Revamping Services & Pricing

[tylermcfarland]

I've been calling around to other local computer repair companies and I am finding that I am way under-priced on the majority of my services. For instance, I've been charging $55 + tax for virus removals. The bigger companies in town are charging between $82.50-$120 or more. I live in a town of about 80,000 and that population can be around 115,000 when you count people coming in from smaller rural areas. I've also been charging $55 an hour for on-site repairs. That's businesses and residences. I've had my business for 3 1/2 years now with 2 1/2 of those years being in a physical location. I don't want to be known as a pizza tech. I want to have a sustainable company that can continue to grow. Other businesses in town are charging $75 an hour to go on-site. I'm probably going to match that. Just trying to figure out what I should be charging for virus removals, tune-ups, system formats, etc. My virus removals are pretty thorough and I do other things like fix registry errors, run full diagnostics, etc. Sorry if I'm rambling just wanted to give everybody a little background info. I'm open to hearing all advice you can give. Thanks.

I offer a wide range of services. I do DC jacks (soldering and the harnesses), cell phone screen replacements and repairs (mostly iPhones and I also do iPads), general virus removals, laptop screen replacements, tune-ups, formats, etc.

 

[PCX]

First, there is tons of information on this in the forum with a simple search . . . That said, here are a few pointers.

1. Never be the cheapest.

2. If you were just starting out, I would say that you may want to start somewhere just above the cheapest competitor unless of course they are ridiculously low.

3. You want to gain some of the market using pricing, then run promotions that bring you closer to the lower end, but use these promotions as loss leaders that will lead to up-sales of your products and services.

4. By this point (for as long as you have been open), if your quality of work and your customer service skills support it, you should be in the middle to high range of the market. If your quality and customer service sucks, then work in these areas before raising your prices to that range.

5. Adding to point 4, being the cheapest makes it harder to be able to and to want to provide high quality repairs/products and customer service. Raising your prices appropriately will make it easier to do this.

6. If you do not change your prices and you have any level of success, you will bring down the market as a whole. This means that your competitors will have to bring down their prices and it will be harder for you to bring up your prices when you finally feel the need to do so.

7. Being the most expensive can hurt you too if you do it too soon or if you are ridiculously high.

8. Finally, you can't grow or sustain your business on the prices that you are currently offering the market.

Anyways, those are just off the top of my head. The truth is, without knowing your market, your competitors and the quality of work and customer service that you provide, there is not much more I can tell you.

 

[SpaceSquad]

If you're doing good on 55/hour, then why do you need to match the competition? Why not come in a little lower if you can support it? 65 maybe?

On the virus removal...55 is too low. I think it should be more than an hour's labour.

 

[Rocco]

I charge $95 for virus removals. Honestly, it is 5 - 12 hours on the bench, but only an hour, two at the most of actually sitting in front of the computer. I am not the cheapest in my town. I am the cheapest of any company that registered in the state to do business though. At $65 an hour, I am $20 lower than the legal competitors.

I plan to stay at my rates until I move into a retail/higher overhead situation. I did not want to go too low and make my company look like a pizza tech. However, I wanted to be low enough to be able to get the business.

 

[tylermcfarland]

Yeah, I knew I was way too low on some of my prices but I guess I didn't realize just how low they really were. I have excellent customer service and a lot of my customers really appreciate that. They don't feel like their just another customer, you know? I've just been afraid to raise prices I guess because I don't want to lose business. I get a lot of tire kickers or people that don't want to pay. I've given people there computers back and then they run off and don't pay (I know, BIG mistake on my part and one I won't make again). What do you guys think about diagnostic fees? I haven't been charging them but a lot of the bigger companies in town do.

 

[CLC]

If you're doing good on 55/hour, then why do you need to match the competition? Why not come in a little lower if you can support it? 65 maybe?

On the virus removal...55 is too low. I think it should be more than an hour's labour.

I'm in a town with about probably 40k with surrounding areas and I charge $90 flat rate for virus removals. I'm not the highest or lowest and I seem to do ok. You are always going to have your price shoppers but if you raise your price you can afford to be more thorough and do a better job.

You get what you pay for as they say.

 

[SpaceSquad]

<snip> but if you raise your price you can afford to be more thorough and do a better job.

You get what you pay for as they say.

True! This is something I realised early on. I have since raised my rates to ensure that I do a better job instead of just wanting to get out of there.

 

[atlanticjim]

If you're doing good on 55/hour, then why do you need to match the competition? Why not come in a little lower if you can support it? 65 maybe?

On the virus removal...55 is too low. I think it should be more than an hour's labour.

This drives me crazy. If 55 is good enough then MORE is BETTER.
More income= better retirement, better house, better car, better donations to charity or whatever you want to do with it.

Find the sweet spot for your market and stay at the top of that.

Don't leave money on the table, unless you are running a charity.

 

[lan101]

I'm in a town with about probably 40k with surrounding areas and I charge $90 flat rate for virus removals. I'm not the highest or lowest and I seem to do ok. You are always going to have your price shoppers but if you raise your price you can afford to be more thorough and do a better job.

You get what you pay for as they say.

Similar to me. I'm at $90 for virus removal. $120-$150 usually for a reload of OS and basic data transfer.

 

[cypress]

Similar to me. I'm at $90 for virus removal. $120-$150 usually for a reload of OS and basic data transfer.

Sounds pretty reasonable. If you are trying to reasonable area, middle ground is a pretty good place to go with. So 55- $100. I would go with around 80-85

 

[JonnyRT]

True! This is something I realised early on. I have since raised my rates to ensure that I do a better job instead of just wanting to get out of there.

This is very true, and something which I really need to implement. Also, when you've charged a bit more you don't mind answering a quick question over the phone when they call back a couple of days later to 'just check' something with you.

Will be going over my prices again tomorrow, as I know I need to increase them.

 

[OCWI]

OP: Definilty raise them, which it seems like you are doing. We are in a similar situation, have been retail for about 2.5yrs now so we are just now starting to become a serious operation. Recently we went from 55/h to 87.5/hr in shop and 120/hr off site. It has been a very wise decision, and was made based on a lot of information here on TN (Thanks guys

 

[tylermcfarland]

Thanks everybody for the replies! Here is what I'm thinking about going with based on what you all have said and what things are going for in the area I live in.

Virus Removals $90.
Tune-Ups $100.
System Reformats $137.50. Add $55 to backup and restore data.
DC Jacks range between $110 and $192.50.
Laptop screen replacements start at $137.50 and go up to $247.50.
Data Recovery starts at $110.
On-site is $75 an hour.
Diagnostic charge is $55. This fee is only charged if no work is completed.

 

[Martyn]

When you start off you have no reputation with computer repair(or anything) generally. I've been going now 3 years and when I first started i did all the advertising but rarely got any calls, it takes time. After a while the work comes in and you then start to build your reputation. I now spend less on advertising than I have ever done but my work comes in through my reputation. I'm rarely asked my prices, they just want me when I can get there. I'm now about to break my best month since I started out, I work from home so no shop. I have raised my prices and tweaked my business and am still doing it. PCX gives good advice, low prices are not sustainable. You will not survive or you will be flat out for not much money. You need time to work on your business. I read somewhere to raise your prices by 15% and maybe lose 15% of your customers but get the same money. People need to connect with you, see you, read about you and generally then trust you. I had a call the other day for a power jack replacement. I quoted him £85 and he said he had been quoted £70 by someone else in the same newspaper. I got the job. It turns out I did work for his two brother a couple of years ago and he didn't realise it initially. They gave me glowing references.

You're young I suspect but, as anyone of my age on here will tell you, you will realise you get what you pay for in life generally. We've all been in the University of Life.

 

[Tony_Scarpelli]

The long answer is this:

Most service businesses have similar costs to run properly. If you allow for future payroll, taxes, rents, utilities, training, warranty work, insurance, tools, auto and all the rest.

Rent even if you start working from home. Labor even if you are the only employee you probably need $30k-50k to have a normal living.

So lets say your break even after paying yourself a salary and office rents and auto expenses works out to about $150k per year that is $3k per week or about $500 per day. That sounds crazy but anyone who is successful in this business is going to obtain levels like this or higher, much higher.

Lets say your fee structure works out to average $75 per customer some higher and some lower. You would need 7 customers a day to break even and reach $500 a day.

However if your average job billed out at $150 you would only need 3.5 customers average.

Which do you think is easier to achieve?

Even if you are new, you can work on your professionalism, experience and training so that you are offering a good value to your customers at a rate similar to the more experienced shops.

I consulted with Small Business Administration and research by them suggests that it is much more likely to cost you your business if you error to the low side of charging rather than the higher side. Non trained businessmen will underestimate their costs and run themselves out of business.

You always see Pizza Techs they are just never the same guys from one year to the next as they quickly find out that they are not sustainable.

 

[OCWI]

The long answer is this:

Most service businesses have similar costs to run properly. If you allow for future payroll, taxes, rents, utilities, training, warranty work, insurance, tools, auto and all the rest.

Rent even if you start working from home. Labor even if you are the only employee you probably need $30k-50k to have a normal living.

So lets say your break even after paying yourself a salary and office rents and auto expenses works out to about $150k per year that is $3k per week or about $500 per day. That sounds crazy but anyone who is successful in this business is going to obtain levels like this or higher, much higher.

Lets say your fee structure works out to average $75 per customer some higher and some lower. You would need 7 customers a day to break even and reach $500 a day.

However if your average job billed out at $150 you would only need 3.5 customers average.

Which do you think is easier to achieve?

Even if you are new, you can work on your professionalism, experience and training so that you are offering a good value to your customers at a rate similar to the more experienced shops.

I consulted with Small Business Administration and research by them suggests that it is much more likely to cost you your business if you error to the low side of charging rather than the higher side. Non trained businessmen will underestimate their costs and run themselves out of business.

You always see Pizza Techs they are just never the same guys from one year to the next as they quickly find out that they are not sustainable.

wow, 100% agreed. Worded perfectly

 

[Tony_Scarpelli]

wow, 100% agreed. Worded perfectly

Thank you. It is difficult to help someone understand about pricing without sounding condescending.

 

[redmon]

As one strategy that we use is heavily advertising $79 virus removal as a loss leader. When they checkin we ask if they want a discounted tuneup for $30 extra(just a few extra step), probably 2/3 take the upsell, so they are now paying $109. We also ask as a standard question at checkin, "to get the lowest rate we will start on it with in 2 business days, if you need it faster we offer premium express service, which puts you in the front of the line". This is a $50 upsell. We get about 3 to 5 per week. Now we are making $159 for a virus removal and more importantly the clients are happy to get preferential treatment. After they are finished up, if needed, we will upsell av, data backup solution, air cleaning if it is really plugged up. All said and done many of our virus removals with an upsell will come in over $200(some just $79). For that money the clients are getting great value.

Edit added later //
Some people may say what we do is gimmicky, but it works. It is just using human psychology in an honest way. They keep coming back because we give a consistent, positive experience with excellent standards.

 

[ComputerPro]

pizza tech

Not to sound funny... but what's a 'pizza tech'?
When we posted a pic of our awnings somebody posted PizzaTech and then said kidding. What is it, and is it bad lol?

 

[Tony_Scarpelli]

We look at their computer and repair it up to 30 minutes $49.99. Then we advise what it needs from there. 2 hrs will buy a Tune up or Reinstallation, plus 1 more hour for updates and security pak, 1 more hour if a basic backup and restore was involved. Our bench rate is $59.99.

If we go on site its $99.99 per hour $120 for business.