How Critical Is It?

Sellers want to get the most out of their airplane at sale. That's perfectly understandable. But overpricing your airplane will actually cost you more money than if your aircraft was priced correctly from the beginning. Here's why:

• The average general aviation airplane takes 6 months to sell.
• Most airplanes lose value over time. On average, 2 to 3% annual devaluation can be expected.
• Fixed expenses such as hangar rent, the cost of an annual inspection, and insurance, continue to accrue.
• Debt service, if any, will also continue.

Take a look at Otto Pylot. Otto owns a $200,000 airplane, has 12 years remaining on a 7%, 15-year note and has a loan balance of $150,000. His expenses are as follows:

• Depreciation for 6 months: $2,000
• Hangar for 6 months ($200/mo): $1,200
• Annual Inspection ($2,400 annual): $1,200
• Insurance ($2,400 annual premium): $1,200
• Loan Interest: $4,500
• Total: $10,100

Wow!! Ten thousand dollars! That's $1,667 that Otto is losing for every additional month he keeps his airplane. If that same $1,667 were reinvested at a conservative 8%, then the real cost of continued ownership inflates to over $1,800 per month!

Today's buyers are savvy and generally know what the value of a given airplane is. Moreover, they often know actual sales prices for aircraft that have recently sold. To think you're going to fool them into paying you a premium is really nothing more than an exercise in fooling yourself. They do know a good value when they see one however, and will often pounce on an appropriately priced airplane. An appropriately priced airplane will often sell in half the time. Based on this scenario, Otto should save himself at least $5,000.

So, how do you go about pricing an aircraft appropriately. In short, a combination of multiple aircraft value guides (BlueBook, Vref, etc.), an on-site visit from a knowledgeable broker or appraiser, and first hand knowledge of current market activity. Establishing the right price has absolutely nothing to do what you paid for, what you currently owe, or what you've spent on your plane.

Regardless of whether or not you're a current Wild Blue client, we'd be happy to share our opinion of the appropriate asking price for your airplane.