Pricing Questions Answered

[Mushin]

So, one of the most common questions that occur is how much should I charge for X and what do you charge for Y. So I want to lay my thoughts out on the table for those new to the industry or those getting started. I don't mean this message to be mean but it is going to be blunt.

1.) If you don't have the fortitude to research pricing and come up with a pricing structure on your own do you have the fortitude to be in business for your self.

2.) If what you mean when you ask these question is why do you charge x then this is a better question.

3.) Hourly Pricing a vs Flat rate. This should be determined right from the start and you have to be able to back it up. With hourly pricing you don't have to worry about what to charge for each individual service (easy and done)

4.) Flat rate pricing requires much more thought and planning but allows for more marketing potential and positioning of your business. (I prefer this because of the ability to market my services and sell them)

5.) Don't compete on price alone. You will do yourself a disservice as well as the industry as a whole. The big players have higher prices and this is good for us because we can charge that much as well if we want.

6.) Being in business means trying to make the most amount of money possible all the time. (Qualifier: I don't mean ripping people off) This means charging a fair price and making sure the customer is happy with the interaction. It also means making sure you are charging enough to be around to help them in the future.

7.) You have to sell your services as much as you have to perform them. Sell your services and add value to justify your price. Don't lower it just becasue someone comes by offering to to it for less.

8.) Phrases like low rates and affordable rates hurt you in the long run. This type of statment is purely subjective and only limits you. Charge what you charge. It positions you as a budget place and attracts budget customers.

9.) Find out a way to get to the customer first or be the first one they come to. If you are the first to actually look at the computer then they will most likely have you fix it if you are anywhere in the ball park price wise. the alternatvie is they have to schedule an appointment with another company or pick it up from your shop and drive it to anohter.

10.) Raise the bar on the services in your area by being the best, fastest, best looking, most friendly, easiest to work with, most caring about the customer, most informative, etc. etc. etc. This will set you apart and price will be less of an issue.

Please don't flame me on anyo f this I just want people to take ownership of their own business and this really is not going to happen if you can't decide on pricing for your services. If you can't feel good about charging $199.99 to remove viruses (not saying this is what you should chage) then you don't see the value in your own talents and your problems are bigger than the question of how much to charge.

 

[NickCat11]

10.) Raise the bar on the services in your area by being the best, fastest, best looking, most friendly, easiest to work with, most caring about the customer, most informative, etc. etc. etc. This will set you apart and price will be less of an issue.

I'm downright sexy, the best, and easy...the bar has just been raised

 

[GoldenClick]

So, one of the most common questions that occur is how much should I charge for X and what do you charge for Y. So I want to lay my thoughts out on the table for those new to the industry or those getting started. I don't mean this message to be mean but it is going to be blunt.

1.) If you don't have the fortitude to research pricing and come up with a pricing structure on your own do you have the fortitude to be in business for your self.

I recently asked one of these questions not because I didn't do my own research but because I wanted to get a better idea of what others charge. Sure, I researched local competitors but the more data I have the better I can gauge my pricing.

2.) If what you mean when you ask these question is why do you charge x then this is a better question.

You are right, however, no one really responds with "$x."

This is a forum to discuss the tech field, not give single worded answers so I think that the why is already implied.

3.) Hourly Pricing a vs Flat rate. This should be determined right from the start and you have to be able to back it up. With hourly pricing you don't have to worry about what to charge for each individual service (easy and done)

Should be determined from the start of what, the job or the beginning of a business?

4.) Flat rate pricing requires much more thought and planning but allows for more marketing potential and positioning of your business. (I prefer this because of the ability to market my services and sell them)

Good point here....but at the same time by asking how much others charge you can easily cut the time it takes to create the pricing guide while charging the going market rate

5.) Don't compete on price alone. You will do yourself a disservice as well as the industry as a whole. The big players have higher prices and this is good for us because we can charge that much as well if we want.

This is very true. This is an industry with a very high demand, allowing for a monopolist (big box) as well as fringe competitors such as ourselves who can service the clients who are unwilling or unable to pay the higher prices.

Personally, I feel that it's all about the personal touch. If you give a **** about customers you will gain more trust and respect than you would buy selling yourself short on prices.

6.) Being in business means trying to make the most amount of money possible all the time. (Qualifier: I don't mean ripping people off) This means charging a fair price and making sure the customer is happy with the interaction. It also means making sure you are charging enough to be around to help them in the future.

KEEP THE CUSTOMER HAPPY! Good point here, Mushin.

7.) You have to sell your services as much as you have to perform them. Sell your services and add value to justify your price. Don't lower it just becasue someone comes by offering to to it for less.

Always back up your prices by offering value to your clients. As a Realtor I charged 5.5% commission for a residential listing and other brokers would try to undercut me by charging as low as 3%. When customers would object and say that the competitor charged so much less my response was always the same "you get what you pay for, sure they charge less but they do not offer the value (experience, connections, knowledge) I offer".

Always back your prices up with your performance. I've found that the customers that try and haggle end up respecting you more when you stand your grand and are a huge pain in the ass when you budge.

8.) Phrases like low rates and affordable rates hurt you in the long run. This type of statment is purely subjective and only limits you. Charge what you charge. It positions you as a budget place and attracts budget customers.

Ads are saturated with these terms, and I think people are starting to realize that was this really means is CHEAP.

Again, market yourself on value, knowledge, experience, etc. Price will win you some customers, but instill trust in them and you will gain so much more (in terms of relationship and long-term revenues).

9.) Find out a way to get to the customer first or be the first one they come to. If you are the first to actually look at the computer then they will most likely have you fix it if you are anywhere in the ball park price wise. the alternatvie is they have to schedule an appointment with another company or pick it up from your shop and drive it to anohter.

I've always found that a really great way to get business is to pound the pavement. Pick a business park and go to every business, pick a neighborhood and go to every house. Eventually you will find a person who needs help and what better time to help them than there on the spot

10.) Raise the bar on the services in your area by being the best, fastest, best looking, most friendly, easiest to work with, most caring about the customer, most informative, etc. etc. etc. This will set you apart and price will be less of an issue.

AMEN! lol

Please don't flame me on anyo f this I just want people to take ownership of their own business and this really is not going to happen if you can't decide on pricing for your services. If you can't feel good about charging $199.99 to remove viruses (not saying this is what you should chage) then you don't see the value in your own talents and your problems are bigger than the question of how much to charge.

I really feel like this is a great place to get pricing information rom other techs who are experienced. I am sure there are some lazy people who want others to do the dirty work for them but at the same time it contributes to the community. In the short-run prices may be fixed but in the long-run we must adjust them and by asking others their pricing trends one can better price.

Good post Mushin, you hit some very good point here. How long have you been in the business?

 

[Mushin]

My history and a few lessons learned.

Good post Mushin, you hit some very good point here. How long have you been in the business?

I start my first business with a project called LABBS is the early 90's while I was in highschool. LABBS stood for Local Area Bulletin Board Systems. It was my first big project. At the time the internet was not really around the things were driven by AOL, Compuserve, and Prodigy. Also many companies ran bulletin board systems when they wanted to support their products with driver updates, technical suppport or as a way to provide customer service. There were also BBS systems for entertainment and etc. During this time e-mail was relayed via dialup connections from one BBS to the next.

LABBS allowed me to host multiple Bulletin Board Systems on a single 486DX100 computer with multiple modems and multiple phone lines. I sold "hosting" services (although not called hosting at the time) to companies that did not want to have the cost associated with many phone lines and the operating and maintenence of the BBS.

I learned a lot about business with this project but made some "mistakes" because of my lack of business knowledge at the time. For example I missed out on fully translating my LABBS idea into what we now call web hosting. Could be a millionaire... If I had the foresight.

I then converted LABBS into a consulting business and also proceeded with my next big plan. I dropped $1000 on my first CD Burner and hit the pavement selling backup services to local businesses. I also converted audio tapes to CD for teens and college students.

Later I left the consulting realm thinking that I sould make a go of it in the employee arena. I worked with a local ISP untill they went belly up becasue the owners could not understand why they should put all their money into Highspeed DSL services. (I learned that lesson with LABBS. I then worked in Online Banking with a focus on technical support, problem resolution, and call center issues.

Following this I went to work with our dreaded enemy Geek Squad as a Deputy of Counter Intelligence and then as a Double Agent. In both situations I trained many agents as well as Blue shirt employees on scopes of work and how to sell services. I led my Precinct to be in the top 50 in the company while I was the DCI (Supervisor) and as a DA I was quite productive.

I must admit that as a GS employee I often had people in my neighborhood come to me personally on my days off and ask if they could hire me to work on their computer rather then call GS. I was torn... conflict of interest. As an GS employee I put all consulting and independant PC work on a permanent hold. Still nearly every week people in my neighborhood were coming to me. Many even called in to schedule an appointment only to find that some other DA was dispatched to the job. I even had several businesses that I had done work for with my Data backups years and years ago contact me about service but since I was not in the area any longer I referred them to GS. When word got back to me about how poor their experience was with the call center, dispatch process, and other issues. I was very disappointed. My reputation and that of GS was tarnished because of poor service being provided by a company I worked for.

So what did I do about these people coming to my door. I seized the opportunity and in 2006 I went back out on my own. It was a scary move because by this time I was married with a family so just leaving GS was too big of a risk. I moonlighted while employeed and founded Site Tech (This was a very fine line of conflict of interest but I must admit I never stole customers. They were GS customers if GS got to them first. They were mine if they knocked on my door at home or called me personally.

For those that called me or knocked on the door I told them that yes I could help them but I charge similar rates. It was clear that price was not an issue and all they wanted was to have someone they knew had and trusted. These first customers knew my background because I had been in the area for years. Some I even did work for as a teenager (that neighbor kid that knew computers)

So here were are nearing 2010 and I have opened a physical location where before I was onsite only. So to answer the question how long have I been in busines.... I would say since the early 90's

Sorry about this long post but I would love to help anyone with any issues but I also want to challenge people to make their own choices because it is the wins and the failures that we learn by. There is no easy road to success. I have a tone of experience and I truly want to help people navigate an industry that I have been a part of for quite some time.

Please feel free to ask me any questions.... even that of pricing I do want to help.

 

[apochimongitus]

Mushin,

I must admit that if I talk to any of my IT colleagues their jaw hits the ground when I talk pricing. But really, my customers don't seem to mind at all. What really annoys customers is bad service rather than high prices. I must confess also that I haven't always given the best service but since being on this board my standards are improving.

I've done the budget operator thing before and tried to support a family on it - I was charging $25 per hour for callouts... I remember handing someone a bill for $12.50 because I'd only been there 30 minutes. I honestly don't know how we could afford to eat.

So in reality, there's no point short selling yourself, if you've don'e this gig a while, you know how hard it is to make a living on budget fees. IT services are valuable - just think how often a customer has told you they've spent 'a couple of days' trying to nut out a problem that you solve in five minutes... is it worth 5 minutes or a couple of days to your customer? So you charge them somewhere in between...

My $0.02 AUD

Apochimongitus.

EDIT: typo

 

[ComputerClinic]

So in reality, there's no point short selling yourself, if you've don'e this gig a while, you know how hard it is to make a living on budget fees. IT services are valuable - just think how often a customer has told you they've spent 'a couple of days' trying to nut out a problem that you solve in five minutes... is it worth 5 minutes or a couple of days to your customer? So you charge them somewhere in between...

Too true. I got a call from a lady who couldn't get her printer to work, and she had been trying to fix it for two days. I changed the printer's IP address to the correct IP and fixed the problem in 5 minutes. I then offered to tune-up their computers and they said yes. I discovered that she likes to shop online from lots of different places, and her credit card # had been stolen twice. I installed Web of Trust and showed her what it was. In the end it costed $180 but she was extremely happy with the service. In her words it was "The best $180 I've ever spent". So yes, 5 minutes of our time is worth more than many of us realize.

 

[GoldenClick]

Another thing that I (and others) need to keep in mind is that pricing is all relative.

Businesses and older folks usually have the money so for them it is not as painful as it would be for me.

@Mushin...Your post made me feel a bit nostalgic, thinking back to the day when AOL, Compuserve, and Prodigy ran the game. Those were the days huh? And to think that you were hosting the boards on a x486 WOW!

Very impressive background and I see where you're coming from. I've decided that I am going to make a pricing guide asap, it's the only way to truly compete with others and it gives you credibility, flying by the seat of your pants isn't professional and cute only to your friends and family.

 

[K007]

That is why Sales should be separated from Production.
The ones in the Production department are very fond of their talent and skills and the amount of work and dedication they put into it.

Sales department on the other hand is deciding how much to charge in such way the production department will get their money and at the same time keeping the existing customers and getting new ones.

If you have ever heard of the "Theory of the thinking hats" then give it a thorough study.
It will help you be impartial when you have to do "Production" and "Sales" decisions.

 

[Mushin]

@Mushin...Your post made me feel a bit nostalgic, thinking back to the day when AOL, Compuserve, and Prodigy ran the game. Those were the days huh? And to think that you were hosting the boards on a x486 WOW!

Very impressive background and I see where you're coming from. I've decided that I am going to make a pricing guide asap, it's the only way to truly compete with others and it gives you credibility, flying by the seat of your pants isn't professional and cute only to your friends and family.

Just to clarify I was not hosting Compuserve, AOL, and Prodigy. Just other companies Bulletin board systems. Amazing thing, those ASCII text and graphics, coupled with 28.8k and 56k modems don't create a lot of overhead.

Biggest problem was the modem banks and phone lines. My office sounded like I had a cat farm because I liked hear all the connections taking place. I left the modem speakers turned on in the initialization string and you would hear the modems negotiation the innitial connection.

Sometimes I still hear the awfuls sounds but at the time it was "money" to my ears.... and my wallet. LOL

 

[joydivision]

Put this way for £156 I got two new rear shock absorbers, a new CV boot, new ball joint, new exhaust rubber all fitted and including parts. Although its fairly easy jobs for my garage its a good honest pay for him. I am happy that my car is roadworthy he gets about £70 profit.

Now £150 for Virus removal? There is something clearly wrong in some cases it may come to that if the job is extremely involved but if you're charging that much all the time then there is something wrong. Maybe the guy is a very clever marketeer but personaly I would not be happy charging that much.

But then I have always put bringing a really good service at good honest prices as more important than making a quick buck.

 

[Mushin]

I was with you right up until then. If you do feel good about charging $199 to remove viruses maybe you should seek out another profession such as used car salesman. There no good reason for this.....ever.

Your personal attack aside let me put a quick qaulifier on this.. This was not the whole quote and it reads that I charge less.... but...

There are all the reasons in the world.... let me illustrate why.

Reasons

1.) The markets tells us that people ARE paying this. They do it every day. (Geek Squad, Geek On Site, etc.)

2.) People even pay $299.99 for on site virus removal.

3.) Being in business means making as much profit as the market will allow. (provide quality service)

4.) If the customer if informed up front of the charges, what the service includes, they approve the service and they are satisfied, Isn't this a successful business transaction between two parties?

I could go on but... try this..

As technicians are we basing the prices we charge off of our own knowledge or that of the customers?

What do Doctors charge to tell us we have a cold? And when we do have one what do they actually do? (Not a slam on Doctor's at all)

Sure I can give a deal and remove a virus from a computer for $50.00 but why when I know that my clients will pay $150.

Your example about used car salesman... hmm.. They have a vehicle for sale and listed at $5000, you negotiate but they are firm. You buy the vehicle. Successfull transaction and both parties are happy. Where is the problem?

The problem comes only if that salesman misrepresents the vehicle. Then the customer feels slighted.

So what do I feel good about... I feel good about having an average repair cost sitting at $150 and pusing to get it to $175. I feel good about the quality of the services that we perform. I am honored that my clients refer us to others. I feel good that my business is growing and I am able to help more people. I feel good that I will be in business for quite some time. I feel good about our pricing and the added value we provide to our clients.

I don't know your pricing but.. If you feel good about the price and you are profitable and you keep your customers happy then good. But.. don't under value your service. Sure it is easy for us but that is bacause you do it day in and day out.

 

[gunslinger]

Your personal attack aside let me put a quick qaulifier on this.. This was not the whole quote and it reads that I charge less.... but...

If you don't charge this much than it was not a personal attack on you and you have no reason to be offended.

1.) The markets tells us that people ARE paying this. They do it every day. (Geek Squad, Geek On Site, etc.)

Known ripoff companies. If you want to patern yourself after such scum be my guest.

2.) People even pay $299.99 for on site virus removal.

There is a sucker born every min. If you have no morles by all means take full atvantage of them.

As technicians are we basing the prices we charge off of our own knowledge or that of the customers?

I can remove any virus you can remove and still charge half of what you charge and make a good living.

The problem comes only if that salesman misrepresents the vehicle. Then the customer feels slighted.

IE the problem comes when a tech make virus/malware removal seem harder than it really is. If you charge $50 per hour and it takes you 4 hours to remove a bit of malware the customer should not have to pay for your lack of skill.

So what do I feel good about... I feel good about having an average repair cost sitting at $150 and pusing to get it to $175.

As long as you can sleep at night.

 

[K007]

@mushin

Wow!!!!
You are way out of my league man.
No offence, but you should become a banker selling loans and morgages.
On the other hand, trust me, you don't know much about computers.
Take if from me, 20 + years of experience, I know about people and computers a lot. All I need is to hear someone's brain farts and I will know who I am dealing with.
3 or 4 more memebers in this forum with your attitude towards professionalism, and I will look for another forum.
It really makes me ...... ill reading how you feel good about certain things.

P.S
You may answer to my post, bu I will not let myself get involved into an argument. Above here you have my opinion and I am entitled to it.

 

[Tweak]

I almost don't want to comment here because I do not wish to take sides but...

I have seen people that wouldn't accept the price quoted and wished to pay a fairly larger amount because the level of service was exceptional and they were very pleased... I can understand that IF a high level of service is rendered AND support is given properly afterwards (if needed) and the client is happy to, willing to, and choses to pay whatever the amount then you can't actually TAKE advantage of what amounts to an offer. Now seeing others in the local area charge say half of the price you charge and provide similar service, then it might feel more like you have "taken advantage" of someone and so I guess I agree to a degree with both sides of the argument.
I recall a time past when someone paid well over $100 for a service call to replace a case fan, it was a good bit of a drive and they were told it would be $20-$25 (can't recall which of the two) but they insisted and would not accept NO, ended up being $125 because they WANTED it this way, didn't hurt they had a hot daughter either. Please do not let me start or encourage any conflicts as this is the last thing I want to occur due to my reply. Circumstances play a major factor in how much is charged and what work is performed, there is always so many variables to consider this cannot be as cut and dry as it is made to seem which I'd think when considered wouldn't anger people as much as it seems to have in this case.

 

[Bryce W]

Hmm,you guys have touched on a really interesting topic and I can see it from both perspectives. I am not saying one way is ok and another isn't. Im just looking for further clarification of what everyone thinks about this.

To begin, what Mushin is charging more than what I charge so one might consider it price gouging, ripping off the unsuspecting etc..

However, where is the bottom of this pit? Lets say a computer technician charges $70 per hour which is a fairly reasonable fee. Now, lets say I am a new technician with little overheads and I can charge $20 per hour and still be fine. From my "$20-per-hour-perspective" it would appear the rest of you at $70 are price gouging.

Of course, the $70 per hour technicians probably has more experience, is appropriately insured and probably provide a higher level of service than the $20 tech. So that makes it OK to charge $70 per hour. Im sure you can all agree with this since most of you are at this point.

Now, if Mushin provided an appropriate level of service/experience/professionalism to justify much higher prices, is it still price gouging?

 

[Tweak]

Thanks Bryce, now I wish I had just typed that instead....haha, but I am also glad I am not the only one (or one of the minority it would seem at the least) seeing both sides of this topic.

 

[GoldenClick]

If you don't charge this much than it was not a personal attack on you and you have no reason to be offended.




Known ripoff companies. If you want to patern yourself after such scum be my guest.

If the a customer is willing to pay for a service then obviously them having that service is more valuable than the money they could have otherwise saved.

If you feel badly about a high price why not increase the value the customer receives? Sure, I offer the exact same technical skill that Geek Squad does but 1) I also offer short turn around times 2)realistic expectations of what the problem is and how quickly it can be fixed 3) Work done domestically, not outsourced to India 4) I am honest about the severity of problems. I will not charge someone for something that will take 2 clicks and I explain the ROOT of the problem, not sure fix it and let them get infected again, etc.

I'm in business to maximize profits and I know that this is done by controlling costs and revenues. The higher my price, the higher my revenue, plain and simple. Best Buy has an immense amount of R & D, don't you think they've done enough research to know what people think is "fair"? Unlike us common folk, they have access to data and talented people to figure these things out. They didn't get their prices by guessing and asking on a forum.

 

[red12049]

If you don't charge this much than it was not a personal attack on you and you have no reason to be offended.




Known ripoff companies. If you want to patern yourself after such scum be my guest.




There is a sucker born every min. If you have no morles by all means take full atvantage of them.




I can remove any virus you can remove and still charge half of what you charge and make a good living.






IE the problem comes when a tech make virus/malware removal seem harder than it really is. If you charge $50 per hour and it takes you 4 hours to remove a bit of malware the customer should not have to pay for your lack of skill.





As long as you can sleep at night.

The reason GS and the GeeksOnSite are known as ripoffs is because they usually don't perform their services well, not because of their pricing. The above is like saying that Ford is a ripoff because Chevy sells cheaper cars. Not so. If people are willing to buy Fords for whatever reason, then they are not a "ripoff." As long as service and price go hand in hand, and both parties are happy, there is no ripoff.

Rick

 

[gunslinger]

I guess it comes down to doing what you think you have to so to stay in business and if you can live with yourself.

$199 for virus removal? I can do a clean reinstall with data backup and still make a very nice profit for far less. Thats all I'm saying.

 

[Mushin]

This topic has degraded

This topic has degraded to a non-productive conversation which iswas not my intent.

I have posted a follow up http://www.technibble.com/forums/showthread.php?t=10715

To clairfy some point regarding prices.

I think this degraded into a price debate too much and should be look at more of a broad topic... Please read the above topic and direct comments on competitive price strategies here.

Thanks