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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.

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 kit could command.

$50,000 saved

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, 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 equipment is simply not their core business.

Three rules

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 hardware than dealers with orders to fulfil for those products. It's astonishing how many businesses throw away huge sums byfailing to follow these three rules.

Let's take a closer look at that third point. Switches, routers and other network devices 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 devices, 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 kit, 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 disposed of your redundant equipment than traded 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 equipment to fulfil a customer order. The scenario is turned on its head: without your kit that dealer may not have a bottom line on that order at all. They have an active, pressing need for your 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 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 kit. Always shop around. It could save you literally tens of thousands of pounds.