Trade-Ins Equal Discounts - So Buy a Few

Although not heavily advertised, many hardware vendors occasionally offer significant additional discounts based on the trade-in of existing equipment. Designed to encourage earlier than planned technical refreshes or to replace competing products, vendors may provide set or negotiated discounts off of list prices on top of any already negotiated discount levels if an organization agrees to turn over equipment to them. In most cases, these promotional programs can be leveraged to provide discounts that far outweigh the value of selling old and idle assets or even the cost of acquiring systems from used hardware vendors specifically for trade-in. There are however several aspects of these trade-in programs that buyers should be aware of.

First, always arrive at an agreeable price prior to introducing the concept of trade-in products for additional discounts. Many vendors will simply blend the trade-in discount into the traditional discount resulting in a lower overall discount, if given the chance.

In some cases, it may be worth acquiring the equipment required for trade-in. Several channels exist that can supply qualifying systems and storage for what amounts to pocket change. From eBay to liquidators, servers originally selling for $50,000 or more are available for $400. Those same servers may provide an additional 2-10% off of the list price of a $250,000 server.

Another important concept to remember is that many of these programs have enormous flexibility in what qualifies for trade-in. Not long ago one hardware company offered a trade-in discount on a new server if two existing ‘servers’ were traded in. However, their definition of a server included systems then selling for less than $100. The result was a potential additional discount of more than $10,000 on a midrange system in exchange for hardware valued at less than $200. Such discounts are made possible because for the most part, unless the actual resale value of your trade-in is substantial, vendors are concentrating on overall deal economics, what they consider an acceptable gross margin, and future technology lock-in, not the value of the equipment traded in.

Vendors also frequently do a poor job of handling the logistics of trade-ins. Some never forward the required documentation and shipping instructions, others fail to follow-up to ensure equipment has been returned, and at least one has asked that the client merely throw away the equipment rather than forwarding it to them.

When contemplating a trade-in of equipment with material value, check to see what the going liquidation value is relative to the discount and act accordingly. Given that many IT assets are leased, remember to verify ownership of the equipment to avoid trading in or agreeing to trade in equipment that will need to be returned to a leasing company.