# How to depreciate used printing equipment



## humblymade (Nov 12, 2018)

Hey guys I'm hoping someone can help me. I am looking at purchasing used printing equipment and I'm not sure how to get a good idea of what something is worth. Is there any general yearly depreciation that one can use to help get a ballpark idea on the worth of the equipment?


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## binki (Jul 16, 2006)

Depreciation isn't the same as Fair Market Value which is not the same as a used equipment sales price. You didn't say what you are buying but this might help. Figure the cost new. Remove 50% each year. So if the value is $10K to start, then after 1 year, $5K, then 2.5K, then 1.25K. You might want to smooth that out a little and use something more complex such as 50% on year one, 25% off of remaining value for year 2, 12.5% down on year 3 and so on. 

What are you looking at and how old is it?


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## humblymade (Nov 12, 2018)

Thanks so much for your help here! It's very hard to get an idea of the price on used equipment and I wanted to try and understand what is a fair way to ballpark it. Here is what I am currently looking to purchase and it was all bought in 2014 from what I can tell. So right around 5 years old. 

- Vastex V-2000HD 6 color 4 station 
- Vastex Econored II 30 Dryer
- Vastex Expose It E1-5236 (fluorescent bulb max two-screen width)
- Vastex Flash F-1000


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## binki (Jul 16, 2006)

Price it new back then (Take today and subtract 3% per year for inflation) and then you would take off 5 years of use which would be about 30% of original value. So for the 5 years the value is as follows:

Year 1 - 50%
Year 2 - 75% of Year 1
Year 3 - 87.5% of Year 2
Year 4 - 93.75% of Year 3
Year 5 - 96.875 of Year 4

It sounds brutal but used equipment is well, used. Now, the person selling will want something closer to what he paid for it and that is where you start negotiating. This formula gives you a starting price though. You can use a different starting figure if you want. Say the first number is 30%, and then cut each in half so 15%, then 7.5% and so on. 

BTW, are you getting the screens too? Are you buying a going biz or are they just replacing equipment? Are they closing down? That would affect what you would offer as well as the customer list might be worth more than the equipment. 

Let us know how it goes. You can also do a search on how to do equipment valuations for selling used equipment. There is an entire industry around that. In the end it is what you are willing to pay meeting what he is willing to take. The longer it sits around the lower the price will go.


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## humblymade (Nov 12, 2018)

You are totally right, in the end it's all really what you are willing to pay and what they are willing to let it go for. The quipment is owned by a friend who is currently looking to sell because he has decided to exit the business. So I just want to make sure to be fair on both ends, I believe he is looking for just under 10k with an original purchase price of 15k. 

Thanks so much, this is really helpful! Could you give an example of how you would consider pricing the items below out so I understand your formula/approach? I've listed the price new for each piece. 

- Vastex V-2000HD 6 color 4 station = $5,095
- Vastex Econored II 30 Dryer = $5,295
- Vastex Expose It E1-5236 (fluorescent bulb max two-screen width) = $3,995


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## NoXid (Apr 4, 2011)

I can't add to the conversation on the pricing, but that is good equipment. You are lucky to find it used. I have the flash and the 4/4 version of the press. No regrets.


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## humblymade (Nov 12, 2018)

That's great to know, it seems like Vastex has great reviews. Hoping since it's only 5 years old it can go another 10 if needed.


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## binki (Jul 16, 2006)

humblymade said:


> ... The quipment is owned by a friend who is currently looking to sell because he has decided to exit the business. So I just want to make sure to be fair on both ends,


Ok, this is a different animal. First off, forget fair, the world isn't fair 

Now, if he is leaving the business then his customer list is the most valuable part of the deal. You want that as well. You would value the company at anywhere from Net to 2.5 times Net plus FFE. 2.5 is a premium price. Use his last 3 years of profits to determine Net on an average. 

At 15K using a 30% first year depreciation over 5 years I would come up with $7800 as a value for the equipment. Figure out what his customer base can make and figure you get 30% profit on revenue and there is your price. 

Good luck and welcome to the club.


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## humblymade (Nov 12, 2018)

Thanks Binki for all the help and all the time, that is all really helpful information! I appreciate you walking me through some of that so I have a better idea how to approach the situation. Onward!


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## LancerFlorida (Mar 20, 2018)

When you buy exceptional quality equipment the depreciation is like that of a Mercedes and Kia. In 5 years the more expensive will be the least costly to own.
Vastex is industrial grade and will still be working and making money 15 years from now. Imagine if you had electronics intense stuff with designed obsolescence of 7 years. 
As Binki pointed out, the DATABASE is the most valuable asset of this company.


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## humblymade (Nov 12, 2018)

Totally makes sense, there is a lot of cheaply made equipment that just doesn't last for the long haul. I'll keep this in mind and I really appreciate all the help guys.


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## Printavo (Oct 7, 2007)

Depreciation is a tax-based incentive that you'll want to work with a CPA on. There are different schedules of depreciation based on type of equipment. Essentially you write off X amount each year for Y years.

This all depends on factors such as leasing, interest, etc etc. 

Please please though reach out to your accountant for details.


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