zone of perceived ‘good deal’.

At PrimedeQ we use our tried and tested methodology to arrive at a fair price for equipment. We connect hospital to hospital for the sale of medical equipment. This way, we eliminate multiple intermediaries and hence both buyer and seller benefit by getting a better deal. We also can bring in multiple buyers in a short period of time. PrimedeQ is India’s first comprehensive e-Marketplace for all things related to medical equipment.

Shanthi Mathur

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