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View Full Version : The long and short of shortage?


Mushin
10-27-2011, 04:34 PM
Is the shortage on hard drives potentially a good thing for the computer service industry?

Throughout history there have been all kinds of shotages on products and materials. Gasoline and Sugar are the first two that come to mind and I would venture to say that in all cases of a shortage the price of the item in question never really goes back down to the pre shortage price.

Assuming this to be the case at a time when computer sales are strongest (Holiday Season in the US) I contend that the price for computer will go up and stay up.

This increase may make it more attractive to get a computer fixed versus buying a new one. Even in the case of a repair where a new hard drive is needed the repair is probably going to be even more economical for the end user.

Sure this is speculation but I am pretty sure that the computer mfgs would love the opportunity to have an industry wide price adjustment that puts more margin back into PC Sales while haveing a perfect excuse for doing so.

joydivision
10-27-2011, 04:58 PM
Bad for new hard drives/hard drive replacement jobs but it could be good for other things, if the price of a PC goes up a lot then repairing them will become normal again so we may see a lot more other type of work such as DC Jacks, viruses, motherboards etc.

While the shortage is a major problem for us, it is swings and round abouts and we could benefit.

sassenach
10-27-2011, 06:22 PM
At least one of the system builders has stated that they have at least 3 months supply of hard drives and their system prices will not be affected.

However, their individual drives have already seen a near 100% price rise already. Buying a ready-made system may well look like a good deal to customers who would otherwise have had a replacement drive fitted.

Cornerstone Technologies
10-27-2011, 07:06 PM
Large manufacturers will be less affected by these increases, thus I wouldn't look for your average HP or Dell to radically change in price. I do think that people are panicking in the short term. We might be inconvenienced by higher prices and limited quantities when ordering, but it will pass. Certain people have a tendency to latch onto negative events and blow them out of proportion and beat them far beyond death.

Tony_Scarpelli
10-28-2011, 05:06 AM
Rather than by a drive for $90 and sell it for $180 plus my labor to set it up and install it, I am recommending people just use this opportunity to buy a new quad core.

It is working so far,I just ordered 20 new computers pre built and the price I am paying is $5-9 less than they were last month. Go figure. So it hasn't effected my margin of 50%.

Scales
10-28-2011, 05:19 AM
I haven't followed much in regards to the flooding over seas. My understanding is that a Western Digital manufacturing plant is flooded. So why would all hard drives in general increase in price. Would this not be a great time for other manufacturers to gain market share? I don't think jacking up Hard drive prices is beneficial or warranted.

Tony_Scarpelli
10-28-2011, 05:25 AM
General motors bought up to 40% of their automatic transmissions from Chrysler for decades. They all share supplies for common parts.

It seems I read the head housing arm mfgr was down so half of all mfgrs are going to have difficulties getting them and the other half were already building at 75-80% of capacity already so they can only boost productivity 12-15%.

emsbronco
10-28-2011, 07:18 AM
According to a partner email from western digital, the flooding has shut down 60% of their manufacturing capacity. Seagate has a plant in the same area, but I don't know what percentage is made there. But I have read news reports that the company that manufactures the drive spindles ia located there...and they supply 80% of the spindles used in all hard drives.

Sent from my DROIDX using Tapatalk

Tony_Scarpelli
10-28-2011, 07:52 PM
Thank you, Drive spindles that is the word I was searching for....senior moment.:)

Appleby
10-29-2011, 06:22 AM
I see this have no positive effect on our repairs. Say a hard drive cost me $45 a month ago and it costs me $90 today. I like to mark my prices up to Staples prices, since they are the only local place to buy parts. In the past, I could usually sell a $45 drive for about $65. So now, if I keep my dollar amount of profit the same (not using the percentage, which is how it should be done), that $65 drive is $110. Let's say I charge $100 for a basic data backup, drive installation, OS reinstall, updates, performance tweaks, data transfer and basic apps installed. So now they customer is looking at $210 vs $165. First off, psychologically hitting that $200 mark is bad. Plus, a decent Dell/HP laptop with 4GB RAM and a dual core processor is going to cost between $400-$525. We went from the repair costing 30-40% of a new machine to 40-52% of the price of a new machine.

I know, you will say, that the price of the new computers will go up by the same amount as the our drives. Wrong. First off, they have contract pricing to fix their costs. I do not believe they don't have a contract for less than 6+ months on the max they will pay for their commodity type parts like hard drives. BUT, even if they didn't. If their actual costs went up tomorrow....they still won't go up the same $45 ours will because of their buying power. If they went up $25/each, that is still small potatoes and raising the price of a decent laptop from $400-$525 up to $425-$550 isn't going to change a thing in the end user's eyes.

Let's be honest, we are becoming a disposable society. Everything we buy is a throw away item, even if it's expensive. Smart phones are replaced every 2 years when the contract renews, HD tvs are thrown out if they have problems after 2-3 years, computers have a hiccup after 2-3 years and they are replaced.

Unless a customer is really in financial strains, they aren't going to let a $25 price increase on a computer at Walmart, Staples or Best Buy keep them purchasing it, if they have the new computer bug and theirs is acting up.

Case in point, a long time customer calls me today and has weird and random booting problem with his 2.5 year old Dell laptop. It's probably a hard drive issue but who knows. I'm supposed to take a look at it around 5pm. We talk about 4pm and he says, "Well ya know, this computer is getting slow, I've been noticing it now that I think about it and I bet you can get me a new one for a good price. Let's just buy a new one." I never quoted a price on fixing the problem...for all he knows it's a $45 fix but he talked himself into buying a new just because "it's getting slow". And this is an Intel dual core machine with 3-4GB of RAM.

Cliff notes, I wish this would help us out, I really do, but my customers seem to be looking for a reason to buy a new machine and a small increase on a new computer will not scare them away, especially when the parts to repair theirs goes up more than the increase on a new computer.

Tony_Scarpelli
10-29-2011, 06:31 AM
First off, offer to sell him the new laptop. You can buy open box and make some coin while still selling to him for less than he pays for it through other sources.

Second, what is he going to do with the old broken laptop? You should offer to recycle it. Then fix it and sell it for up to 75% of new cost. Most of my customers are happy when I offer this alternative so it goes to good use.

Third, you should offer to transfer the files, settings and software for $99 (unless he gave you the old laptop for free).

Your assumptions are negatively effecting your ability to make money-IMO.

I hope this helps.

joydivision
10-29-2011, 12:34 PM
This is why we have to move away from the repair business. Having said that I now have six computers in the work shop all waiting repair and despite all our predictions I get just keep getting busier and busier. This however is the peak and my prediction is by 2013 we will see a fall as the number of PCs really does start to fade.

This why I want to move into training.

Appleby
10-29-2011, 07:54 PM
First off, offer to sell him the new laptop. You can buy open box and make some coin while still selling to him for less than he pays for it through other sources.

Second, what is he going to do with the old broken laptop? You should offer to recycle it. Then fix it and sell it for up to 75% of new cost. Most of my customers are happy when I offer this alternative so it goes to good use.

Third, you should offer to transfer the files, settings and software for $99 (unless he gave you the old laptop for free).

Your assumptions are negatively effecting your ability to make money-IMO.

I hope this helps.

Ok, I didn't go into all those details because that was off topic. A HUGE portion of my business is derived from the purchase of new computers on behalf of my customers and charging them a fee to order it, setup it up in my office, transfer data, install AV etc. This is a very very big part of my business model.

So in the case of the customer with the laptop he opted to trash....he called to tell me to order him a new laptop. He doesn't even ask the price or tell me anything other than, "Order me whatever I need." He's good for it, so I don't ask for a nickel. This will be the 7th computer I've purchased in 4 years between he and his wife and their son and daughter in law. He will bring me the old laptop and ask me for an estimate to repair it and knowing him, he will just opt to give it to me, rather than fix it.

I didn't go into all those details, because I've done it so many times here I figure people are tired of hearing it.:D I've built a majority of my business from Day 1 around pre-purchase advice and the purchase/setup of new computers on behalf of customers. If I never had to repair another computer, it would be fine by me, I love getting to open the boxes up every week on brand spanking new computers! Too bad they aren't all mine.;)

NWPhotog
10-29-2011, 11:51 PM
Ok, I didn't go into all those details because that was off topic. A HUGE portion of my business is derived from the purchase of new computers on behalf of my customers and charging them a fee to order it, setup it up in my office, transfer data, install AV etc. This is a very very big part of my business model.

So in the case of the customer with the laptop he opted to trash....he called to tell me to order him a new laptop. He doesn't even ask the price or tell me anything other than, "Order me whatever I need." He's good for it, so I don't ask for a nickel. This will be the 7th computer I've purchased in 4 years between he and his wife and their son and daughter in law. He will bring me the old laptop and ask me for an estimate to repair it and knowing him, he will just opt to give it to me, rather than fix it.

I didn't go into all those details, because I've done it so many times here I figure people are tired of hearing it.:D I've built a majority of my business from Day 1 around pre-purchase advice and the purchase/setup of new computers on behalf of customers. If I never had to repair another computer, it would be fine by me, I love getting to open the boxes up every week on brand spanking new computers! Too bad they aren't all mine.;)

How much do you charge for those services?

Appleby
10-30-2011, 03:51 AM
The way I do it is this..... remember this is done 99% of the time with good customers or businesses that I have a past relationship with or I know very well. (it's a small town) If Joe Blow calls up and wants this service, he pre-pays for the computer. I've only had this happen once in 6 years. Every other time, it's someone I know and/or trust.

I talk to the customer and find out what they want/need in a computer, I get them some prices, give them the very basic specs (they don't usually care), they agree to the price and computer and I order it. When it arrives at my office, I unbox it, perform the out of box setup, tweak all the power settings, uninstall any bloatware, install the Windows Updates, install an AV of their choice, setup IE w/Google as the default search engine etc. I create icons on the desktop for Documents, Computer, IE etc. I basically set this computer up just like it was my own. I put it back in the box and I'm done.

For all of that, I charge a flat $75. And to be honest, I do my best to mark the computer up $30-$50 if possible but not always. It just depends on the customer, the deal I've found on the pc etc. My total time, from ordering the pc to boxing the pc backup after the setup is about 30 minutes of actual time. Sure the updates and installs takes awhile but it's not like I'm actually doing anything. I'm working on other computers while those things install. Also, with credit card cashback and Ebates cashback I'm getting 3-5% back on every purchase.

Very often the customer wants a paid AV installed and I will sell them Kaspersky if they have no preference. If they do have a brand preference, I will purchase it for them and install it too. And yes I mark up KAV and any other AV I sell. I charge Staples prices or a little less and I can usually make a really nice profit. If the customer needs data transfer or other software installed I will do that too for an extra charge.

I've been doing this for years I've yet to have a single customer who wasn't super happy with the service and feel like they saved money vs going to the store themselves and getting talked into $200 worth of software/warranties/bells & whistles they don't need. I have so many customers who just automatically call me every time they or their business needs a pc it's nuts. I'm telling you, sometimes I'm ordering so many computers, I have to keep good notes to keep up with which computer is for which customer.