Unlocking the hidden value of your lab

It is the norm that a science company or educational institution in possession of used lab equipment will simply discard it for want of new equipment. But there could be value in that piece of unwanted equipment. Here, Greg Sutcliffe, explains how to value used lab equipment

Whether it’s down to pride or prejudice, some organisations would never dream of buying second-hand equipment. This attitude normally stems from some fundamental questions about an item’s provenance; is it damaged in any way? Why is it being sold? And why is it so cheap?

These questions are relevant but they are largely based on a modicum of suspicion about anything that has been pre-used, when in fact these fears could be allayed quite easily by just talking to someone who can help. Alternatively, the attitude is ‘we don’t need to buy second hand equipment because we don’t have to; we’ve got a good budget and we prefer to buy new’. That’s fair enough, but selling equipment is a different matter.

Missing a trick, a lot of companies or departments will dispose of their equipment because they don’t believe there’s an alternative. They may not realise that their equipment has a second-hand value, or they're not aware that channels exist that can help them realise their value.

Yet the market for equipment is in fine health, you only have to look at the number of companies offering to buy or sell used lab equipment.

Whether you’re buying or selling, how do you value your used lab equipment and does all used lab equipment have a value? This article identifies a few categories of lab equipment that have high second-hand value, while offering some tips about how to determine that value.

The UK lab equipment market is expected to grow by 11.3% between 2013 and 2017, sustained by R&D activity in the science and technology sectors.  That means a lot of companies and institutions are either going to pay over the top market rates for new equipment or, if they’re canny, make big savings on buying demonstration or second hand equipment.

At a time when budgets are shrinking and departments are strapped for cash, buying or selling pre-used lab equipment could make the difference between surviving or going under.

What about if you're in the market to buy equipment? The main reason for buying second-hand equipment is cost. Typical savings are between 50% and 80% off the list price. In general, the higher the original purchase price of a new item, the greater the ‘bargain’ if it is bought second hand. Ex-demonstration models that are for sale often come with the manufacturer’s guarantee still in date, although the savings here will not be as great as for buying actual ‘used’ equipment.

Certain categories of equipment are definitely worth buying second-hand: for instance, high-tech equipment is usually valuable if it is sold within one to five years of purchase. This type of equipment usually comes onto the second-hand market from laboratories that are early adopters of new equipment, or those that continually cycle their purchasing to ensure they always have the most up-to-date equipment in their labs. HPLC and FPLC systems as well as DNA sequencers, mass spectrometers and specialist microscopes are examples of high-end equipment.

As a general rule, you can expect equipment to depreciate by between 40% and 75% over five years. Of course, this will depend on the type of equipment (whether it has moving parts, for instance), and more importantly on the amount of use it has had. When buying used HPLC equipment the software is key.  Make sure it is compatible with your own system and check what version it is running. If it is not the latest version then a phone call to the manufacturer can tell you what it will cost to upgrade.

The value of older equipment, at least to the purchaser, will very much depend on the age and condition of the equipment, and lesser considerations such as the availability of instruction manuals, software and cables. Service history is another important factor, which can greatly affect the value of second-hand equipment, so it’s important to retain this information if possible.

However, certain items of equipment are often sold even when they are more than five years old. Common but essential laboratory equipment such as shakers, -80°C freezers, pumps and fume hoods come into this category, as they have a long lifetime and show relatively little deterioration over time. Other items of bench-top kit such as centrifuges and balances are also regularly sold second-hand.

The value of any product is not a fixed price: it depends on what the product is worth to that particular individual seller or purchaser. And this is even more the case with used lab equipment. If the equipment is from a respected brand, then this will add to its re-sale value. Disposing of unwanted equipment can be costly, because of the requirement to meet recycling or disposal regulations. Selling a product rather than disposing of it will avoid those costs associated with disposal.

It is worth pointing out that certain types of equipment are never worth buying second hand, because they are relatively inexpensive to buy brand new, and technology becomes out of date very quickly. This applies to any control software, which has the added issue of needing to be compatible with other equipment in the lab.

Other types of equipment that may not be worth buying second-hand include items that require thorough decontamination, which will be both costly and risky. Examples are fume hoods that may be chemically contaminated and as such are a bio-hazard. The cost for the decommissioning of the hood may mean it does not make financial sense to resell the equipment.

A note of caution: it would also be very unwise to purchase any second-hand equipment for which spare parts are no longer available, so do some research. Also, when buying large or delicate second-hand equipment, the cost of transportation and packaging can reduce its attraction and, ultimately, its value.

Most items have a potential value and realising that value is a very worthwhile financial exercise. Clearing out old equipment also creates valuable space that allows you to keep on top of your inventory items. Lab space is valuable and therefore keeping bench top and floor space clear from redundant equipment is critical for the running of an efficient lab workplace.

Tips for valuing your equipment: 

· Invest some time in putting together an inventory then do some research and review some ads online or in specialist trade magazines to determine how others are pricing similar equipment to yours.

· Call suppliers to determine how much they are selling the same equipment for or browse some of the lab equipment sites to see how sellers are pricing similar equipment. They will be more than happy to give you advice on what a reasonable price is for your equipment.

· Find out the brand new price for the same equipment. Is your equipment the standard model or does it have additional bells and whistles?

· When was it last serviced and is the manufacturer a respected brand that is still in business?

· Review the condition of other sellers' equipment and set your prices accordingly. For example, if your equipment is in much better condition than the equipment listed by other sellers, you may want to sell your equipment for a higher price.

The author Greg Sutcliffe. Greg is Managing Director of LabMerchant