Rental companies need to determine their total equipment value for various reasons, whether it be for buying and selling equipment, auditing your rental inventory, or getting it insured.
Equipment values will vary based on your business, but our used equipment value calculator is a great first step in creating a construction equipment price guide.
Equipment Value Calculator
Get an estimated current market value for your equipment
How This Calculator Works:
Disclaimer: This calculator provides estimates only. Actual market values may vary based on location, demand, and specific equipment features. For precise valuations, consult professional appraisers or current market listings.
Table of Contents
- Reasons for Valuation
- Valuation for Insurance
- Financial Reporting and Financing
- How to Calculate Your Equipment Value
- Equipment Valuation Example
- Automate Equipment Value Calculations & Financials
- Other Equipment Valuation Factors
- Other Equipment Valuation & Fleet Management Resources
Reasons for Valuation
The reason you’re looking to value your equipment will play a role in which equipment value estimator and approach you’ll use. Are you looking to buy or sell a piece of equipment? Assessing the value for insurance purposes? The valuation methodology you’ll use depends heavily upon the reason you’re trying to determine a value for your equipment in the first place.
When it comes to valuing equipment for buying or selling, there are three key valuation methods.
Fair Market Value
Fair market value is a valuation method in which both a buyer and seller are willing to partake in a transaction. Say you’re looking to start a rental business: To get an idea of the costs involved, you can use a fair market value calculator. Equipment you’d need can be entered into the calculator to determine the price you’d pay.
If you already have a rental business but are looking to upgrade your equipment by selling some older items, then the fair market value is likely what you’ll use to get a rough idea of how much you could sell your equipment for.
Orderly Liquidation Value
The orderly liquidation value is what’s expected when a seller is forced to sell an asset with some time constraints. This method gives a reasonable amount of time to find a willing buyer. This valuation is generally less than the fair market value.
Forced Liquidation Value
A forced liquidation value is the asset’s value if sold almost immediately at auction. This valuation assumes the assets or equipment are sold as soon as possible and is generally lower than the orderly liquidation value.
Valuation for Insurance
If you’re looking to value your equipment for insurance purposes, such as filing an insurance claim or purchasing a new insurance policy, you’ll use one of the three methods below.
Actual Cash Value
Insurers may use the actual cash value to determine the value of your equipment. This value is calculated as the replacement cost of the equipment and incurs less depreciation.
Replacement Cost New
The new replacement cost is the value of purchasing the latest version of the same piece of equipment, brand-new.
Reproduction Cost New
The new reproduction cost is the valuation for a piece of equipment based on the costs involved in reproducing the equipment with the same specifications, based on current prices.
Financial Reporting and Financing
If you’re valuing your equipment for financial reporting or to raise funding for your business, there might be specific requirements. For example, a lender may base its valuation on the market price of the equipment for calculating the loan-to-value ratio.
How to Calculate Your Equipment Value
Regardless of the reason, if you’re looking to calculate the value of your equipment, you’ll need to do the following.
Identify and Compile the Relevant Information for Each Piece of Equipment
To get a proper valuation done, you’ll need to gather key information for each piece of equipment you have, such as:
- Purchase date
- Purchase price
- Accumulated depreciation
Keep a file with this information readily accessible.
Determine the Right Valuation Methods
There are three different methods that are generally used for equipment valuations: the sales comparison approach, the cost approach and the annual straight line depreciation method.
Sales Comparison Approach
The sales comparison approach looks at the current market for new and used equipment — what are the current prices for similar equipment between willing buyers and sellers? A sales comparison approach is used when sales data is readily available.
The age and condition of the property are taken into account when looking at used equipment. This may involve looking at recent auctions, dealer listings, and conversations with vendors to assess the market.
The best way for this approach is to start keeping track of what similar equipment is being sold for so you can gauge your own equipment.
Cost Approach
The cost approach (also known as the cost method) uses the new replacement cost. This method is generally used when there’s not an active market for the equipment. For example, you have a specific type of excavator that the manufacturer no longer sells, and as such, there’s no real market for it. Your heavy equipment valuation calculator should point you toward using the new replacement cost for a new version of a similar piece of equipment.
When there’s not an active enough market for the sales comparison approach, that’s when the cost approach is used. It is also suitable when the product is highly customized.
If you have a rental business that uses custom equipment, the cost approach is what you’d use for your valuations. The cost approach may include reaching out to manufacturers and vendors to appraise the custom equipment needed to reproduce the asset and may also involve checking published price lists.
If the equipment is no longer made, the cost approach may include reaching out to the previous manufacturer to see if they can provide an estimate of what the equipment would cost to build today, factoring in present technology and current prices for supplies.
Calculate the Equipment Value
Now that you’ve nailed down the reasons for your valuation, you should have a general idea of the best method to conduct it. If you’re using the sales comparison approach, look at the buy-and-sell market for new or used equipment like yours. The cost approach means you’ll need to find equipment that’s similar to yours and factor in depreciation.
Equipment Valuation Example
Let’s walk through a practical example of valuing a small rental company’s fleet to demonstrate how these calculations work in practice.
Example Fleet:
- 2019 CAT 320 Excavator (purchased for $125,000)
- 2021 John Deere 544K Wheel Loader (purchased for $180,000)
- 2020 Skid Steer Bobcat S770 (purchased for $45,000)
Step 1: Gather Information
- CAT 320: 4 years old, 3,200 hours, good condition
- Wheel Loader: 3 years old, 2,800 hours, excellent condition
- Skid Steer: 3 years old, 1,500 hours, good condition
Step 2: Apply Valuation Methods
Sales Comparison Approach:
- Research similar equipment on auction sites, dealer listings, and classifieds
- CAT 320 (similar age/hours): $75,000-$85,000 range
- John Deere 544K: $130,000-$145,000 range
- Bobcat S770: $28,000-$32,000 range
Cost Approach with Depreciation:
- Apply annual depreciation rates (typically 10-20% for heavy equipment)
- CAT 320: $125,000 – (4 years × 15% × $125,000) = $50,000
- Wheel Loader: $180,000 – (3 years × 12% × $180,000) = $115,200
- Skid Steer: $45,000 – (3 years × 18% × $45,000) = $20,700
Total Fleet Value Range: $233,700 – $262,000
This example shows how both methods provide a valuation range, helping you understand your equipment’s current market position.
Automate Equipment Value Calculations & Financials
Manual equipment valuation can be time-consuming and prone to errors, especially as your fleet grows. Modern rental management software like Quipli can significantly streamline this process.
How Quipli Helps with Equipment Valuations:
Real-Time Asset Tracking: Quipli’s inventory management system automatically tracks key data points including:
- Purchase dates and costs
- Accumulated hours and usage
- Maintenance history and costs
- Current location and status
Automated Depreciation Calculations: The platform can automatically calculate depreciation using various methods:
- Straight-line depreciation
- Usage-based depreciation (per hour/mile)
- Custom depreciation schedules
Financial Reporting Integration: Generate detailed reports showing:
- Current book values vs. market values
- Equipment ROI and utilization rates
- Depreciation summaries for tax purposes
- Fleet performance analytics
Market Value Integration: With integrations like Boom & Bucket, Quipli provides real-time market valuations, helping you:
- Monitor equipment values automatically
- Make informed buy/sell decisions
- Optimize your fleet composition
- Track asset performance over time
This automation saves rental companies hours of manual calculation time while providing more accurate, up-to-date valuations for better business decisions.
Other Equipment Valuation Factors
Beyond the basic valuation methods, several additional factors can significantly impact your equipment’s value:
Brand and Manufacturer Reputation Popular brands like Caterpillar, John Deere, and Komatsu typically hold their value better than lesser-known manufacturers. These brands offer:
- Better resale value
- Wider parts availability
- Stronger dealer networks
- Higher rental demand
Market Conditions and Demand The construction and rental market conditions greatly influence equipment values:
- Economic growth increases demand and values
- Regional construction activity affects local pricing
- Seasonal fluctuations (spring/summer are typically stronger)
- Infrastructure spending and government projects
Equipment Condition and Maintenance History Well-maintained equipment commands premium prices:
- Complete service records
- Regular preventive maintenance
- Quality of repairs and parts used
- Overall appearance and cleanliness
Technology and Features Modern features can significantly impact value:
- GPS tracking and telematics
- Fuel efficiency improvements
- Advanced hydraulic systems
- Operator comfort features
- Safety enhancements
Hours and Usage Patterns How equipment has been used affects its value:
- Total operating hours
- Type of work performed
- Operating environment (dusty, wet, extreme temperatures)
- Number of previous owners
Market Comparisons Research comparable sales through:
- Online auction platforms (IronPlanet, Ritchie Bros)
- Dealer listings and trade publications
- Industry valuation guides (Equipment Watch, EquipmentTrader)
- Local dealer and broker networks
Understanding these factors helps you make more informed decisions about equipment purchases, sales, and overall fleet management strategy.
Other Equipment Valuation & Fleet Management Resources
Rental Roundtable Episode: People and Machines Watch this insightful discussion with industry experts about equipment management and valuation strategies:
Additional Resources:
- How to Keep Track of Your Rental Inventory
- Equipment Loan Calculator
- How to Start an Equipment Rental Business
- Leasing Pricing Strategy Guide
Build Your Rental Business with Quipli
Quipli is an all-in-one software solution for rental businesses. Our equipment rental software helps rental companies track their inventory to maximize revenue-generating opportunities and integrates with our reservation & scheduling tool for a seamless customer experience.
With features like automated asset tracking, real-time market valuations, and comprehensive financial reporting, Quipli takes the complexity out of equipment valuation and fleet management. Reach out to the Quipli team today to learn more about how we can help streamline your rental operations.
