To sell or reccomend PC's

[sean]

Hi

We are mainly a repair business but we currently sell computers and laptops in our shop (we order them when someone wants one) but the margins are tight. We were thinking of becomming an affiliate to a suppliers website and charging the customer a consultancy & setup fee to help find a solution for them and they can purchase it direct from the supplier. The bonus is we make about the same but dont have the hassle of giving 30 days credit thats expected.

Any Ideas ?

How does everyone else do it

Thanks

Sean

 

[coffee]

A place I work part time at orders from Tiger Direct as a business account with them. They get some perks for opening a business account with them. Might be an idea.

Most of the ones I sell I build myself. But they do cost more. I explain that its quality inside the computer that counts ect...

 

[RichmondTech]

Hi

We are mainly a repair business but we currently sell computers and laptops in our shop (we order them when someone wants one) but the margins are tight. We were thinking of becomming an affiliate to a suppliers website and charging the customer a consultancy & setup fee to help find a solution for them and they can purchase it direct from the supplier. The bonus is we make about the same but dont have the hassle of giving 30 days credit thats expected.

If you are not doing the setup on every desktop/laptop you sell, why even bother selling desktops or laptops? Like you said margins are tight. We only had one desktop go out the door in the last two years without a setup, but it was a custom build so there was margin built in.

Also I'm not following where you need 30 days credit. Are you telling me that you're ordering desktops and laptops and having the customer pay for it when it comes in? That quickly depletes your cashflow and things get tight real quick. You should be getting your customer up front from the customer because that's what any other business would do if your customer went there.

 

[Paul Rodgers]

Check this out http://www.technibble.com/forums/showthread.php?t=30952

 

[lan101]

Anymore for me it's easier just to find them a deal, let them order it and I charge $150-$200 to come out and set it up and get everything that they need done.

That way down the road they can't be mad at me when their machine breaks down. The quality of everything seems like it's going down so much, I would rather not be held responsible for a bunch of warranty issues or feel that I have to take care of something for free down the road.

I would rather make a little less money and just do the maintenance or fix parts on it down the road if need be.

I am also a 1 man show, mostly onsite. If I had a shop, I would probably resell at least refurbs or something along those lines.

 

[sean]

Also I'm not following where you need 30 days credit. Are you telling me that you're ordering desktops and laptops and having the customer pay for it when it comes in? That quickly depletes your cashflow and things get tight real quick. You should be getting your customer up front from the customer because that's what any other business would do if your customer went there.

Over here it's expected to give 30 days credit to business and it does make things tight maybe we should just charge upfront

Sean

 

[andcorptech]

Over here it's expected to give 30 days credit to business and it does make things tight maybe we should just charge upfront

Sean

Same here. Its easy to say dont offer credit but most of the businesses I deal with will simply go elsewhere if you dont. I live in a rural area with alot of out of town owners and alot of my business customers work on billing cycles set by their parent companies.

Its also easy to say "let them" but thats a BIG chunk of my business if I do.

So far as paying up front, very few businesses here would pay up front though I have had a few offer to pay deposits on large orders. Thankfully I am in a reasonable position so far as cashflow goes so its not an issue.

 

[Rob_NNCC]

Anymore for me it's easier just to find them a deal, let them order it and I charge $150-$200 to come out and set it up and get everything that they need done.

That way down the road they can't be mad at me when their machine breaks down. The quality of everything seems like it's going down so much, I would rather not be held responsible for a bunch of warranty issues or feel that I have to take care of something for free down the road.

I would rather make a little less money and just do the maintenance or fix parts on it down the road if need be.

As an FYI, I lost about several hundred USD and a customer because a Dell laptop that he ordered at my suggestion had a HDD failure. He did not lose anything, but had me fix it instead of Dell then told me It should be under my warranty after 3 months. In retrospect I should not have given it back without being paid first, but he wanted it ASAP.(He popped the 'it should be under warranty' after he had the laptop)

my point, unless you are selling referb/wish to claim responsibility on a computer, I would stay out of the buying process, especially if you are making a slim margin. I was pretty involved in the above example's buying process, but he still paid directly from his card. This is not a small home owner guy. He owns at least two businesses and I have heard him on the radio.

We have been burned...

 

[RichmondTech]

Over here it's expected to give 30 days credit to business and it does make things tight maybe we should just charge upfront

Sean

If you customer wants 30 days credit tell them to get it through Visa or MasterCard as you swipe their credit card. They get their grace period without your cashflow getting tight.

I don't understand how people should expect to pay 30 days out for what they get through you but anywhere else they go to get what they need (gas, food, clothing, etc) they pay at the time of purchase.

 

[altrenda]

But you've added to your price to cover your time ordering, delivering, and your cost for fronting the money, correct?

 

[andcorptech]

If you customer wants 30 days credit tell them to get it through Visa or MasterCard as you swipe their credit card. They get their grace period without your cashflow getting tight.

I don't understand how people should expect to pay 30 days out for what they get through you but anywhere else they go to get what they need (gas, food, clothing, etc) they pay at the time of purchase.

No Actually, you dont understand. I have seen it happen to a competitor. They were bought out, and the new owner did not give credit accounts to local businesses. They lasted about 18 months more then closed their doors. In that 18 months I picked up most of their account customers as their accounts departments simply will not deal with suppliers who wont invoice them on a term account. I give 15 days now, but I have maybe 3 dozen companies who will pay on 30 day terms and nothing less.

I have no issue with this as they always pay ( I have had 3 non payers in nearly 4 years) and It actually helps my cashflow, because I always have money streaming in from accounts when we have slow weeks in the workshop. I also lived on savings for the first 3 months ( on advice from my accountant) in order to build up my bank account to handle any cashflow issues which may arise.

I generally do not do accounts for residential users or workshop jobs, but It depends on the customer.


And as for "no one else" offering term accounts, you may not get them at the supermarket or fuel station, but most service/trade businesses will offer accounts to businesses. Its just the way its done here ( Rural NSW. Australia)

 

[YeOldeStonecat]

For larger items....multiple workstations, and servers.....we ask for the hardware to be paid for before we place the order for the client. For smaller orders...one or two workstations..and under (routers, printers, etc)...we order...and invoice those to the client. The labor charges that go with installing these get invoiced at the time of the job being done.

Note that these are for our regular business clients...we won't do credit for someone that walks in off the street.

 

[YeOldeStonecat]

I don't understand how people should expect to pay 30 days out for what they get through you but anywhere else they go to get what they need (gas, food, clothing, etc) they pay at the time of purchase.

Eh.....comparing to gas/food/clothing...that's not an "apples to apples" comparison to what we do. You're taking direct consumable products that a stranger walking in off the street is purchasing. When talking about regular clients ..things change.

We're more service oriented in our industry...and you'll find in other service oriented industries, even those that include hardware..they do invoice you. If I call my heating guy..he comes and replaces some controller unit and circulator pumps in my heating system...I get that bill a week or two later. I can call my oil/gas supplier and have the tanks of my house filled...I'll have an invoice in my front door 'net 30. If I call my electrician and have him add some outlets and lighting fixtures...I'll get an invoice a few weeks later. If I call my pool guy and he services my pool, replaces a few parts...I'll get an invoice a few weeks later. If there is a big ticket item...yeah they'll ask me for money up front. Example...last summer I had my inground pool re-lined. Had to get a custom liner installed..cost over 7 grand to have a custom liner made...naturally I paid for that ahead of having it made.

 

[RichmondTech]

No Actually, you dont understand. I have seen it happen to a competitor. They were bought out, and the new owner did not give credit accounts to local businesses. They lasted about 18 months more then closed their doors. In that 18 months I picked up most of their account customers as their accounts departments simply will not deal with suppliers who wont invoice them on a term account. I give 15 days now, but I have maybe 3 dozen companies who will pay on 30 day terms and nothing less.

I have no issue with this as they always pay ( I have had 3 non payers in nearly 4 years) and It actually helps my cashflow, because I always have money streaming in from accounts when we have slow weeks in the workshop. I also lived on savings for the first 3 months ( on advice from my accountant) in order to build up my bank account to handle any cashflow issues which may arise.

I'm not sold on your example because there are A LOT of variables to consider when a new owner comes into play and the fact that it took a year and a half after the new owner took over for them to close their doors. Could not offering terms played a part in them closing their doors? Sure. So could a million other factors.

As far as offering terms actually helping your cashflow, I think it's a bogus statement since you just robbed Peter to pay Paul (lived off your savings for three months). All you did was just start with more money in the bank (something a lot of startups don't have the luxury to do).

Eh.....comparing to gas/food/clothing...that's not an "apples to apples" comparison to what we do. You're taking direct consumable products that a stranger walking in off the street is purchasing. When talking about regular clients ..things change.

We're more service oriented in our industry...and you'll find in other service oriented industries, even those that include hardware..they do invoice you. If I call my heating guy..he comes and replaces some controller unit and circulator pumps in my heating system...I get that bill a week or two later. I can call my oil/gas supplier and have the tanks of my house filled...I'll have an invoice in my front door 'net 30. If I call my electrician and have him add some outlets and lighting fixtures...I'll get an invoice a few weeks later. If I call my pool guy and he services my pool, replaces a few parts...I'll get an invoice a few weeks later. If there is a big ticket item...yeah they'll ask me for money up front. Example...last summer I had my inground pool re-lined. Had to get a custom liner installed..cost over 7 grand to have a custom liner made...naturally I paid for that ahead of having it made.

You're right that people tend to pay for products up front while paying for services when the job is done. One thing that John Warrillow's book "Built to Sell" teaches is to train your customers to think of your offerings as products instead of services so that they pay up front and you don't have cashflow issues. I have been implementing this with my customer base and have gone from scrambling to get cash together to make a purchase for one customer to being able to handle multiple customers with ease.

I think the perfect example of this are maintenance agreements. How many people collect fees for agreements at the end of the month/quarter? I know I don't.

 

[YeOldeStonecat]

You're right that people tend to pay for products up front while paying for services when the job is done. One thing that John Warrillow's book "Built to Sell" teaches is to train your customers to think of your offerings as products instead of services so that they pay up front and you don't have cashflow issues. I have been implementing this with my customer base and have gone from scrambling to get cash together to make a purchase for one customer to being able to handle multiple customers with ease.

I think the perfect example of this are maintenance agreements. How many people collect fees for agreements at the end of the month/quarter? I know I don't.

For cash flow, for smaller "start ups"..yes it's harder to get over that first month....or to "bite the bullet" for new clients and absorb that first month. But once you're established and have cash flow and got past that first month (per client), the fact that you're invoicing at the end of the month pretty much becomes a non issue, it's a perpetual machine...the ball has started rolling. After you've had say...50x business clients that you invoice monthly...a year or so down the road, doesn't really matter if you're invoicing at the beginning of the month, or the end of the month. It's a perpetual motion machine.

 

[PCDienst]

I work the same way as lan101. Since the margings are slim i let them buy the pc and i'll set it up for the customer. Most of the time i can't even compete on price with the big chains in my city. For computer upgrades it's a different story though.

 

[atlanticjim]

I offer recommendations based on their needs and budget, let the client buy it themselves and then set it up. Remember that most of the computer purchases now are replacements or additional to what is currently in place. So the services become setup computer, printer, network and data migration. I just finished a job like that and the client said it was the best $200 he ever spent and what I did in an hour and a half would have taken him 3 days. It reminded me again to value my knowledge and skill. (Something that as techs we often discount).

 

[andcorptech]

I'm not sold on your example because there are A LOT of variables to consider when a new owner comes into play and the fact that it took a year and a half after the new owner took over for them to close their doors. Could not offering terms played a part in them closing their doors? Sure. So could a million other factors.

As far as offering terms actually helping your cashflow, I think it's a bogus statement since you just robbed Peter to pay Paul (lived off your savings for three months). All you did was just start with more money in the bank (something a lot of startups don't have the luxury to do).

Offering accounts is nothing new around here, and It works well for me. Even the milkman and newsagents in our town offer monthly accounts. Though I cannot prove it to you in any way you will agree, I know that if I stopped offering accounts to my customers, I would lose a good portion of them to out of town competitors, I have been in the accounts office of more than one customer when they have spoken about cutting off otherwise good service providers due to them not offering accounts any more.

Im not prepared to argue anymore about the way each of us do business, you have your way , I have mine. We each do what works for us.

 

[FoolishTech]

Established business customers get full credit with me on new systems. As others have stated you are just shooting yourself in the foot when you don't extend net terms to businesses.

Your avg. home user must pay 50% the cost of the system up front at the time of order, the rest to be paid on receipt of the product.

I also make good margins on my custom builds. Yes, this means I don't sell a lot of them, but that's ok, the ones I do sell are actually worth my time to sell, not a waste, and I'm not worried about the slim markups that many get while trying to compete with the big boys. I never try to compete, I only look out for my business interests.

If a customer doesn't like my prices, I'll recommend something else plain and simple. If they want to know why my prices are higher, I'll explain and they usually understand that A. I cannot compete with the big boys regardless, B. I'm selling them better quality components, and C. my support is local and in their own language!

Most people who are only looking out for savings when buying a PC, you don't want them buying a PC from you anyway. When I worked at Gateway around the time that the sub-$500 PC came out and put PCs in more lower income homes than ever, we noticed a trend in that those who went after the cheap PCs were generally more difficult to work with in terms of support; meaning they were stupid, and therefore very needy when it came to PC usage. Not saying that there is a direct correlation between income level and intelligence, (also keeping in mind that these people had no prior experience with PCs) but looking at the numbers from our point of view, well, it didn't matter because for one reason or another you didn't want to work consumer support after the cheap PCs hit the market. Those in business class support where the cost of the PCs were significantly higher didn't have the issues with clients that we did.

So in my opinion those seeking discounts over quality are more likely to be your problem customers for one reason or another, intelligence or mere lack of experience regardless, they will call you for every little thing.

On the other hand, those who are concerned with quality over price, then I accommodate them happily.

 

[andcorptech]

On the other hand, those who are concerned with quality over price, then I accommodate them happily.

This is exactly my thoughts. I make a nice profit on custom machines, but I dont sell crap either. If a problem does arise I go out of my way to make sure it is resolved quickly.

We may not sell the amount that a big store sells but so far this year ive sold over 30 custom builds. My techs are pretty proficient at building them now, we can go from boxed components to bench testing in 30 - 40 minutes now, so its not that labour intensive.