Pay for the equipment you need, when you need it.
Jan 04, 2024
While many people across the country are feeling the pinch of rising costs as U.S. inflation rates hover at 3.1%, farmers themselves have been dealing with rising prices of farm equipment and tools for several years.
In 2021, farm machinery prices increased at least 15%. By 2023, farm production expenses in general were up as much as 28%.
One strategy farmers are using to combat inflationary pressures is to negotiate the price of their farm equipment.
In this post, we’ll explore what type of equipment you can negotiate prices for, provide you with steps to help you get a fair and reasonable price, and give you the opportunity to apply for an equipment loan through FBN® Finance. You’ll come away armed with the knowledge and tools necessary to help you conserve your budget and maximize your profits.
You can also download our free guide How to Negotiate Ag Equipment Prices Like a Pro for a handy pdf of tips on negotiating.
Have you ever wondered how to get the best deal on farm machinery, whether you can bargain the sale price of both new and used equipment, or how to negotiate a tractor price?
When it comes to purchasing a new pair of jeans, there often isn’t any room for haggling over the price. But this does not apply to large farm equipment purchases. Don’t take the first price you see as the best and final offer. There is often room for negotiation.
In fact, many dealers, expecting there to be a negotiation process, inflate the price.
You can often negotiate the price of the following:
New farm equipment
Used farm equipment
Farm equipment at a dealership
Farm equipment sold through a private seller
Heavy machinery
Parts
Use these steps to distinguish between what’s a good deal and when to walk away and to learn the best way to negotiate when you dislike haggling.
When you wait until the last minute to begin the process of purchasing a new piece of farm equipment, you may end up paying more. This could be for a number of reasons, including:
Feeling pressured to purchase quickly even though you haven’t done sufficient research on the latest innovations
Purchasing what’s currently in stock instead of having time to wait for the exact right model for your operation or the less expensive model
Paying to expedite customization
Paying to expedite shipping and delivery
Rather than waiting until you absolutely need a new piece of equipment, give yourself ample time. Factor in that you will want to:
Adequately gather information
Have some back-and-forth during the negotiation process
Possibly even wait until another season
While you likely already know that you need a general category of equipment — for instance, a combine harvester — you still should consider what your more specific needs for that piece of equipment are. If you’re upgrading from a previous model, consider what you liked best and what you may want in this next piece of equipment.
This is a great time to reduce costs by going with a less expensive model if you didn’t use all the bells and whistles on the fancy equipment you previously purchased. Conversely, with the autonomous farming equipment market expected to reach $95 billion by 2027, this is also an excellent opportunity to look into equipment that will help you reduce labor costs, speed production, and become more eco-friendly so that you can stay competitive.
There isn’t one size fits all when it comes to purchasing farm equipment. Pick what best suits your operation’s needs and your budget.
To know how to determine fair and reasonable price points for the equipment you need, research what the going rate is on the market. You can look online, call retailers, and ask in forums like the FBN Community Forum.
When gathering data, consider low and high price ranges for:
The latest model
An older model that is new
An older model that is used
Add-ons and accessories
Service fees
General maintenance fees
Warranty
Rentals
These data points will be helpful in helping you negotiate the overall best price so that you don’t save in one area, say the equipment itself, only to discover that the seller made up the cost in another area, say the warranty.
While you research equipment prices, also research what reviewers have to say about equipment quality. Sometimes spending more upfront can save money in the long run. Other times, the latest model may not work as well as the one you were more recently using.
Crunch the numbers on your overall operations budget so you have the most recent data to work with to make an informed decision about your budget. You may find that costs went up or down elsewhere on the farm, and that could change how much you can realistically spend on new farm equipment.
Armed with the knowledge of the going rate of the equipment you need (see Step 3) and your operation budget, you can determine your equipment budget. It’s a good idea to have a range in mind that includes the highest price you’ll pay if you were to get everything you want in the piece of equipment, factoring in any shipping and handling costs, service fees, warranty, and other things that may be associated with the overall cost.
Once you’re ready to start the negotiation process, simply asking questions is a great way to both gather general information about the equipment you’re considering and also prompt the seller to begin negotiating with themselves.
To start, ask the seller:
About their offerings and develop a rapport
Which equipment has been selling the best and why
How much they can come down in price
If they have any upcoming sales events
If they offer any bundle packages
These should be leading questions that get the salesperson in the frame of mind to offer you the best possible deal.
Physically inspecting the equipment for yourself may give you more information on the types of questions to ask. This is particularly true for used equipment, where you may notice issues that could get you a discount.
It can also be true for new equipment too, as you may discover it requires an additional purchase to fully utilize — for instance, perhaps you need a loader in addition to make a new tractor more productive — that you could see if the seller is willing to throw in for free or discount.
As you conduct your research and ask questions of the seller, you’ll likely discover that price and value are not necessarily the same thing.
If you negotiate down the price of farm equipment but then get talked into purchasing extra features you don’t need, you’re not truly getting the best value. Or, if you buy a cheap used model that needs a lot of repairs, you may end up having to either pay more later to refurbish it or replace it entirely.
It’s often said that you can catch more flies with honey than you can with vinegar. Bargaining is expected, but negotiation does not need to be ruthless.
Establishing a congenial relationship with a seller can help you in the long run. They may be willing to let you know about upcoming sales, put aside machinery and implements for you before they sell out, and throw in some freebies for being a loyal and likable customer.
Don’t feel pressured into making a purchase even if you’ve established a relationship with the seller, though. In the end, you need to do what’s right for your budget.
Be patient, and be willing to walk away. If you’ve built enough time into your negotiation process, as suggested in Step 1, you may be able to pass up a decent sale for one that better suits your needs and budget.
Negotiation tactics can only stretch a budget so far. With the cost of equipment rising, you may need farm equipment financing to purchase the equipment that’s best suited for your operation.
FBN Finance provides trusted solutions for farm equipment loans, which can be used to:
Purchase new equipment
Buy used equipment
Upgrade your existing equipment
Finance maintenance or repairs on your existing equipment
At FBN Finance, we understand the value of the right farm equipment. Because many of our loan advisors are farmers themselves, they understand how equipment can empower you to maximize efficiency while minimizing labor costs, optimizing your farm and increasing your ROI. Click here or call our team today at 866-551-3950 to learn more about what’s possible with an equipment loan for your ag operation.
Unlock your free How to Negotiate Ag Equipment Prices Like a Pro guide here.
© 2014 - 2023 Farmer's Business Network, Inc. All rights Reserved. The sprout logo, “Farmers Business Network”, “FBN”, "Farmers First", “FBN Direct”, "F2F", and "F2F Genetics Network" are trademarks, registered trademarks or service marks of Farmer's Business Network, Inc.
Financing offered by FBN Finance, LLC and its lending partners. Terms and conditions apply. To qualify, a borrower must be a member of Farmer’s Business Network, Inc. and meet all underwriting requirements. Interest rates and fees will vary depending on your individual situation. Not all applicants will qualify. NMLS ID: 1631119.
The material provided is for information purposes only. It is not intended to be a substitute for specific professional advice. Neither Farmer’s Business Network nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in the material and any liability therefore is expressly disclaimed. The information and opinions expressed by others in this material are their own and are not endorsed or approved by FBN or its affiliates.
Jan 04, 2024