Saving Money on Networking Infrastructure
By: David Mayberry, Go Communications Systems Ltd
Here’s David Mayberry of Go Communications Systems Ltd (www.gocomsys.com) with tip #10…Never accept 1st trade-in price.
Trading-in: never accept the first offer
When upgrading network equipment, most Network Managers seek a trade-in on their old devices. There’s absolutely no point in throwing away kit for which you could get a financial return, reducing the net cost of the upgrade to new network equipment.
That’s fairly obvious, but there’s more to this than meets the eye. The key is to shop around. Never accept the first trade-in price you are offered for any piece of redundant network equipment. It’s almost certain to be well below what that piece of network equipment could command.
Several years ago, Go Communications had a customer who came to us periodically for devices that their incumbent supplier, a manufacturer, could not deliver quickly enough. They had reached the point where they needed to upgrade their network equipment, in the process removing some 120 48-port VoIP-enabled switches. Their manufacturer offered them a trade-in of $200 per switch – around one twentieth of their purchase price some two-to-three years earlier.
Understandably, the customer felt they should be able to do better, and approached us. We were able to offer them around $600 per switch – a total saving on the upgrade of almost $50,000 (around £30,000). We were able to do this as VoIP had recently become a key technology for many up and coming businesses, and there was a strong second-user market for these VoIP enabled switches. The manufacturer could not match our offer because selling second-user network equipment is simply not their core business.
This story illustrates three simple rules of network equipment trade-ins. Firstly, always shop around. Secondly, never think you can second-guess the market. Thirdly, manufacturers are always likely to offer you a much lower price for your old network equipment than dealers with orders to fulfil for those products. It’s astonishing how many businesses throw away huge sums by failing to follow these three rules.
Let’s take a closer look at that third point. Switches, routers and other network equipment are almost always deployed with a variety of options installed – extra features, modules and software functionality, for example. When you ask your manufacturer for a trade-in value for your redundant network equipment, the chances are, planning on feeding those devices back into their refurbishment programme, that they will offer you a price based on their base configurations. No options, no additional modules and no extra software functionality.
Additionally, handling your old network equipment, refurbishing it and selling it on is a headache for the manufacturer. Their core business and chief objective is to sell their current lines, not to resell old equipment. Really, they’d rather you simply dispose of your redundant network equipment than trade it in. On top of all that, any offer they make you for it will come straight off their bottom line: it’s likely to be grudging at best.
A seller’s market
Now, consider the dealer who needs your old network equipment to fulfil a customer order. The scenario is turned on its head: without your network equipment, that dealer may not have a bottom line on that order at all. They have an active, pressing need for your network equipment – you’re in a seller’s market, and can command a much higher price.
There’s a direct parallel to all this that most of us are familiar with. When buying a new car, accepting the dealer’s trade-in offer on the old one is convenient, easy and simple, but we all know that we’ll get much more for it by selling it privately. Only by doing so can we make sure the value of all the options – that heated, massaging driver’s seat, the iPod port, those parking sensors – is reflected in the price we get for it.
So – especially in the current economic climate, with cost control a priority and used network equipment prices on the rise as a result of fewer organisations upgrading – swim against the tide. Never, ever accept the first trade-in price you’re offered on your old networking equipment. Always shop around. It could save you literally tens of thousands of pounds.