Help with billing for Bench Labor?

[drnick5]

Hey Guys,

How do you guys handle bench labor? That is, computers dropped off to your shop? We are really trying to make a move into MSP, but currently about 50% of our business is residential customers

When we first opened, we started out at $60 per hour for bench work, and offered a free diagnostic to any computer dropped off. we take everything on a first come, first serve basis. And offer a "Rush" option (for a fee) if you need it back ASAP. We also offer to do a full backup of the system for $30 before we perform the diagnostic.

Basically when a comptuer comes in, we'll look at it and try to figure out how long it will take...we then call the customer, give the estimate, and get approval, if its declined we have no charges (unless they opted for the backup upon sign in) Once approved, we move the job into a Bench queue, which again, gets worked on first come first serve.

This worked for a while, but we found ourselves mostly billing 1 hour of labor for quicker jobs, 1.5 hours for some things and 2-3 hours for full OS reload and data migration. Even though in almost all of these cases, we'd spend much more time on the computer then what we billed... but the problem is you can't really bill 4-5 hours for a residential comptuer job.. with the exception of data recovery.

We got in some odd situations where we'd quote 2 hours... and then have something bad happen half way, or almost all the way through the job. Computer is just about ready to be finished... then it shuts down due to bad motherboard or power supply, or a few times.. I've had hard drives just die.. hasn't happened often, but its happened. Sometimes you have those cases when you can't fully remove a virus.. and you spend hours and hours trying.

Since we saw this pattern, we decided to change our pricing model to 3 flat rate "buckets". We now have "Basic" $59, "Advanced" $139 and "Critical" $199 repair rates.

Basic being any quick fixes, installing a Ram upgrade, swapping a power supply, removing or installing software etc.

Advanced being Virus Removal, Os Re installs without data migration

Critical was usually reserved for OS reloads with data migration, or in house Data recovery. As well as invasive laptop repairs (DC jack, screen replacement)

over the years as computers have become cheaper.. I find myself almost never billing critical labor anymore, as when I'd diagnosed a job as critical, it kept being declined.. meaning lost work.. so I'd rather get $139 for a job then $0 and no work

So at this point its almost as if I have 2 labor rates, $59 or $139... I don't necessarily want to get rid of our Free Diagnostic service, as I think its helpful for a customer to be able to find out what the problem is without cost. But I'm struggling to figure out what to do about this problem.

Should I go back to hourly billing? if so.. how do you guys estimate the hours spent on a job? what happens when you run into an unforseen problem that takes more time? Do you call for approval on more work? what happens if they decline the additional work, and you're left with a half finished job you can't bill for?

The other option I thought of is remaking the labor "buckets" having a 4th tier in the middle of the Basic and Advanced (so going basic $59, basic + $99, Advanced $139 and Critical $199 for data recovery or really difficult jobs)

At this point I'm open to any options or opinions..I still want to support home users while growing my MSP side of things, but as computers get cheaper i feel like my labor is becoming significantly devalued.

Thanks in advance for any suggestions!

 

[Maniaman]

We do flat rate for services in shop, and tried to base it off of the average time the job would take to do. You'll always have a few jobs that get done faster than average and a few that take longer than average. Either way, customers like flat rates because they know what to expect. It will, however, come back to bite you sometimes when you get the demon possessed computers that seem to require way more work than average.

On the free diagnostics what do you do if you spend 3 hours diagnosing it, and the customer decides to fix it themselves or take it to "their buddy who knows computers"?

 

[RedFoxComp]

On the free diagnostics what do you do if you spend 3 hours diagnosing it, and the customer decides to fix it themselves or take it to "their buddy who knows computers"?

I do free diagnostics unless I've given them a quote and the customer chooses not to repair it. I explain that there is no charge at all if the computer is not worth fixing and they leave it with me for recycling. (An older system with a dead motherboard for example.) More often than not they end up buying a new computer from me or at least doing a data recovery on their old system.

 

[cyabro]

Why not have a diagnostic fee that is paid by all customers when they drop off their machine and then if they decide to go ahead with the repair this diagnostic fee gets deducted from the total?
This way you aren't doing work for free as those that decide not to go ahead with the repair have at least paid you for the diagnostic.

 

[compnet]

The whole free diagnostics thing gets brought up a lot, and a lot of people here are scared of it. I can tell you this, we get a LOT of business offering free diagnostics. And maybe 1 out of 30 or 40 don't go through with the repair, maybe losing 5-15 minutes tech time for a lot of extra business.

3 hours on a FREE diagnostic?? I don't think you understand the idea here. We aren't drilling down to specific driver/system file/registry entry.. We test hardware(5 min tech time), and pretty much from there call it hardware or software and give it a price.

@OP, I would have to agree 199 is too much labor for anything but data recovery, but especially for os reload and screen replacements.

 

[16k_zx81]

$129 flat rate for most repairs

add $44 if they require data backup before commencing (ie nuke and pave, or they have not backed up before dropping in the pc and are concerned about data loss).

$77 quotation/diagnostic fee if a repair is not undertaken. Also serves as a 'minimum bench fee' for quick jobs that dont merit full rate

This weeds out cheapskates and timewasters. I find it works very well. I advise all customers of it up front and have had very few refusals.

Obviously I am a fan of 'simple' pricing, and dont like 'variable rates' because the calculations are too difficult to project (for me, anyway)

Customers seem to also appreciate the simplicity*.

When people approach the receptionist for quotes she just tells them "[flat rate] plus parts" - which seems to work pretty well.

*Note that for the last few years I have been operating at a $99 flat rate and just a few days ago bumped it to $129. So for me its early days.

Bear in mind in making your own calculations that pricing is very much geographically based; What the local market is doing, and particularly your closest competition.

 

[Tony_Scarpelli]

In the beginning dozen years ago, we were $85 per hour bench rate for end users dropping off their computers. We also found that we could have sometimes 4 hrs or even 5 and always had to discount the end product. So we cut our advertised hourly to $55 hrs but vowed never to discount again. our sales doubled. More customers brought computers in and when it takes 4 hrs or 5 they pay it as we were the cheapest in town.

When people call and ask your rate they do not calculate a maximum so better to give a lower rate with no freebies than a rate that makes you feel good but in practice doesn't exist.

Depending on market conditions we bounce between $64.99 and $59.99 per hour. We now offer $59.99 hrly repair, virus removal or what have you. We tell them at check in it is likely 1 or possibly 2 hrs for virus removal/tune up and reinstallations. We give free diag with repair. If they choose not to fix it because of hardware costs or its just too much with backup and advanced repairs they pay 1 hr minimum cost.

We charge $99 for a backup however if they are already performing a tune up $119.99 or re-installation then we discount the backup to about $49 so the bill is about $169.

We charge 1 additional hour for our security pack which includes updates of Windows and all software loaded, setup and configure of antivirus and antimalware so this raises the out the door price to about $229 with discounted backup service.

We do not try to sell the antivirus until the rest of the job is repaired and we call the client for pickup. Then we ask them what they prefer to use for their antivirus? So if they take it without security then we warn them there is zero warranty if they go home and get infected tonight. However if they buy the security pack from us we can ensure it is not infected before protected and we also give them 30 days warranty against virus damage and we will do it all again for free. Luckily this seldom happens to us.

When the bill gets upwards of $200+ then we ask the client if the would like to abandon their computer, transfer their data to a new computer and quote them custom built systems or refurbs from us. This is often a good source of additional sales.

 

[katz]

Good topic. I'm losing "my shirt" on this one too. I live in a very small rural area and the client base won't support high price structure. At present, I am at;


$25 diag., gets absorbed into the cost of the repair if they decide to move ahead with the repair.

$79 flat rate (+ parts) in-shop repairs. This usually includes "minor" data backup such as pics/music/docs, unless they have a boatload of data.

$139 flat rate (+ parts) on-site. I know I should change that to an hourly rate.

My problem is just as the OP stated - A bench repair can turn into hours of scanning, updating, etc. for me.

 

[Tony_Scarpelli]

Good topic. I'm losing "my shirt" on this one too. I live in a very small rural area and the client base won't support high price structure. At present, I am at;


$25 diag., gets absorbed into the cost of the repair if they decide to move ahead with the repair.

$79 flat rate (+ parts) in-shop repairs. This usually includes "minor" data backup such as pics/music/docs, unless they have a boatload of data.

$139 flat rate (+ parts) on-site. I know I should change that to an hourly rate.

My problem is just as the OP stated - A bench repair can turn into hours of scanning, updating, etc. for me.

The easy way is to just say the prices are as quoted above however over 3 or 3 hrs and you add an additional $25 per hour ....then they see wow this guy spent 5 hrs fixing that....

 

[drnick5]

Thanks for all the replies!

Our diagnostic is usually a quick process, occasionally we get a computer where it takes a long time just to figure out the problem. but in most cases we can figure out if its a basic or advanced job pretty quick (as I said.. I haven't been billing critical labor, which is $199, for a while now, with exception of data recovery). It isn't too often that a customer doesn't get their computer fixed after diagnostic. although we are seeing it happen more and more with old crappy computers that just don't make sense to put any money into. We typically have a fee refurbished desktops in stock, and I always have a new laptop ready to go.. but we don't sell as many as we'd like. sort of a side question, how do you guys handle laptop and desktop sales? do you just buy computers from online vendors and mark them up a bit? what do you typically sell a desktop or laptop for?

Most laptop screen repairs I've dropped down to $149 for labor and usually sell the screen at whatever it costs me. in some cases (if its an easy screen to get at) I'll do it for basic labor, but mark up the screen a little bit. I usually include a quick once over of the computer as well.

My problem with hourly rates.. is if we estimate 2 hours and it runs longer. how do you guys handle that? do you call after the 2nd hour and ask for approval on a 3rd or 4th hour? and if its not approved... we are stuck in awkward position of charging for a job that isn't fixed... in the few cases this has happened, the customer doesn't return for the computer, and we are left with a broken machine and an unpaid invoice.

I like the security pack idea.. currently we install Microsoft Security Essentials, but we are in the process of getting set up with GFI for our MSP offering, which has built in anti virus, so we might try selling that cheaply to residential customers as the cost is pretty low.

 

[Tony_Scarpelli]

The key to using standard pricing or standard hours is that you can often beat it. So if you set your reinstallation at 2 hrs you are saying most days you can beat that with F11 reinstalls or what have you. If that is the case you don't worry about the one that goes over as it was already paid for by the others. Its an average game.

If you find that 2 hrs doesn't leave you enough time to do a complete reinstall then you can charge for something you are doing for free such as separate the backup service or use a small diag fee that is not applied to the repair.

We used to get $39 diag on every computer plus 2 hrs re-installation, 1 hr security and $99 for backup. But now there are more computer stores offering repair than their are starbucks and Tmobile stores together.

 

[acesdeals]

we keep it simple as well

we have a base and advanced repair
a $30 deposit is taken on all repairs and goes towards the repair and its non refundable so it becomes diagnostic if they refuse the repair

 

[YeOldeStonecat]

My problem with hourly rates.. is if we estimate 2 hours and it runs longer. how do you guys handle that? .

Because on "the bench"....the tech can have a half dozen rigs on that bench being worked on all at the same time. His time does not have to be 100% focused on watching progress bars of installations or downloads or scans or disk cloning for every minute that the clients computer is running.

A computer may be up on the bench running for 5 hours....but since the tech was working on half a dozen PCs all at the same time, and doing other stuff in the shop, on the phone, remote work....that one computer may have actually consumed 37 minutes of his time focused on it for an actual rebuild.

A good sized bench setup allows a tech to concurrently work on many jobs at the same time.

 

[drnick5]

Thats exactly my point. in some cases a computer could be on the bench for 6 hours... but you are only spending 2 hours of actual time... However, Bench space is not unlimited. The longer a computer sits up there occupying a spot, the longer its keeping another computer in the queue and off the bench until its finished. so that does have to factor in a little bit.

I also understand its an average game, some computers will be billed for advanced and only end up taking 45-1 hr minutes, others might take 2-3 hours. the goal is that more computers take less time.

although Iv'e thought about some sort of diag fee... I'm still inclined to offer free diagnostics until it starts to hurt me. (it hasn't yet and I feel it brings in more business then it costs money).

One other question for you guys, how do you handle backup? currently we charge $30 at check in (its optional) If they request this, the first thing we do is a full image of the drive, buy hooking the computer hard drive up to our bench computer (via a usb to SATA or IDE cable) and image the hard drive to our network storage (we have a SAN). This backup fee only includes the backup, and not any sort of transfer. We also store this for 30 days just in case something happens after they get the computer back. If the backup is needed (lets say the computer isn't repairable and want to replace it) we charge our basic labor of $59 for the transfer.