Buying Used

Getting familiar with industry terminology and practicing due diligence can help you to purchase fitness equipment at a low price and stay within budget.

If it's been more than five years since you bought your cardio equipment or weight machines, or your members are complaining that they're waiting too long to use a machine, it's time to think about replacements. "We say three to five years is a good time to replace equipment, because that's when parts like bearings and belts start to wear out. They need more maintenance and start to cost you money," says Mark Clayton, president of Fitness Equipment Source Inc., Sandy, Utah. "It's just like a new car. Once you get a certain number of miles on it, you are more likely to end up in a repair shop for mechanical failures and frequent maintenance. So, you trade it in for a newer model. If you have a treadmill that's running 10 to 12 hours a day, you're going to have to replace parts after five years."

If you have a large fitness center or a small profit margin, buying new equipment every five years is bound to put a dent in your budget. So, purchasing used and remanufactured equipment is an option to consider. "Depending on the age of the equipment, you can save anywhere from 30 to 70 percent on used products," says Roy Greenberg, vice president of Global Fitness Inc., Gardena, Calif. In general, the newer the piece is, the less you'll save, but not because it's in better condition. Newer pieces are more popular because they have more bells and whistles and better technology, and more people want them. This is especially true for cardio equipment. Prices for strength machines and free weights are more stable simply because the designs don't change drastically from year to year.

You can purchase almost any piece of commercial equipment used, whether you're looking for treadmills or elliptical trainers, weight machines or free weights, benches or Olympic bars. Both Clayton and Greenberg agree that, as long as you find a reputable dealer, there's no piece of equipment that must always be bought new. "Our industry allows all facets of the health world to reap the benefits of purchasing remanufactured fitness equipment, regardless of the size or budget of any facility," says Nick Pugh, owner of Fit4sale, Paramount, Calif., and also co-owner with wife Stephanie of Malibu Gym, Malibu, Calif.

How old is too old? Greenberg says that, once a manufacturer stops making parts, the product is obsolete. For cardio machines, that's generally 10 years. Strength equipment tends to hold its value longer because there's less technology involved.

Buying used when new?

Most fitness center operators think of buying used equipment when replacements are in order. But, Pugh says that all types of facilities can save big by purchasing used when opening a new facility. "They can literally cut their equipment costs in half and put those saved dollars into a rainy day account and use that for marketing and advertising ... equipment repairs or additional future buys," says Pugh. This is especially true for facilities that are on a tight budget, such as smaller studios and corporate, police, fire department and school fitness facilities. Used equipment vendors can provide these centers "with twice as much equipment based on their budgets and needs that new equipment manufacturers would have a difficult time providing," explains Pugh.

By purchasing new in the beginning, facility operators can save money for emergency situations and keep overhead costs down until they are making a profit. "I always tell start-ups that the two biggest reasons clubs fail are due to poor management of high overhead, [and] equipment usually ends up being 40 to 50 percent of that overhead cost," says Pugh. "It is wise to save during this start-up period, as most start-ups take anywhere from eight to 18 months before they see any light, if their overhead is high."

Terminology

Just like cars can be "used" or "pre-owned," fitness equipment can be labeled "used," "refurbished" or "remanufactured." The terms have their own individual meanings, but you have to be careful because some dealers use the words interchangeably. Refurbished and remanufactured are often used to mean the same thing. Make sure you ask the sales person if the piece has been "cleaned up" or "rebuilt to factory specs."

Used equipment. Used equipment is just what it sounds like. You're buying the piece "as is." It may have been dusted off, but there are no guarantees that it will work properly. It could break down at any point. On the other hand, you could purchase used equipment with more confidence if the piece was a demo model or hadn't been used very often. Just be sure you can trust your seller.

Refurbished. Refurbished means that the machine has been cleaned up, lubricated and tested. It works, but there may not be any warranty or return policy.

Remanufactured. Remanufactured means that the piece has been completely dismantled and rebuilt to factory specifications. The paint has been sanded off and reapplied. The gears, cables, bearings, upholstery, even electronics, have been replaced. It's more than functional; it's truly "like new."

Due diligence

It's important to find a reputable dealer when purchasing used equipment, not only for the sake of your pocketbook, but also for the safety of your members. The Internet makes it all too easy for companies to throw on a coat of spray paint and sell a faulty treadmill. So, do a bit of detective work, and really investigate the companies you're thinking of doing business with.

According to Greenberg, you should look for a company with a brick and mortar warehouse and remanufacturing facility. Or, at the very least, they should be brokers for a company with these facilities. The sales people should be knowledgeable about the equipment and about the process used to bring the products back to life. They should be able to send you photos of every piece you ask about, and they should respond to your questions promptly.

You should also look for a long-term track record in remanufacturing equipment. "The company should be in business for at least seven years," Clayton says. "That way, they've been through the five-year cycle, and you can see if they have many repeat customers. Word of mouth is also a good indicator of a high-quality reseller. Look for testimonials on their website, and ask your colleagues in the industry who they purchase from." Pugh agrees: "I would suggest looking at how long they have been doing business in that state under the same name."

A larger company is going to have a much wider variety of products to choose from. Unlike a manufacturer, a reseller can't make more of one model simply because it's popular. What they have in stock is all they have, and popular brands will be more expensive in a smaller operation because of higher demand. Pugh says buyers should look for a full-service company, which means they inventory equipment and remanufacture onsite, and that the quality of their remanufacturing is verified with referrals.

Both Clayton and Greenberg say that it's perfectly safe to make your purchase through an online company, as long as you research it first. If the company can be trusted, then you don't need to see every piece in person - a picture will suffice. However, if you're buying an entire fitness center's worth of equipment, or spending a large sum, many resellers will pay to fly you out to their facility. That way, you can see firsthand how the company operates.

Most important of all, says Pugh, is for the company to fully support their product once it arrives at the customer's location. A good company will also offer a warranty on all parts and labor. Six months on parts and labor is the industry standard. "Any less than that," Greenberg says, "and you have to wonder about the quality of the equipment. Any longer than that, and you have to wonder about the company. Are they promising you more than they can deliver just to win your trust?" Six months is the standard because that is the point when you will need to perform heavier maintenance on the machine. "We can't make sure people do their maintenance regularly, so we can't guarantee anything beyond that," Clayton says. Some companies also offer a one-year warranty on motors and alternators. If your machine breaks down within that time, the company should send a technician to your facility to fix it onsite. If it is irreparable, they should replace it at no cost to you.

Last, Pugh advises that facility operators may want to make sure that the company they purchase from is fully insured with liability insurance in case of any mishaps in their facility or poor product remanufacturing.

Budgeting for replacement equipment

When budgeting for equipment replacement, Pugh recommends that operators first determine what their priories are in keeping members happy. "One of the ways we replace our equipment at Malibu Gym and what I share with Fit4sale's customers," says Pugh, "is to set a goal each and every month to try to replace or switch out two to three pieces per month. I call that our new product of the month program, which keeps our members excited every month with something new and different, and at the same time, allows the gym to easily meet an attainable equipment budget a little at a time, instead of [making] a huge purchase." Pugh also recommends that the budgeting process would be best tackled one area at a time, such as cardio, strength circuits, free weights and also group exercise. Then, he says, you can break down each area further into segments. For instance, cardio would be broken down into treadmills, ellipticals and cross trainers, bikes, steppers, etc.

When you're working out your budget, remember the five year rule, and stagger your purchases so that you don't have to replace everything at once. You'll find plenty of leasing and financing options for used equipment, too. If you purchase a good brand, with reasonably advanced technology, chances are it will have solid resale or trade-in value. Generic, dated equipment won't have as much value, but you'll still likely find someone who's interested in it. Clayton says that resale value depends on the product and demand. Treadmills and elliptical trainers are the most popular. They can retain 50 percent or more of their original cost. Cycles and stairclimbers do not remain that valuable, but strength machines can retain their value for up to 10 years.

You may be wondering about paying high shipping fees if you purchase used equipment from a distant company. You may go so far as to think you will negate all of your cost savings, and might as well buy new. But Clayton says that you are going to pay for shipping no matter what. Ninety percent of fitness products are shipped by van. Freight companies charge by weight and size - they don't care if the piece is new or used. If you buy new equipment, you'll likely pay a set percentage of the sale for shipping, usually 10 to 12 percent. However, reputable resellers only charge the actual freight fees, which generally run lower than that. "It's difficult to give a percentage because every order is different, but our shipping averages about 5 to 6 percent of a sale," says Clayton.

Summer is the best time to get great deals on used equipment. People spend more time outdoors and less time in the gym, so the business slows a bit and you have greater negotiating power, says Greenberg. But ultimately, it's your budget that dictates your purchase. Do some long range planning, attend trade shows and stay current on the trends. That way, you'll know what's out there, and you can make informed decisions on just which bells and whistles you need to have and which you can do without.

When it comes to purchasing fitness equipment for your facility, you have to weigh many factors: the comfort and safety of your members, profit margins and your facility's image. By taking your time and researching the trends, your market, the products and the resale companies, you can strike a nice balance with remanufactured equipment.