Computer Parts Questions Answered

Computer Parts and hardware

A common aspect of the computer repair business that just about all Computer Technicians have to deal with is computer parts. Whether we are building new systems, selling out of a storefront or going onsite and installing them, we all have to deal with computer parts. There are many questions about computer parts on the Technibble forums such as “How much should I charge? What should I carry?”. In this article, I will answer some of these questions.

How Much Markup Should I Place On Parts?

On average, I mark up my parts about 30% more than the cost I bought it for. 10% of that goes to tax, leaving me with 20% profit.
However, I dont use a 30% markup for everything I sell. On some lower priced items my markup may be as high as 100%. For example, if I bought a special cable for $2.50, I will probably sell it for $5. If I were to use my 30% markup for everything, the lower priced items would just not be worth it. It takes time for me to go out and buy them, they take up space in my workshop and they could potentially lose value.

In any case, regardless of whether I am selling it for 30% extra or 100% extra, my prices are usually below the price of the Big Box stores anyway.

I know of some Computer Technicians who will use 30% for everything, regardless of what it is. There are also many Computer Technicians who use a scale like me. For example:

  • Accessories: 50-100%
  • PC Hardware: 30%
  • Peripherals: 25%
  • Software: 10%

There are also other Computer Technicians who will sell their computer parts at cost price citing that they make money on the service. After doing some research on these technicians, it seems that their general viewpoint is that they feel that it is taking advantage of the client. I believe that those Computer Technicians should do whatever makes them feel comfortable since it is their business, but I personally disagree with them. I think one of our forum members “Appleby” said it best in a forum post:

Look you are in business and so is every other store you walk into. Do you think the grocery, hardware, clothes or car part store sell their inventory at cost? Nope, they all mark their products up and some of them over 100%. Do you think your mechanic buys parts for you car and sells them to you at his cost? The lawn mower repair shop, A/C guy, plumber? None of them. And if they do, why? You don’t know what a muffler costs him.

What I do stress out over is selling my parts at fair retail prices. For common stuff like routers, switches, etc. I sell at Staples prices since they are my only local retailer. So I try to match or beat their price. And do you know what? No one knows or cares. I tell people all the time that I’ve got XX here and Staples sells it for $5. They look at me like, “$5? Who cares?”.

If you do your homework and shop around, you’ll start finding ways to make ALOT of money on parts, all the while, still giving the customer a good fair price. Remember this: Sure your customer can go on eBay and buy the part they need, but they don’t KNOW what part they need. Plus, they will end up buying some off brand knock off in Hong Kong and it will take 5 weeks to arrive and then won’t be the right thing. You are making sure you are buying quality parts and getting fast shipping. Plus, as others have said, you are taking a risk….you take money out of your pocket to buy that part and set it on your shelf in the hopes that someone will come in and need it. You can’t do that for free. And if you are buying the parts on a “as-needed” basis, you still need to make money. It takes time and energy.

Heck I could go on and on about this and the reason is, once I figured it out, I started seeing how much money I was loosing by not marking parts up. Plus the customers had NO idea nor showed NO gratitude for the money I saved them. They were expecting me to make money, so I should be.

By the way, my goal is to make 50% mark up. That’s alot. Most items I can’t do that, but some smaller items like ethernet and USB cables, I might make 600% or more. Also, items like modems, RAM, hard drives etc can be bought for 30-60% less than Staples sells them for, so there is room for a nice mark up there sometimes.

How Long Should I Warranty A Part? Should I Provide A Warranty At All?

Most Computer Technicians will warranty the part for as long as their supplier provides a warranty to them. I have seen some Computer Repair stores keep themselves out of the warranty process by making the client deal with the warranty directly with the supplier. The problem with this is that the client will most likely find out how much you bought the part for because they will either need your receipt to do it, or the supplier may include it in a packaging slip. It doesn’t matter how much or how little you mark it up, it will probably annoy the client.
The best thing to do is to do the warranty yourself on behalf of the customer. You can make sure they are looked after and there isn’t a bunch of back and forth phone calls when the supplier asks them for details about you.
You can also turn the annoyance of the warranty process into an opportunity. A clients hard drive may have failed and you will have go through the warranty process for them for free, but the hard drive still needs to be installed into the computer and an operating system will need to be reloaded. You can charge them for this time since most hardware warranties will only cover the hardware itself.

What Parts Should I Carry?

I have two sets of stock, one set I take onsite and the other set stays in my workshop. In both cases I generally dont carry parts that lose value too quickly. For example, a DVD Burner, Computer Case or Power Supply wont loose value very quickly, but a Hard Drive or Video Card would lose value since the speed and storage of these devices are greatly improving each day. I have found that RAM is excluded from this category because even though it is part of the “latest and greatest” race, it can actually become worth more than its original selling price when it is no longer made anymore but computers still need it. Actually, I find that I sell more RAM when gets old because the older machines that were made at the same time as this RAM are starting to feel the “software bloat” and need more RAM. Actually, DDR400 RAM (which is pretty old now) is still one of my best onsite sellers.

Anyway, my onsite parts that I sell generally consists of:

  • Network cable of various length – I sell many of these
  • USB Cables – Standard A to B. I sell many of these as well
  • Power Supplies
  • DVD Burner
  • Lots of RAM of various types, both old RAM and new RAM for both laptops and desktops
  • Low priced PCI-E video card – For office machines. I dont carry gaming cards as they lose value too quicky
  • AGP video card – Again, for office machines
  • Wireless Ethernet Router
  • Wireless ADSL Router + a few ADSL filters
  • 2 or 3 Wireless USB dongles
  • Mouse
  • Various cables – USB extension, SATA, PATA, RJ-12 etc.
  • Front mounted Card Reader
  • Various cooling fans
  • Various software that frequently sells such as Microsoft Office, Antivirus software etc.

I also carry other stock for testing and completing various jobs such as spare video cards, hard drives, compressed air, batteries etc.. You can see a complete list of my onsite technician gear in this article. It was written 2 years ago but the majority of it is the same with the exception of the part specifications and new connectors.

My workshop parts that I sell generally consists of:

  • Older motherboards and CPUs – For replacing older hardware that is worth repairing
  • Operating System CDs – I dont carry these onsite since I rarely do an OS install onsite
  • A few older machines to sell
  • Wireless Keyboard and Mice sets – To sell with new machines
  • A power supply or two
  • CPU fans and heatsinks of various types

Everything else is either testing stock or I purchase it on an as needed basis since they can lose value so quickly. If needed, I may take something from my onsite stock as well.

How Do I Get That Promotional Material That Stores Have?
You can generally get this from either proper “Business Only” only suppliers or you can sign up as a reseller with the manufacturer. They will usually give you posters, brochures and sometimes even full blown displays.

If you have a store front, you can also put the boxes of your “in-house stock” on the shelves at the front of your store. This has two benefits:
1. It makes your store look more “full” without you holding onto lots of stock.
2. It doubles as an anti-theft system since there is nothing in the boxes.

Hopefully that answers a few of your questions in regards to parts. If you are selling a lot of hardware there you can afford to hold onto the parts that rapidly lose value. If you are an onsite technician who does mainly repair work, I recommend you hold onto the parts that either dont lose value quickly or parts that frequently like RAM.



Bryce Whitty

About the Author

Bryce Whitty
More articles by me...
Bryce is an Australian computer technician and the founder of Technibble. He started his computer repair business when he was 17 years old and is still running it 9 years later. He is an avid traveller and spends at least a month of the year in another country.

Comments (21)

  • Luis Garcia says:

    This is a great information. Thanks for posting this article Bryce.

    I am one of the ones that did not have markup structure. I generally would just round up the cost of the part to the next 10 but now I will certainly reconsider.

  • Charles Collum says:

    For several years I worked as a consultant in the construction industry and was always amazed at how many small contractors had little or no mark up on parts or labor (other workers they would hire on a job) while the successful contractors knew that to make it they had to add in both overhead and profit. This allowed them to make a decent living and their customers were more satisfied since they were able to provide service with less stress. Everything you provide costs you in overhead and you need to make a profit to stay in business.

  • Mauricio Mejia says:

    where can I buy computer parts to resell them?

  • Nathan says:

    Whoa!!! 100-300% markup always. When you calculate in the time to order, pay, stock, inventory, transport to a customer, the time cost of money, etc. the markup on the low cost spares (<$5-$10) is 300% and goes down as the cost of the item go up. When you do all the calculations there is not much profit in the spares, or you are telling me your time is worth nothing.

    Think of it. You just spent an hour ordering $200 of spares. When they arrive there is another hour of inventory and stocking. You now have over $300 invested in the parts.

    Now you have a job and you go get parts out of inventory, transport them, and return some to inventory because you did not need them… this is a cost.

    You have money invested in inventory that you cannot use elsewhere in your business and that has a cost.

    Some items, i.e. software, have a list price that you normally cannot exceed. This is why we get wholesale discounts so we can have a markup that keeps us in business, not necessarily making a profit.

  • I think it’s fair if you keep part prices at or around retail cost. As a tech I know what prices are good and keep an eye out for great deals and buy parts when they are super cheap. Then I sell them at around the regular price, often times at a 100% markup.

  • Although I believe it is ok to charge a fair price for parts and make some money on them all too often computer dealers in my area are charging way more than the percentages mentioned in this article.

  • Once again, a very worth while article. Being one year out on my own, I have worked some of this out, but it will certainly help me work out the rest of the kinks I have. It will definitely same me mental legwork I can apply to other issues. Thanks for the insights.

  • mooncat says:

    Bryce, or anyone for that matter, what markup do you put on new, custom, used, and refurbished pc’s? Do you just markup the hardware that you use at the 30% rate, or do you use a different rate? What about if you are reselling new pc’s, does this fit in the hardware markup category?

  • ANDREW ARIM says:

    Bryce..i am from kampala ,uganda, –i finished my bachelor of information technology from makerere university (mak.ac.ug),currently there are no jobs around and i am planning to start up a business (consultancy company sort of) and as you are a seasoned computer entrepreneur…could you please help me in this area mostly connecting me to somebody or company that can help invest in this business of mine,down here money is hard to come by yet there are lots of potential in computer business. i will be so gratefull for your answer and help.

    Kind Regards.

  • Thank you for your input I was one of those companies only charging what i pay for them ordering on an as needed basis but recently i ran some numbers an d i was actually losing money doing this thanks for another great article.

  • I keep very few parts in stock… usually only a power supply, network cables, and usb cables. Everything else I order as needed, or if the customer really needs it immediately, I’ll just buy it retail. If I buy it retail, I charge them for my time. If I order it, I charge a good markup since the online price is usually way cheaper. I find it’s just not worth the risk or the space to hold onto much inventory.

  • Les M says:

    A few thoughts
    Something is worth what you can get for it
    So the Perceived price and the Cost price need to be as far apart as possible.

    Always factor in delivery/collection costs,
    for up sales stress “If I get this at the same time you can save these additional costs being repeated.

    It is very easy to give a discount on a Quote
    Almost impossible to raise the price without looking incompetent.
    Lastly always charge you replacement charges,
    NOT you original costs for a stock Item.

    Les

  • Johann says:

    What suppliers do you guys use? I signed up with Ingram Micro and their prices barely beat retail by a few cents. I just can’t find a good wholesaler, so I get most of my parts on NewEgg, then mark them up to my competitor’s prices.

  • mh348 says:

    I also charge a markup, it takes time to first quote the customer, check on stock availability, and placing the order.. The Courier costs need to be added. I have accounts with 12 to 15 wholesales, but only keep the basics and order the rest as needed. Also if the customer has a problem I have to send it back to the supplier or Manufacturer, so all these costs need to be considered.. At the end i’m still cheaper than some of the big retail stores.

  • muddyfox says:

    thanks for a great article,I’ve learnt loads as usual thanks to the site …great work:D:D

  • Very important to note as well (and this is for the State of Florida, but applies in most states).

    If you are selling parts, and they are on the same invoice as your services, you are require to apply sales tax TO THE ENTIRE INVOICE, including your services. The only case where this does not apply is when services are the only item on the invoice.

    I got burned for this when I started my business, and learned the hard way. But in the state of Florida, this is required by the Florida Dept of Revenue, and it was explained to me that this applies in most states in the US. Check your local sales tax laws.

  • regarding the mark up of parts if you specify the name brand of the part and the warranty for the part on the invoice that can help justify any questions about cost comparisons.

  • I find old memory like pc3200 to be a hot seller.

  • Stephen says:

    Please! Where do YOU buy your hardware?
    Or, where do you recommend we shop for hardware?
    Many Thanks in advance…

  • Very good article. Although I haven’t stocked many “brand new” parts, I might just need to. I’ve run into a few occasions where the computer needed to be fixed fairly quickly and it was after hours for any computer parts stores….

  • bob says:

    One way to get parts is wait for them to go on sale at Fry’s electronics. There’s one near me.
    I’ll buy something on sale and then I can resell it at list price or a little above.

    Just replacing a power supply which does not take very long we have to charge. You have to tack on something extra for the part and the labor. We used to buy power supplies from a local parts place as needed. Finally I told the owner why not buy them by the box? You can order 10 or more at a time from say Tiger Direct and save a lot of money.