Auctions: Inner workings: Chapter 10
The right attitude.As you gain more insight into the inner workings of an auction, you will feel quite comfortable when it comes to bidding. However, before you get too comfortable, there is a lot more you need to know.
Costing analysis.
One of the biggest mistakes people make is not calculating their exact cost of an item at an auction. This is pretty easy to figure out.
1) Calculate your per-day and your per-hour cost...eg...$25. per-hour...$200 per-day.
2) Calculate your travel costs to the auction site....air fare...car rental,
food, lodging and any other expenses incured.
3) These costs have to be added to the item that you won at the auction.
Now lets continue with our example from the last post....Assume your bid of $800 dollars was the high bid for the plastic banding machine. To this add $80. auction commission. Add $200 for loading and another $200 dollars for transport charges. So far your cost is (800+ 80+ 200+ 200=) $1,280 dollars. Depending on your distance from the auction, your out of pocket expenses will vary. However, you need to add these expenses to the base cost of the plastic bander. Assuming it took you a day to go back and forth to the auction, add $200 to this for your lost wages. Add your car expense etc etc. Lets say this comes to ( 200+ 100 =) $300 dollars. Now this bander is up to $ 1,580 dollars.
Your nightmare is just beginning....
Next morning, with eager anticipation, you await the arrival of this plastic bander. You tell all your co-workers how "cool" you were at the auction and how you "blew " all the competition out of the water. You are beaming with pride at your astute judgement. From this day forward, you resolve to buy all your future machines from auctions. You are "hooked". You have caught the auction fever. Alas, if only you knew....
The nightmare begins....
At about 11 a.m. the trucker arrives at your loading dock. You unload the bander, sign the bill of lading and proceed to admire your acquisition. The plant folks gather around, why even the office staff is out there....all eyes are on you....
No one knows how to turn this contraption on. Finally, you figure out how to get the power to the machine and turn it on.....
Then nothing. I mean nothing happens. About 2 hours of monkeying around later, you realise something is seriously wrong with this machine. No one at the plant has any clues as to what the problem is. In desperation, you get on the phone and start calling all the local repair geniuses you know. Finally, you realise that you have to call someone in, to fix this bander.
Next day, the grease monkey shows up. He charges $60 bucks an hour plus parts. The grease monkey spends a few hours poking around and running electrical tests. after 4 hours you get the results....
1) the motor is toast. Motor cost $150 dollars. To take out the old motor and replace it...Labor cost $150.00. He isn't done yet.
This machine was run 24/7...The clinchers are shot. New clinchers and new seal heads about $500 dollars...labor about $125 dollars.
He recommends that all relays be replaced...they are on their last legs...New relays plus labor $200 dollars. " If it was my machine", says the mechanic, " I would junk it".
At the bottom of the estimate sheet is his charge of $240 dollars for giving you this good news. After you sign the invoice...and after the grease monkey leaves... you realise.....what a nightmare you got yourself into.
