Brand Premium
Brand Premiums are an EquipmentWatch proprietary metric for evaluating the relative price strength of a brand in used equipment markets either at a given time, or as an average over a period time. The analysis involves comparing thousands (or millions) of observations from the equipment Resale and Auction channels, holding constant significant factors like equipment age, equipment type, and market. The end result is a ratio comparing the given manufacturers, brands, or models against the entire market.
For example, consider the randomized sample data below.
The horizontal axis (0%) represents the average price level for the entire market. Model 2 consistently shows a brand premium of 2%, meaning that holding all other factors equal, this model has an estimated 2% price premium over the market average in the specified time period.
Note that brand premiums are different from normal price trends. Price trending typically contains a great deal of noise in the data, stemming from differences in equipment age, location, condition, and market. Brand premiums cancel out that noise, allowing for a very accurate analysis of the impact of one factor on price. Brand premiums are also only relevant for the given time period; unlike residual values, brand premiums should be interpreted solely with respect to the time period in which they were calculated.
