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Buying Floor Models

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Forum topic by Denner posted 12-09-2019 09:30 PM 524 views 0 times favorited 12 replies Add to Favorites Watch
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Denner

9 posts in 248 days


12-09-2019 09:30 PM

Topic tags/keywords: new old stock floor model

Afternoon Folks,

I’m looking for any thoughts y’all might have on buying floor models or new old stock machinery. There’s a hardware store near me that doesn’t seem too interested in machinery business, and has some floor models of products that can’t be sold in the US anymore (Bosch REAXX) or are from companies that don’t exist anymore (General). I don’t want to insult them so they won’t deal with me at all, but it seems like they could use the floor space for something that hasn’t been sitting around for at least two years. Does anyone have a standard discount they’d apply in such cases (e.g. “70% of MSRP”)? Have experience on the retail end and an idea of the markups/margins on machinery?

Thanks,
Denner


12 replies so far

View syenefarmer's profile

syenefarmer

546 posts in 3687 days


#1 posted 12-09-2019 10:08 PM

Probably not to realistic that they might go as deep as 70% off however to me at 50% off of what they were selling for new, not MSRP, they might at least think about it. The biggest issue I can see with buying any of those machines is the unavailability of parts should you need them. For me, that would be a rather large red flag but hey, life’s a gamble right.

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Denner

9 posts in 248 days


#2 posted 12-10-2019 02:21 AM



Probably not to realistic that they might go as deep as 70% off however to me at 50% off of what they were selling for new, not MSRP, they might at least think about it. The biggest issue I can see with buying any of those machines is the unavailability of parts should you need them. For me, that would be a rather large red flag but hey, life s a gamble right.

- syenefarmer

I should clarify that was 70% of rather than off. Wouldn’t object to 50% off, though.

Parts availability would worry me, too. Be nice if there was a concordance table somewhere for all the machines built to the same basic pattern.

View Andybb's profile

Andybb

2376 posts in 1210 days


#3 posted 12-10-2019 02:28 AM

I’d ask to speak to the manager and ask what he’d sell it for. If it’s more than you think is fair give him your number and tell him to call you if he is willing to do better.

70% of retail (30% off) seems fair. 50% is better though. :-)

Don’t know that I’d want Bosch’s Reaxx as the parts and cartridges are also banned from import too.

-- Andy - Seattle USA

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coopersdad

34 posts in 1448 days


#4 posted 12-10-2019 02:55 AM

You never know. I was at Sears some years ago looking for a drill press, and noticed one of their floor models, a nicer one than I’d been considering, had only one quill handle. One other hole was drilled but not tapped, and the other was only centerpunched. Must’ve been quitting time Friday in China…anyway I told the salesman how embarrassing it was for Sears to have that out there, and offered him a ridiculous price, at least 50% off, to take it away for them. He went to check with the manager, and came back and said I just got a drill press. I tried to complete the holes, the two handles were shipped with the press, but they’d chrome plated the hub and it was just too hard to work on. Been using it ever since.

View LeeRoyMan's profile (online now)

LeeRoyMan

498 posts in 333 days


#5 posted 12-10-2019 03:23 AM

I would probably see if they would sell it for cost. (Maybe finagle a little bit more because it’s not new in box.)
I doubt there is that much markup on tools, and the company probably doesn’t want to lose money.
but IDK what you’re looking at. Mom and Pop store? Major company? You never know.

The best thing to do is figure how much you want to pay for something, then make them the offer, without insulting them.
There is no rule of thumb as far as I know.

View Lazyman's profile

Lazyman

4513 posts in 1994 days


#6 posted 12-10-2019 04:31 AM

For floor models, I would inspect it pretty carefully. People tend to fiddle with them and often don’t know how to operate them and they could be broken or out of adjustment and missing parts. IMO, the longer its been there, the deeper discount because the more that can be messed up or missing.

-- Nathan, TX -- Hire the lazy man. He may not do as much work but that's because he will find a better way.

View therealSteveN's profile

therealSteveN

4642 posts in 1181 days


#7 posted 12-10-2019 04:59 AM

I have only bought one new tool, that came with mileage. It’s a radial drill press I bought at one of “Theee Woodworking Shows” a lot of years ago. Plenty of folks had played with it, but I don’t think anyone had powered it on until I did. I bought it at 25% of cost. I know it was a great deal for me. I didn’t ever need to contact them about the full warranty I got with it, worked out either lucky, or good. They were happy too, they had sold 17 of them at full price, less 5% show discount, and didn’t have to load it to go home.

In your case is it maybe you are thinking they need to clear their floor space, or did they tell you that?

-- Think safe, be safe

View SMP's profile

SMP

1596 posts in 512 days


#8 posted 12-10-2019 06:45 AM

I was at Costco years ago and they had a benchtop Delta drill press, clearing them out for $100(think they were $129 normally). I told the employee that i’d like but didn’t see any more in stock. He checked in back and checked other stores on the computer. He couldn’t find any and asked if i would like the display. I asked how much and he said $50 but no box. The chuck and all accessories were still in a bag in the top section never put together.

View CaptainKlutz's profile (online now)

CaptainKlutz

2245 posts in 2101 days


#9 posted 12-10-2019 10:37 AM

This is tough one, but can offer some guidelines.

Standard retail margin varies a lot. Depends on product type, turn over rate on shelves, and volume contracted by retailer; just to a few name major factors. The industry range for durable goods is ~28-40% margin based on retail price, while non-durable (food/perishable commodities) margin is 35-50% due higher spoilage losses.
Large consumer machine tools usually offer the retailer a lower ~25-30% margin. There are exceptions. Often a large OEM or one selling high end products (AKA Powermatic) will often provide a higher 35-40% margin to retail. This is done to enable advertising nationally advertised discount sales a couple times a year.

Please note: this margin value determines the discount price paid, not total cost of goods in store. (Gross) Margin is also not to be confused with markup., as they are calculated differently.

One factor not to be ignored is shipping costs. Retail sellers pay all shipping costs. So regardless of the wholesale costs paid by retailer, his actual out of pocket costs are higher. This lowers the margin they get to keep. Rough rule of thumb is the retailer loses average 7-8% of his margin for transportation costs.

Another hidden factor in calculating retail margin is cost of money. Retailer pays 0.5-1% interest per month on loans taken to cover inventory. So if a retailer keeps a tool in stock for 10 months, his costs go up by 5-10%.

Retail is tough business. The shrinking retail margin thanks to WWW competition is number two reason for failure of brick and mortar stores. Number one reason is the sales tax avoidance, that has pushed consumers to favor online sales. The sales tax avoidance reason is disappearing. Through most end 2019, practically every state will have laws requiring remote sellers to collect out of state sales tax.

Bottom line: Standard retail business model predicts a retailer earning only 7-12% of the product retail price, after adding in all costs. So that tool on floor likely cost them no less than 85% of the retail price.

The hard part about pricing demo equipment is calculating the value of having the tool to store. If they sell 50 more machines a year by having a demo .vs. not having one where they sell 10; then the actual cost to store is obviously less due the extra profit on 40 machines. Another factor in discount pricing is tax break achieved selling a discontinued tool at a loss. The tax break offsets the 21% corporate tax paid on profits. A profitable store is usually more willing to offer tool at a (larger) loss, then a not so profitable store.

Like others have said, and despite the actual cost to retailer:
be surprised if retailer would refuse an offer for 50-60% of original retail price on selling both a used and discontinued tool.

Thanks for reading to end. Sorry if it’s confusing. As I get older, I forget more details more than I remember.
Hope it helps.

-- I'm an engineer not a woodworker, but I can randomly find useful tools and furniture inside a pile of lumber!

View Denner's profile

Denner

9 posts in 248 days


#10 posted 12-10-2019 08:45 PM



I d ask to speak to the manager and ask what he d sell it for. If it s more than you think is fair give him your number and tell him to call you if he is willing to do better.

That’s my thinking at the moment; when haggling in general I tend to offer what I think I can afford, but leave the door open. Less than 50% of people seem to take offense.


Don t know that I d want Bosch s Reaxx as the parts and cartridges are also banned from import too.
- Andybb

I’m not in the jobsite TS market at the moment, but it’s interesting that they still have an orphaned product on the sales floor. There’s a rumor that the cartridges and the firing mechanism are from their airbag systems, i.e. you could get replacements from a Mercedes dealer. Don’t know if that’s true, but why engineer a new system when you have a proven one?


I have only bought one new tool, that came with mileage. It s a radial drill press I bought at one of “Theee Woodworking Shows” a lot of years ago. Plenty of folks had played with it, but I don t think anyone had powered it on until I did. I bought it at 25% of cost. I know it was a great deal for me. I didn t ever need to contact them about the full warranty I got with it, worked out either lucky, or good. They were happy too, they had sold 17 of them at full price, less 5% show discount, and didn t have to load it to go home.

In your case is it maybe you are thinking they need to clear their floor space, or did they tell you that?

- therealSteveN

Slight tangent: What’s your opinion of radial drill presses? The swing could be really useful sometimes, but do you find yourself retramming it frequently? Regarding the space, that’s my judgement alone. The place overall is quite neat, but the machinery section is kind of a jumble—there’s $3600 worth of Sawstop under a pile stuff, under a pallet rack, boxed in on all sides by other stuff.


Thanks for reading to end. Sorry if it s confusing. As I get older, I forget more details more than I remember.
Hope it helps.

- CaptainKlutz

All makes sense, actually; the kind of big-picture analysis I rather enjoy. Given my impression—which could be wrong—that it’s mostly taking up space at this point, the other metric that springs to mind is sales/ft^2. How much other stuff could they be selling but aren’t because there isn’t floor space for it?

Thanks all for your replies!

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therealSteveN

4642 posts in 1181 days


#11 posted 12-10-2019 08:59 PM


That s my thinking at the moment; when haggling in general I tend to offer what I think I can afford, but leave the door open. Less than 50% of people seem to take offense.

- Denner

My tag line used to say, “Whats the worst thing they can do to you? Cook you and eat you?”

I ask you what are the odds of that. I flipped tools for a long time as part of my annual nut. In all that time no one ever took a swing at me, shot at me or threatened me with any bodily harm. I lowballed everyone.

-- Think safe, be safe

View SMP's profile

SMP

1596 posts in 512 days


#12 posted 12-11-2019 12:51 AM


My tag line used to say, “Whats the worst thing they can do to you? Cook you and eat you?”

I ask you what are the odds of that. I flipped tools for a long time as part of my annual nut. In all that time no one ever took a swing at me, shot at me or threatened me with any bodily harm. I lowballed everyone.

- therealSteveN

I used to work with a guy whos previous job was a car repo man in the 90s. He pretty much had the complete opposite experience of what you mentioned. I can see why he left that job. Lol

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