Pricing for Services ...

[lumien]

Ok, I am sorry to bring this up, but I am curious what you guys think about my pricing:

First let me give you some background info on myself:

I haven't done computer repair on the side in a few years, but I want to transition from my FT IT Security position to my own business - I want to focus on B2B services, but I need to start with residential fixes on the side to build to that point. I have 15 years in the IT industry, I am a+ certified, I have an associates degree in network administration, I have a bachelors in computer information technology, and I have work experience that ranges through desktop tech, team leader, network admin, and security analyst, all at large institutions.

Pricing:
I am in a major metropolitan area, and the last time I did side work (2 years ago) I was charging $80 per hour for onsite work. I am interested in doing in-house work (i don't have time to run to peoples houses) and when reviewing big box stores rates, I think $80/h is a good price, but it could even be bumped up to $100-120/h. I understand big box stores have a name brand they paid dearly for, which enables them to charge the prices they do. While I don't have the brand, I do have the experience and the education to back up making a good wage.

So I started to price the "little guys" that post on craigslist and such, and it seems like most of them are charging $25/h or maybe a $25-50 flat fee for everything but OS reinstallation.

I personally don't think that you can run a "successful & growing" business on $25/h for service. I am thinking about overhead, rent, employees - its just not going to cover the costs once I get to that level. And changing prices isn't something I think would go over well with current customers. Now, when I do work, most things don't take over an hour so the cost to the customer is usually $80-120 total. I am curious if these guys that charge $25 an hour, just tell people that it takes 4 hours to accomplish a task.

So am I crazy to want to charge $80/h for in house work? Am I REALLY CRAZY for thinking I should bump it up to $100-$120 an hour?

Any advice you may have, or thoughts you'd like to share would be appreciated.

Lumien

 

[brock029]

Well I'm new to the forum and the self employed computer repair business, but I am charging just about the same as you want to charge...of course with some flat rate prices if I am working on them at my house instead of theirs. To tell you the truth I had one lady who told me I should charge more and paid me $10 dollars more then I was charging her. But my decision on my prices were set from other post I had read on this very forum before I joined. Just like every one else says on here "Price what you think your worth" which I think is very true and from my own personal experience in the construction business even though my families company was the highest priced person in town we would still win bids on contracts because our quality of work was much better and people knew it. Hope maybe this helps in some way or another 8 )

 

[Xander]

I don't have a lot of business customers but I will add this: NEVER let the pizza techs on Craigslist influence your pricing structure. They are not your peers.

Find out what a real business in your area charges and let that influence you. Nobody here can really tell you a rate --- your local economics will be the greatest deciding factor; that, and your own skill set.

 

[JaeTech]

I hate it when potential clients say "But there's a guy on craiglist who charges $20 for all that" How is that even viable?

 

[brock029]

One thing I defiantly have learned in life is the saying "you get what you pay for" is always true. So every one on here knows, and hopefully there is a way to convince a potential client that the guy on craigslist might charge almost nothing but will he actually fix your problem.

 

[14049752]

If I understand you correctly, you're doing only shop work? You don't go to the customer's location?


If that's the case, I think you should consider flat rate pricing instead of hourly. There are a number of benefits...the only real drawback in my mind is that you have to figure out the right price for your average job.

 

[lumien]

Yes, you are correct that I want to focus mainly on in house work for residential customers at the moment.

There is always a possibility I would make a house call, but that would be rare if it happened at all.

What do you believe the benefits of a flat rate are?

Thanks,

Lumien

 

[PCX]

As many have already said, you charge what you are worth and you get what you pay for. As for those who say, "well such and such only charges this much" don't worry about them, you do not want them as customers anyways. If you do try to convince them to use you instead, just be straight forward and blunt and tell them why you are worth more.

In most cases when I have done this, I would end up saying something like, "but if you are comfortable with using such and such and you feel it is a better deal, then I would suggest that you go to them" and in just about every case, they say something like "no, we will just do business with you"

Again, if you bluntness offends them, those are not the customers you want. In most cases they are the type of people who are trying to get the whole world for nothing.

However, with that being said, there are those who are just frugal and really just want to get the best deal possible and not get screwed. So you will just have to learn how to read them and react accordingly.

 

[Carl]

I Fix $50 Repairs....

Don't hate the Pizza Tech. He's your best salesman.
The people who are charging "Bargain Basement Prices" Know that they are over priced.
As Most people here have already told you, Charge What YOU are worth. I think $80/hr is low
given your experience and education . (Emphasize your education NOT the A+ Cert - I won't
let A+ or MSCSE certs turn on anything I own - have too many as clients and I don't have Certs) .

One of the things I do is when somebody tells me I charge too much and some Pizza Tech is
willing to work for less, here are some of the things I tell them:

1) "I don't live in a cardboard box under a bridge, nor do I intend to."
2) "It's YOUR Data and YOUR System, I Don't Know what it is worth to you, but You
shouldn't risk it to save a few bucks"
3) "Go ahead and call him, Here's my card - call me When he screws it up, I Do Fix
$50 Repairs I would estimate that the repair as you described will cost around $225,
If he can fix it for $50 that's great. But when I fix it I'm going to have to repair the damage he
did and I have no Idea how much MORE That's going to cost you. "

Charge $100 for House calls (on top of std rate)

Just my .02c

 

[14049752]

Yes, you are correct that I want to focus mainly on in house work for residential customers at the moment.
There is always a possibility I would make a house call, but that would be rare if it happened at all.
What do you believe the benefits of a flat rate are?

First, let me say I'm only talking about labor, not parts and labor. Also, only in-shop labor. I firmly believe that on-site labor at the customer's location should be hourly.

Well, the obvious advantages are; No guessing on what to charge, or surprises to the customer for job costs. You don't have to worry about tracking your time, which is especially nice if you're working on several systems at once. You can take diagnostic or repair labor up front...and trust me, that is a GOOD idea.
When you talk to a customer, you can either say "I charge $80/hr." or "$160 flat rate. (just an example!)." Obviously you might know that the job will only take you an hour or so, so the flat rate is better to you....but the customer doesn't know what's involved in completing their repair and might think that $80/hr means it could cost them several hundred just in labor. So, you actually end up selling your services easier and usually you make more money.

The trade offs are pretty simple, but really not a problem if you set your prices right. The biggest one is that sometimes you get a real bear of a job and you spend a lot of time on it.....but that's ALWAYS offset by the many other easy jobs you'll do that may only take 30 minutes of actual work.

How you do flat rate is up to you, if you decide to do it at all. But, basically you can do tiered based on the complexity of the job... So, like tier 1 is $60 to install ram or something similar, and tier 2 is $160 to diagnose and repair the system. Or you could do $60 for install of ram.... $60 for diagnosis only, then charge $160 ($60 diagnosis charge waived, if system repair is approved) to fix it. You can also specify what is included in your flat rate service. You don't have to do everything... You could say "Repair is $xx, data recovery is $xx"


I know it's just anecdotal evidence, but... I've been doing flat rate, in shop repairs since I opened and I find that it works really well for me. I also know of people on Technibble that switched from hourly to flat rate and started making more money.... And a previous employer of mine switched from flat rate to hourly...then back to flat rate because hourly was "a b%^& (to quote the owner)"
I'm certain hourly works, too... Flat rate in-shop just makes so much more sense to me, though.

 

[PCX]

First, let me say I'm only talking about labor, not parts and labor. Also, only in-shop labor. I firmly believe that on-site labor at the customer's location should be hourly.

Well, the obvious advantages are; No guessing on what to charge, or surprises to the customer for job costs. You don't have to worry about tracking your time, which is especially nice if you're working on several systems at once. You can take diagnostic or repair labor up front...and trust me, that is a GOOD idea.
When you talk to a customer, you can either say "I charge $80/hr." or "$160 flat rate. (just an example!)." Obviously you might know that the job will only take you an hour or so, so the flat rate is better to you....but the customer doesn't know what's involved in completing their repair and might think that $80/hr means it could cost them several hundred just in labor. So, you actually end up selling your services easier and usually you make more money.

The trade offs are pretty simple, but really not a problem if you set your prices right. The biggest one is that sometimes you get a real bear of a job and you spend a lot of time on it.....but that's ALWAYS offset by the many other easy jobs you'll do that may only take 30 minutes of actual work.

How you do flat rate is up to you, if you decide to do it at all. But, basically you can do tiered based on the complexity of the job... So, like tier 1 is $60 to install ram or something similar, and tier 2 is $160 to diagnose and repair the system. Or you could do $60 for install of ram.... $60 for diagnosis only, then charge $160 ($60 diagnosis charge waived, if system repair is approved) to fix it. You can also specify what is included in your flat rate service. You don't have to do everything... You could say "Repair is $xx, data recovery is $xx"


I know it's just anecdotal evidence, but... I've been doing flat rate, in shop repairs since I opened and I find that it works really well for me. I also know of people on Technibble that switched from hourly to flat rate and started making more money.... And a previous employer of mine switched from flat rate to hourly...then back to flat rate because hourly was "a b%^& (to quote the owner)"
I'm certain hourly works, too... Flat rate in-shop just makes so much more sense to me, though.

Lots of good info here. I second the Diagnostics fee up front, its just smart business. In fact, we are the ones in our area who does this. Also, for in-shop repairs, flat rates just make sense.

 

[RegEdit]

I hate it when potential clients say "But there's a guy on craiglist who charges $20 for all that" How is that even viable?

I tell people I'm about half of what Geek Squad charges and I'm state licensed. Beyond that I don't spend much time on the phone with them. Take it or leave it. Usually people who haggle with price are customers who I want to avoid. When I encounter troublesome sounding customers I usually wiggle out by referring them to someone else.

 

[Martyn]

I tell people I'm about half of what Geek Squad charges and I'm state licensed. Beyond that I don't spend much time on the phone with them. Take it or leave it. Usually people who haggle with price are customers who I want to avoid. When I encounter troublesome sounding customers I usually wiggle out by referring them to someone else.

Agreed. I had someone a while ago who phoned asking what I charged for virus removal. I told him £60 and he said could I match someone who quoted £30? I said no as I believe I provide a better service and will not just remove the virus but plug the vulnerabilities such as Java and Flash etc. Also you cannot fail to give it a bit of a tune up at the same time. He said he was unlucky with viruses and had just spent £30 for a removal by the same person quoting the £30

 

[gunslinger]

Around here you would be out of business quickly charging anything over $50 per hour.

 

[PCX]

Around here you would be out of business quickly charging anything over $50 per hour.

You may be right . . . but people say that around here as well and I am the fastest growing computer shop in my area . . . .

 

[gunslinger]

You may be right . . . but people say that around here as well and I am the fastest growing computer shop in my area . . . .

Around here it holds true. The long time shops who have been here 20 years or more are charging $49 per hour. I have seen more shops than I can count pop up within 15 miles from me in the past 7-8 years who tried charging more and all failed.

This is a very poor section of the state and people just have set limits in their minds about what they are willing to pay for certain things.

 

[sorcerer]

Hmm, it's a difficult one. You can have dozens of qualifications and many many years of experience but that just doesn't help anymore. We're in dire financial times, no-one's job is safe, fuel prices are sky-rocketing (as are many other bills) and no-one has money to spare. It's OK saying "charge what you're worth" but that just would not work here in the north-west of England.

I'm just starting up my computer repairs business and looked around at others within a 30 mile radius - 90% of those businesses, and certainly ALL of those in my own town, are doing the following:

• Offering No Fix-No Fee, and that includes diagnostics too. Spend an hour finding that the fault is on the motherboard of an old laptop and the customer may well decide to get a new laptop instead of having the old one repaired, but I can't charge for that hour because no-one else is doing that.
• Fixed 'menu' pricing, eg, single repair event is £30 (47 USD, 44 AUD) plus parts
• Virus removal £40 (63 USD, 58 AUD)
• Free pick-up and drop-off

So, even though I'm just starting out and can't really afford to provide the above, I HAVE to or else no-one will come to me anyway. There is no such thing as "charge what you're worth", you have to charge according to what's happening around you.

 

[AlaDes]

I would have to agree with gunslinger and sorcerer. There are many factors you must consider before pricing your services. Although I live in one of the wealthier areas of West Virginia, which is one of the poorest states in the nation, people do have their limits and would almost rather go buy a new computer at Wal Mart before paying $100 to reinstall an OS or remove a virus from a computer. Also, many people around here would rather try the DIY fix first and if they don't succeed, they go buy a new computer at Wal Mart. There have been very few computer repair shops in my area that have lasted longer than 3 years. Honestly, my only hope of surviving is by incorporating other services into my business as I've already begun to do, such as cell phone sales and bill payment services. Although these services don't bring in much money, they do provide me a way to market my repair services. Also, I feel that the way my wife and I treat every one of our customers, whether or not they are right, is going a long way because just about every new customer we get says we were highly recommended because of the great customer service the referring customer received. Yes, I agree with many others on this site when they say that customers are sometimes wrong/rarely right, but I never allow a rude customer get to me. My wife and I both have been cussed out (over bill pay fees that we have no control of), been told that our prices are outrageous (we are the cheapest in a 50+ mile radius), and aggravated by people who have no intentions of spending a nickel with us but want answers to all their computer problem questions, and yet we still treat these people like the spent a $1000 with us. Do I like doing business like this? No. However, I feel it will pay off in the long run, just the way it did when Sam Walton opened his first Wal Mart.

 

[nesrinamb]

Best idea is to look at the expenses you will incur and also look at what others are charging in the area but dont look at the other new tech shops as often people starting out tend to under price themselves and dont last long. Call up the longest working tech shop in the area and ask what they charge for onsite service.

Here in the area I service people go to geek squad all the time so I have no problem charging $100 an hour onsite site. Also people here are much more wealthy. Now if I charged $100 per hour in some other area people would just hang up.