BTHE BARATELLI INSTITUTE · Mentoring at Scale
FOR EQUIPMENT-HEAVY OPERATORS · FLEET UPGRADES & DOWNGRADES · TRADE-IN DECISIONS

Your used Cat is worth what the dealer says it's worth. Or is it?

The dealer's trade-in number is a bid, not a value. Their used-lot retail price is your benchmark. The private-party number is the spread between them, minus reconditioning, minus your time, minus the sales-tax credit you forfeit by not trading. Auction is the third path — sometimes the right one for specific classes. Run the math on all of them. The dealer already has.

Dealer Net
After tax credit
Private Net
After recon + time
Auction Net
After fees
Spread
Worth chasing?
YOUR USED MACHINE
1
Equipment
2
Dealer offer
3
Private party
4
Auction path
5
Compare & decide
STAGE 1 OF 5

The equipment you're selling

Make, model, age, hours, original cost. Defaults are a typical 6-year-old Cat 320 excavator with ~5,400 hours, replacement context for a fleet upgrade.

Drives depreciation curve and channel recommendations.
Heavy iron: engine hours. Trucks: miles. Drones: flight hours. Restaurant: years (use age).
All-in delivered cost when you bought it new.
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Honest self-assessment — buyers always discount more than sellers expect.
Why this matters. Equipment dealers don't just sell new machines — they make a meaningful portion of margin on the used-equipment book. When a Cat dealer offers you $X on trade and lists the same machine for $X + $40K, that spread isn't all profit (they have reconditioning, floorplan, sales commission) — but it's the structural arbitrage. Your job is to know what the dealer knows: what the asset really sells for, what it costs to make it retail-ready, and whether the sales-tax credit on your new purchase covers the spread.
STAGE 2 OF 5

The dealer trade-in offer

What the dealer wrote on the trade ticket. And — critically — what they're charging on their used lot for the same class of machine.

The number the dealer wrote on the trade slip when you priced the new machine. Often presented in "trade allowance" form (inflated on paper, then matched by a smaller discount on the new unit).
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What the dealer is asking for comparable machines on their used-equipment lot. Check Cat Used, RitchieList, EquipmentTrader, MachineryTrader.
$
Determines whether the sales-tax credit on trade-in applies to your purchase.
For sales-tax credit calculation. Most states give a dollar-for-dollar tax credit on trade-in value against the new-unit purchase tax.
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Many states tax equipment purchases; trade-in credit reduces the taxable amount. Some states fully exempt manufacturing equipment — leave 0 if so.
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Most states (40+) give a dollar-for-dollar credit. Notable exceptions: California (no credit on equipment), Hawaii, DC. Check your DOR.
STAGE 3 OF 5

The private-party sale path

You sell the machine yourself — to another contractor, an end-user, or via brokerage. Gross is higher; net depends on what comes out before the wire hits.

Typically 15-25% above dealer trade. Use RitchieList sold-prices and EquipmentTrader comps to anchor.
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Heavy iron in a hot market: 30-60 days. Off-season or specialized: 90-180. Each day is carrying cost (storage, insurance, opportunity).
Wash, paint touch-up, fluids service, replace worn ground-engaging tools, address any deferred maintenance. Heavy iron: $3-8K typical.
$
If using a broker or marketplace fee. RitchieList / EquipmentTrader listing: $200-500 flat. Broker: 5-8% of sale price.
$
Storage + insurance + opportunity cost on capital tied up. Heavy iron: $20-40/day.
$
Photos, listing, calls, showings, paperwork, payment processing, title transfer. Realistic: 12-30 hours.
What that time is worth in your business. Owner-operator: typically $75-150/hr opportunity cost.
$
Buyer will negotiate. Typical: 5-10% off list. Set 0 if firm-price discipline.
%
STAGE 4 OF 5

The auction path (IronPlanet, Ritchie Bros, Proxibid)

For yellow iron specifically, auction can be the right move. Fast, predictable timeline, no haggling — but the seller fee structure matters and you give up upside on a hot day.

What you realistically expect the bidding to end at. Auction prices typically run 60-75% of private-party retail for heavy iron.
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IronPlanet: 8-12% typical. Ritchie Bros: 8-10% + listing fee. Local auctions: 10-15%. Some venues charge buyer's premium instead — adjust accordingly.
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Flat fees: catalog listing, inspection report, professional photos. $400-1,500 typical for heavy iron.
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Lowboy haul to the auction site. Heavy iron: $1,500-4,000 depending on distance. Some venues offer onsite-pickup auctions.
$
From decision to consign to hammer day. Most auctions: 30-60 days.
No-reserve auctions get more bidders but accept whatever hammer lands. Reserve protects floor but reduces traffic.
Auction outcomes vary ±15% from expectation. Build in a conservative discount on your expected hammer for probability-weighted net.
%
STAGE 5 OF 5

Compare paths · the decision

Net to your pocket under all three paths. The spread, when it's worth chasing, and when to take the dealer offer for the convenience and tax credit.

HERE, TRY THESE. THEY MAY HELP.

Used-equipment math is one piece of fleet operating discipline.

The Business Operators Blueprint covers trade-cycle timing, fleet utilization, second-unit decisions, and the data hygiene that lifts every trade you make. The CFO & Controller's Guide handles the accounting side — gain/loss on disposal, §1245 recapture, depreciation strategy across the full fleet, and the covenant package on your equipment line.

CFO & Controller's Guide Business Operators Blueprint All free tools
Practitioner reference. Outputs are estimates based on inputs. Used-equipment market values shift weekly with steel prices, fuel cost, regional demand, and seasonal patterns. Sales-tax credit rules vary by state and equipment class — verify with your state DOR or CPA. Depreciation recapture and §1245 ordinary-income treatment on equipment sales are governed by federal tax law and your specific basis history. This is not financial, tax, or legal advice.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator pairs with Business Operators Blueprint and the CFO & Controller's Guide.
The tool gives you the one-machine math. The Blueprint gives you the surrounding operating discipline — trade-cycle timing, fleet utilization, the second-unit decision, dealer relationship management, and the data hygiene that lifts every trade-in offer by 8-15%. The CFO Guide adds the financial-statement side — gain/loss recognition, §1245 ordinary-income recapture, and depreciation strategy across your full equipment base.
Methodology references: BOP Module 8 (Trade-cycle & used-equipment economics) and CFO Guide Ch 12 (Equipment disposal & recapture).
Read the Blueprint → CFO & Controller's Guide All free tools
PROFESSIONAL DISCLAIMER · PLEASE READ

Educational and informational purposes only. This calculator and any output it produces are intended solely for general educational and decision-support purposes. They do not constitute investment, tax, legal, accounting, appraisal, or any other professional advice, and they do not create a fiduciary, attorney-client, accountant-client, or advisor-client relationship of any kind.

Estimates based on your inputs. All results are estimates derived from the data and assumptions you provide. Used-equipment market values move with steel prices, fuel cost, regional demand, dealer used-book composition, and seasonal patterns — sometimes 10-20% in either direction within a quarter. Sales-tax trade-in credit rules vary by state and equipment class. §1245 ordinary-income recapture on equipment sales depends on your specific basis history and depreciation taken. The Baratelli Institute, its affiliates, and any co-branding professional make no warranty of accuracy, completeness, currency, or fitness for any particular purpose, and disclaim all liability for decisions made in reliance on the output.

Consult your own qualified professionals. Before acting on anything calculated here, consult your own attorney, CPA, equipment appraiser, or other qualified professional licensed in your jurisdiction who has reviewed your specific facts and applicable current law. The Baratelli Institute is a publisher of practitioner reference material. It is not a registered investment adviser, broker-dealer, law firm, accounting firm, appraisal firm, or lender.

Co-branded versions: If a professional advisor's name and contact information appear on this tool, that advisor has elected to make the tool available to clients as a courtesy. Inclusion of an advisor's name does not constitute the advisor's endorsement of any specific result, nor does it transfer professional responsibility for the underlying methodology to that advisor. The disclaimer above applies regardless of co-branding.

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