Why Is The Cerec Resale Value So low?
Cerec units currently sell for about 100K$ The resale market on these units vary, but after looking at several units for sale it appears the average current sale price on a used unit is 15K$ to 25K$
I saw a unit up for sale by a Patterson office used for 15K$ and another unit used in working condition for 10K$. The used market for dental is usually a substantial drop in price on certain equipment but a 30K$ digital pano in good working condition should still get you about 15K$.
To get down to 15% – 25% of retail price is rough. Usually used equipment holds its value based on a simple equation that someone looks at the new price of something and compares it to an equivalent used pricing. We then do a decision in our mind where we try to decide if the wear of use is worth the decrease in price.
So you would think these working units that produce excellent results would sell like hotcakes. Especially when it is so easy to prove these units work. Simply scan a tooth, prepare a case and produce an inlay. This is very easy as far as showing that the unit works very well.
So why are there plenty of used units on the market with so few buyers?
I think there are some reasons for this that are imposed by the manufacturers of these units.
I called Cerec today to get some information about Warranty.
First of all the only way to do a change of ownership with a Cerec is by getting a Patterson branch office involved and there could be(?) a fee associated with change of ownership. I called a Patterson branch office to get more information on this but they wouldn’t discuss the fees of change of ownership with me unless I was a Patterson doctor.
I did manage to learn some things about the Cerec that explain why it does not retain much value.
First, the standard Cerec warranty is 2 years and the monthly care program is 219$ a month. If you keep this care program you can have your warranty extended for 1 additional year. If you are the owner and have this warranty and service plan then your repairs and maintenance are covered.
So essentially the warranted life of the Cerec is at max 3 years.
This means that after the 3 years you will be required to pay full price for anything that needs to be repaired in the unit. This isn’t the end of the world in most industries because of what is called aftermarket parts.
This is where the second reason for the resale value to be so low is.
In the dental industry specifically on the technology side there is no way to get aftermarket parts except from the OEM. This means any parts you would need to fix your Cerec are only available from Cerec. Meaning Cerec can set any price they want on these parts.
Third reason for poor resale value is that not only are the parts only available from one source but no one is allowed to buy these parts except for the same people that sell the new units. Meaning, there is no opportunity for there to be Cerec repair companies out there except for Patterson. Patterson obviously has a conflict of interest here. Why would they want to provide reasonable yet profitable repair parts when it is much more profitable to sell new units or “Upgrades” that are extremely expensive as well almost 50% of the cost of the original unit.
Fourth reason for poor resale value is very limited competition in the industry. Let’s say you look at all of this information and it bothers you. You don’t like that they control the price, you don’t like their policy on taking care of old units out there and quite simply you are not a fan of how they do business. What are your alternative options?
There is only one in the US and it is the E4D and it is only sold and supported by one company as well.
So my conclusion for the low value of resold Cerecs is that the company that sells them has the ability and desire to make it highly difficult to purchase a used unit and then have any confidence that you could reasonably get the unit repaired in the case of failure.
This is not limited to the Cerec or even milling machines, but this does happen to be one product that has extremely limited options for alternatives.
If this were any other industries the justice department would probably have blocked the agreement between the manufacturer and the reseller. Imagine if Verizon tried to buy half of the cell phone manufacturers and ATT tried to buy the other half. Meaning not only are your service providers limited but you can only purchase cell phones from 2 companies.
Many companies have this anti competitive practice in Dental. Look at products like the BioLase laser. The unit sells for over 60K$ initially but they have inhibited the resale market by charging nearly 8K$ for a change of ownership and putting huge markups on the price of aftermarket parts. For these very expensive dental products they charge so much for replacement parts that the cost of buying all of the replacement components will run you roughly 5 times the cost of purchasing a new unit. This is excellent evidence that they are greatly marking up the price of replacement parts, because obviously it couldn’t cost a manufacturer 5X in parts the initial cost of a unit. Even if you assume extremely low margins you should anticipate that the actual components should cost 20% of the retail price of a unit. Meaning that when you are paying for a part it is at nearly 2,500% markup.
Compare this to any other industry. Let’s say you purchase a Dell computer for 675$. You could purchase all of the components on the open market for 500$ or less and there are literally thousands of companies that are available to do the service on the machine and plenty of availability for parts. With this in mind a computer is fairly inexpensive and major manufacturers offer fairly inexpensive support for them. Extending a 3 year to a 5 year warranty on a dell is only 110$
People might say computers are a specific market and shouldn’t be compared. So I suggest looking at automobiles, CNC milling machines, industrial lasers and several other highly expensive and specialized products.
As another example of this I have looked at a recent incident with a Planmecca pano unit. A doctor had a Planmecca EC and upgraded it to digital with the Planmecca upgrade. This upgrade cost the doctor 30K$. 13 months late the x-ray tube head on the unit failed and the doctor went to Patterson to get a price on replacement and installation. It was going to cost the doctor $6,800 for the unit and $1,000 for installation, if the control board was also bad this was going to be an additional $1,700. I heard this story because I had a film used Planmecca unit for sale. It was cheaper for the doctor to buy the whole used working pano and take parts from it ($2,600 for pano and shipping) then to go to the company he bought the unit from and get parts.
Our company sells lots of used equipment from dentist to dentist. Our doctors are always saddened at the idea that their equipment will generally sell for 20% of its original purchase. Right now I have a doctor with a 3 year old Cerec 3D unit. It is perfect working order and has only been used on about 25 mills total. This unit should be worth a lot considering it is in perfect condition, works great and is being sold by its first owner with records of any repairs available, not to mention the unit has been under warranty for 36 months out of the 37 months it has been owned. In reality we will be lucky to get 15K$ for the unit because it is out of warranty and there is no support available for a 3 year old unit.
I personally think this is unfair for dentists and was wondering if anyone had any suggestions or comments about this.